Zeaiter v Reliance Financial Services [2006] NSWSC 1471

In this case the borrower is seeking orders that the lender withdraw its caveat and is stopped from lodging any more caveats until a refinance of the first mortgage over the land is completed. The borrower had discussions with the lender to ask them to remove the caveat to allow refinancing but were refused. The caveat was removed on 10 October by order of the court. The lender relodged the caveat the very next day claiming an equitable interest arising from an engagement letter.

Justice Brereton agreed that the lenders had a caveatable interest arising from the engagement letter. On the balance of convenience the refinance would operate to prejudice the lender because of the additional security and higher interest. However, the court agreed the caveat should be withdrawn because of the frustrating and uncooperative behaviour of the lenders. The lender was given some protection in that the borrower was required to pay into court from the proceeds of sale of the property a sum equivalent to the increase in borrowings under the proposed refinance.

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