Background
Equity-One Mortgage Fund Limited lent $780,000 to a company controlled by Christopher Edwards. His wife, Albette Edwards, guaranteed the loan and mortgaged her Richmond property as security. Following default, the mortgagee entered possession, marketed the property, and exchanged a contract to sell it for $1.235 million.
Ms Edwards lodged a caveat claiming an equitable interest as registered proprietor, alleging the mortgagee had sold at an undervalue contrary to s 111A of the Conveyancing Act 1919 (NSW). She relied on a valuation of $1.6 million, criticised the marketing campaign, and said she might refinance. The purchasers had issued a notice to complete, with settlement due the following day.
The Court’s Holding
Slattery J ordered removal of the caveat and restrained Ms Edwards from lodging further caveats over the title. Although it was arguable that an alleged breach of a mortgagee’s statutory sale duty was only a mere equity rather than a caveatable interest, the Court addressed the practical issue as if Ms Edwards sought an interlocutory injunction stopping completion.
There was a serious question to be tried because the valuation evidence provided some basis for alleging an undervalue. But the balance of convenience decisively favoured allowing the sale to proceed. Section 111A(4) preserves a purchaser’s title and ordinarily leaves a mortgagor with damages against the mortgagee. Equity-One appeared financially capable of meeting such a claim; Ms Edwards had not brought the secured debt into court or provided persuasive refinancing evidence; and an injunction could harm the unjoined purchasers and jeopardise the existing sale.
Key Takeaways
- An arguable claim that a mortgagee sold below market value will not necessarily justify stopping completion of a sale.
- Section 111A of the Conveyancing Act generally channels a mortgagee’s breach of sale duty into damages, without impeaching the purchaser’s title.
- A mortgagor seeking equitable relief will ordinarily need to address the secured debt and provide cogent evidence of refinancing or another basis for preserving the property.
Why It Matters
The decision illustrates the Court’s willingness to look beyond the form of a caveat dispute and determine whether the owner could actually obtain injunctive relief against a mortgagee sale. A valuation dispute alone may establish an arguable case, but it will not outweigh an adequate damages remedy, unpaid secured debt, uncertain refinancing, and the prejudice caused to committed purchasers.