Caveat extension - Undertaking required - Registered proprietor - Mortgages - Sale pending - Materials deficient - Extension refused

Transfer of Land Act 1893 (WA)

McCourt v National Australia Bank [2010] WASC 121

Sinclair v Hope Investments Pty Ltd [1982] 2 NSWLR 870

Swanston Mortgage Pty Ltd v Trepan Investments Pty Ltd [1994] VicRp 47; [1994] 1 VR 672

(This judgment was delivered extemporaneously on 26 August 2010 and has been edited from the transcript.)

1 This application is brought by Mr Prater in person, seeking to extend the duration of a caveat (L327715) over his property at Nannup, Western Australia.

2 There are a number of core difficulties which face the plaintiff, who, I appreciate, acts in person and, it would seem, does not have the benefit of any legal advice.

3 The first problem is that on an extension application made under s 138C(1) of the Transfer of Land Act 1893 (WA), Consolidated Practice Direction 4.3.4 par 1 requires there to be an undertaking as to damages provided by the applicant. No undertaking has been provided. That deficiency, in its own right, is a fundamental obstacle to relief.

4 The second problem is that there is no copy of the caveat in Mr Prater's affidavit of 20 August 2010 filed in support of his extension application. That affidavit was corrected before me by Mr Prater by the replacement of one of the attachments, DJP3, but no further. Ordinarily, an application to extend a caveat under s 138C would be terminally tainted unless at least a copy of the caveat is produced, along with any statutory declaration filed in support of the caveat when lodged.

5 Fortunately for Mr Prater, the first defendant's opposing affidavit filed 26 August 2010 attaches the required materials. The first defendant's affidavit sworn by Ms De Silva on 25 August 2010 attaches a copy of caveat L327715 of 27 May 2010, which Mr Prater appears to have lodged in respect of his separate certificates of title for lot 67 Warren Road, Nannup, being Certificate of Title Volume 2735 Folio 496, and lot 68 Warren Road, Nannup, being Certificate of Title Volume 2735 Folio 497.

6 The caveat, which appears as MDS6 to Ms De Silva's affidavit, says, under the heading Estate or Interest Being Claimed:

Claiming as Registered Proprietor to prevent improper dealings.

After the standard component of the caveat preface, '[t]he caveator claims an estate or interest as specified herein of the estate or interest of the abovenamed Registered Proprietor in the land above described by virtue of', there follows this insertion on behalf of Mr Prater:

As per the matters posed in the Statutory Declaration of David James Prater sworn on the 27th May 2010

7 So, what are the arguable improper dealings about which Mr Prater complains?

8 That inquiry leads me to examine a copy of Mr Prater's statutory declaration of 27 May 2010, fortuitously found at page 17 of Ms De Silva's affidavit. It is in very brief terms, reading (in part):

(2) ... The Mortgagor wants to prevent any unfair, unjust and/or unconscionable dealings by the Mortgagee in relation to the said property.

(3) The Mortgagor wishes to prevent any unfair, unjust and unconscionable dealings in 'the property'.

(4) I am claiming as the owner of 'the property' as described in Point 1 to prevent any further unconscionable conduct and prevent any further improper dealing on 'the property'.

(5) I make this Statutory Declaration in support of the Caveat dated 27th May 2010 to be lodged against 'the property' as described in Point 1 and I claim to have an interest in fee simple as owner.

9 There are demonstrable inadequacies in Mr Prater's statutory declaration. The most glaring deficiency is that no factual detail whatsoever is provided about what incidents, conduct or events might arguably be assessed as unfair, unjust or unconscionable dealings.

10 Rolled-up jargon is deployed in the statutory declaration, but without providing the underlying facts to explain what conduct has occurred that might arguably amount to an unfair, unjust or unconscionable dealing. The required underlying facts are simply absent in Mr Prater's statutory declaration.

11 Furthermore, it is not at all clear what (equitable or legal) interest in his own Nannup property Mr Prater asserts, in order to sustain his caveat. I would mention Murphy J's recent decision in McCourt v National Australia Bank [2010] WASC 121 [8] - [12], where his Honour addressed the issue (which is not free from doubt) as to whether or not a party who is a fee simple owner of land (as Mr Prater is) may also hold a separate interest in their own land sufficient to sustain a caveat. Murphy J in McCourt, by reference to the decision of Needham J in Sinclair v Hope Investments Pty Ltd [1982] 2 NSWLR 870, observed:

That was a case in which the registered proprietor contended that it had an equitable interest in its own property to prevent the transfer of the property by a mortgagee to a third party where the mortgagee was (allegedly) fraudulently exercising its power of sale. The decision was predicated on an assumption that the registered proprietor could establish an arguable case in that regard.

