On 22 March 2012, the Planning and Environment Court of Queensland (Court) granted the Gold Coast City Council (the Council) an injunction restraining the mortgagee in possession from exercising its power of sale over Lot 15 Caballo Road, Guanaba (Guanaba property) until further notice.
An auction for the sale of the Guanaba property was scheduled for 31 March 2012. The Information Memorandum stated:
The subject property is 65.11 Hectares in size (160 acres approx) with a Rural Zoning and located on Caballo Road at Guanaba. The property is fairly heavily timbered and quite steep in parts, however there are a couple of areas where a home could be built with quite fantastic views, particularly from the peaks on the ridge which overlooks the coast.
To complicate matters, the Guanaba property was subject to a development approval, which showed Lot 15 as park on relevant plans. Condition 22 of the approval stated:
The land shown as park on the plan of subdivision shall be dedicated to the Crown at the applicant’s expense.
The Council did not make any attempts to enforce the development condition until it became aware that the Guanaba property was advertised for sale (four years later).
The Court acknowledged the difficult position of the mortgagee in possession, but preferred that the fate of the Guanaba property be decided before a sale to a third party. It warned that if future purchasers did not proceed with the development after Guanaba property was sold for a nominal amount, the mortgagee in possession would risk not discharging its obligation to take reasonable care to ensure that the property is sold at the market value.
The decision of the Court in this case of Gold Coast City Council v Crest Hill Pastoral Company Pty Ltd & Ors  QPEC 025 is a timely reminder for mortgagees and receivers exercising a power of sale. It is important that development approvals are reviewed, to ensure that the necessary development conditions have been complied with and that appropriate disclosure is made to potential buyers.
T: +61 (0)7 3135 0648