On the evening of 5 July, I gave a paper entitled “Questionable Caveats – To lodge or not to lodge?” at Leo Cussen Centre for Law. Over 50 persons attended in weather mildly reminiscent of that described in Love’s Labour’s Lost in words commencing “When icicles hang by the wall”. This indicated the concern in the Victorian profession about this topic. I intend to deal with Victorian cases as they are decided, but commence with the basic tests under the Transfer of Land Act 1958 s. 90(3).
1. Power to lodge a caveat over land is given by s. 89(1) which materially provides –
“(1) Any person claiming any estate or interest in land under any unregistered instrument or dealing or by devolution in law or otherwise or his agent may lodge with the Registrar a caveat in an appropriate approved form forbidding the registration of any person as transferee or proprietor of and of any instrument affecting such estate or interest either absolutely or conditionally ….”
A caveat as a “statutory injunction to keep the property in statu quo until the court has an opportunity of discovering what are the rights of the parties” (Kerabee Park Pty Ltd v Daley  2 NSWLR 222 at 228). A caveat or failure to caveat may well also affect priorities between unregistered interests: eg Mimi v Millennium Developments Pty Ltd  VSC 260 at .
2. The methods of instigating removal of caveats: to lodge certain transfers or dealings for registration (ss. 90(1), (2)); to apply to the Registrar for a notice requiring the caveator to commence proceedings (s. 89A); or to proceed in the Supreme Court or County Court against the caveator for removal, the Court being empowered to make such order as it thinks fit. This blog will deal with s. 90(3) as cases under s. 89A tend to resolve into full trials in which the caveat issue recedes.
3. In Nicholas Olandezos v Bhatha  VSC 234 at  Derham AsJ sets out the summary of principles by Elliott J in Sylina v Solanki  VSC 2 at . These with embellishment are:
(1) The court’s power under s. 90(3) is discretionary.
(2) A caveator bears the onus of establishing a serious question to be tried that it has the “estate or interest in land” claimed (Elliott J). Derham AsJ expands this  by noting that the “serious question to be tried test” was often used interchangeably with the “prima facie case test” and that the latter was preferable: this did not mean that caveators must show that it was more probable than not that at trial they would succeed, but must show a prima facie case with sufficient likelihood of success to justify the maintenance of the caveat and the preservation of the status quo pending trial. As to the interplay between serious question and prima facie case see further Nicholas Olandezos at  and the foundational case of Piroshenko v Grojsman  VSC 240 at  (Warren CJ). Ordinarily the final determination of disputed factual issues or of the claimed interest is unnecessary and inappropriate; but that an exception may be where there is no substantial issue of fact: Nicholas Olandezos at .
(3) The caveator must also establish that the balance of convenience favours the maintenance of the caveat until trial (Elliott J). The court (as in an interlocutory injunction case) takes whichever course appears to carry the lower risk of injustice if it should turn out to have been “wrong”, in the sense of maintaining the caveat in favour of a party who fails to establish his right at trial, or in removing the caveat of a party who succeeds at trial: Piroshenko.
(4) The stronger the case in establishing a serious question/prima facie case, the more readily the balance of convenience might be satisfied. It is sufficient that the caveator show a sufficient likelihood of success that, in the circumstances, justifies the practical effect which the caveat will have on the ability of the registered proprietor to deal with the property in question in accordance with its normal proprietary rights (Elliott J).
Finally, in Saafin Constructions Pty Ltd v Vidak & Anor  VSC 441 at  Warren CJ stated that the two-stage test (ie in (2) and (3) above) “informs, but does not subsume, the exercise of the Court’s discretion”.
Philip. H. Barton
Owen Dixon Chambers West
Wednesday, September 20, 2017