12 Murphy J mentioned conflicting lines of case authority as to whether or not a registered proprietor could establish an arguable equitable interest, referring to Swanston Mortgage Pty Ltd v Trepan Investments Pty Ltd [1994] VicRp 47; [1994] 1 VR 672:

the Victorian Court of Appeal held that whilst a mortgagor had an equity to have set aside a sale effected by a mortgagee in consequence of a fraudulent exercise of power, until the equity had been established in curial proceedings, the mortgagor had no equitable interest in the land and no right to lodge a caveat in respect of it.

13 That Victorian decision in turn has been the subject of criticism, as Murphy J explained at [11].

14 What emerges, however, is that if there is to be an argument raised here by Mr Prater as to the existence of an interest in his own land sufficient to sustain a caveat, that argument would need to descend to at least providing some minimal factual detail, in respect of the mortgagee's allegedly questionable exercise of its power of sale in respect of Mr Prater's Nannup property. It is manifest from the statutory declaration of Mr Prater that this has not occurred.

15 Therefore, on what is before me, there is no basis to sustain even an argument for Mr Prater that in going about the exercise its powers of sale, the mortgagee in some way has not exercised its powers properly, or regularly.

16 So there is a second fundamental difficulty in terms of a complete absence of relevant facts within the statutory declaration of Mr Prater supporting his caveat - and which I only saw courtesy of Ms De Silva's affidavit - to sustain an argument for Mr Prater as regards an arguable caveatable interest, aside from his position as the fee simple proprietor of the Nannup land.

17 But there is a third and even greater obstacle, which I identified with Mr Prater. As a consequence of what would appear to be earlier civil proceedings taken against him as a defendant in Supreme Court action CIV 1392 of 2009 by Permanent Mortgages Pty Ltd, there is a subsisting judgment of this court, albeit a default judgment, obtained against Mr Prater on 28 May of 2009. The judgment against Mr Prater obtained by his mortgagee, Permanent Mortgages Pty Ltd, are in these terms:

(1) No appearance having been entered by the defendants herein leave is granted to the plaintiff pursuant to Order 62A rule 4(1) to enter judgment in the terms set out hereunder.

(2) The defendants within 28 days of service of this judgment on them deliver up to the plaintiff vacant possession of the properties at lot 67 and 92 Warren Road, Nannup in the State of Western Australia being Lots 67 and 68 on Deposited Plan 222884 and being the whole of the land comprised in Certificate of Title Volume 1093 Folio 559.

(3) The defendants pay to the plaintiff the sum of $1,044,046.24, being the principal and interest due under the mortgage to today's date.

18 That default judgment has been extant since 28 May 2009. On its face, it is a valid, enforceable and fully efficacious judgment. Unless and until it is set aside, order 2 as to possession of the Nannup property binds Mr Prater, as indeed it binds me.

19 For Mr Prater to seek to contend today that he may have some argument by which to somehow undermine the loan agreement by which he borrowed funds in the order of $1 million from Permanent Mortgages Pty Ltd, now the subject of judgment, or seek to thwart the mortgagee's rights to possession of his Nannup property under the terms of the judgment, is simply an untenable avenue while the judgment lies undisturbed. The door is firmly shut against Mr Prater until the default judgment of 28 May 2009 against him is overturned, reversed, or set aside.

20 The extension of caveat application raises the issue of Mr Prater making, in effect, in these proceedings, a collateral attack against a subsisting judgment. The orders which are now sought by Mr Prater in terms of extending his caveat under s 138C(1) are inconsistent with the first defendant's possession rights - which are the subject of the judgment, entitling Mr Prater's mortgagee, the first defendant, to possession of Mr Prater's land. At the risk of repetition, I will observe once again that there is no factual material at all before me now to suggest that the first defendant, as mortgagee in possession of Mr Prater's Nannup land, has in any way acted improperly, unconscientiously or irregularly in the exercise of its powers of sale.

21 I also discern, reading Ms De Silva's opposing affidavit, that a contract of sale has now been entered into by the mortgagee with a third party purchaser to sell the Nannup land, the subject of Mr Prater's caveat sought to be extended. Settlement on that contract of sale is now imminent. No factual basis sufficient to interrupt a balance of convenience allowing that sale to proceed to settlement has emerged on this application.

22 Mr Prater's caveat will lapse in accordance with the formal notice which has been issued to him, pursuant to s 138B(2) of the Transfer of Land Act, unless this court makes an order extending the duration of the caveat under s 138C(1). But in order for the court to grant such an extension, Mr Prater, as the applicant seeking the extension, carries an obligation to put forward at least a modicum of factual material which could arguably justify the caveat being extended - by reason of he, as caveator, holding a sufficient interest in the property the subject of the caveat sought to be extended. That has simply not happened.

23 There are insurmountable obstacles here to me finding even an argument as to an interest in land sufficient to provide the necessary underlying foundation to justify extending Mr Prater's caveat L327715. I have no option other than to refuse Mr Prater's application to extend his caveat.