Secure Funding Pty Ltd v Michell in his capacity as trustee of Jeremy Rowell & Ors, [2026] VSC 398, Gorton J.

This case concerns a contest under the Transfer of Land Act s. 90(3) between caveators and a registered mortgagee.  It is interesting because Gorton J. states the criteria for maintenance of the caveats in terms similar to those for an application for an injunction, in particular in stressing whether damages are an adequate remedy.   Although the relationship between injunctions and caveats is close (eg a caveat has been called “a statutory injunction”: Kerabee Park Pty Ltd v Daley [1978] 2 NSWLR 222 at 228 quoted in Nicholas Olandezos v Bhatha & Ors [2017] VSC 234 at [23]) courts generally state the caveat test in a fashion more distinct from the test for obtaining an injunction (eg Nicholas Olandezos at [16]-[18] per Derham AsJ, quoting Sylina v Solanki [2014] VSC 2 at [43] per Elliott J.; Chan & Anor v Liu & Anor [2020] VSCA 28 at [42], [43], [75], [76]).

Further, his Honour states that the caveator was obliged to establish a serious issue to be tried of the caveator having the interest in land claimed, and in so doing appears to prefer this test to that of the caveator having to establish 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 (espoused for example in Nicholas Olandezos at [17] and footnote 27 and the cases cited therein).

 The facts were –

• Torbeckin Pty Ltd (Torbeckin) was the registered proprietor of land. In 2021 it borrowed monies from the plaintiff secured by a mortgage subsequently registered as a first mortgage.  The second defendant (Rowell) was a director of Torbeckin from May 2022 to October 2025.   The third defendant (Domino) was a current director of Torbeckin.
• Torbeckin defaulted in making mortgage repayments and in 2023 went into liquidation.
• On 3 October 2024 Rowell caveated the property on the grounds of an implied, resulting or constructive trust. Later that month he was bankrupted.
• In April 2026 the plaintiff, pursuant to its powers as mortgagee, entered into a contract of sale of the property, initially due to settle on 18 June.
• In May 2026 Domino caveated over the property claiming an interest as chargee on the ground of “exoneration”.
• The plaintiff applied under the Transfer of Land Act s. 90(3) for removal of the caveats. It also sought orders restraining the caveators from lodging further caveats.

Gorton J. ordered that the caveats be removed and that the caveators be restrained from caveating further, holding –

1. On the hearing of an application under s. 90(3) a caveator was obliged to justify the retention of the caveat as if the caveator was applying for an interlocutory injunction to prevent the registration of the transfer in question. Accordingly the caveator was obliged to establish a serious issue to be tried of having the interest in land claimed which took priority over the interests of the registered mortgagee, and that the balance of convenience favoured the maintenance of the caveat.  In reality, the two tests converged: was there a sufficient likelihood of success in establishing an interest in the property to justify in the circumstances the preservation of the status quo pending trial?   Whether it be a separate test, or part of the assessment of the balance of convenience, the question as to whether damages would be an adequate remedy was also a relevant consideration. [12], [13], [37], [43]

2. Rowell’s caveat would be removed because:

• • there was no real prospect of him establishing that he had an equitable interest in the property rather than merely being a creditor of Torbeckin; [29(a)], [33]
  • if he did have this interest there was no real prospect of it being prior to the plaintiff’s interest. To gain priority he must establish, at the very least, that the registered mortgagee had notice of his equitable interest before registration so that some in personam right could be asserted against it; [29(b)], [38], [39], [42]
  • if Rowell had established (a) and (b) that interest now vested in his trustee in bankruptcy, and so he had no real prospect of obtaining an injunction to restrain registration of the transfer on the ground that this registration would result in him losing his interest, because this registration would not affect an interest held by him. (However, as to standing, it was arguable that the implications of bankruptcy may well affect whether a bankrupt could succeed in resisting the application, rather than whether a bankrupt could respond to the application.  It might, theoretically, be possible, for example, that a supposedly-bankrupt caveator might seek to establish the fact of not being bankrupt, or that the interest claimed had not vested in the trustee or was exempt property); [16], [19], [20], ]23], [29(c)], [43]
  • His Honour was not satisfied that damages would not be an adequate remedy to any claim by the caveator against the plaintiff; [29(d)], [46]
  • the balance of convenience favoured it because of: the lack of a strong case that the he had proprietary interest prior to that of the plaintiff; Rowell’s bankruptcy; and the likely ability of the plaintiff to meet any damages ordered. [29(e)], [52]

3. A guarantor who discharged a principal’s debt had a right that might be called a right of “exoneration” from the principal, but that only created a right to reimbursement for the moneys paid and not an interest in the principal’s property, let alone one with priority over a registered mortgage. [32]

4. Domino’s caveat would be removed for the same reasons as those contained in paragraphs 2(a), (b), (d) and (e) above. [29(a)], [29(b)], [29(d)], [29(e)], [33], [38], [39], [42], [46]

5. The fact that another caveator had withdrawn that caveat pursuant to a private arrangement, or that no application had been made to remove other caveats, was irrelevant. [25]-[27]

6. The source of the power to restrain lodgment of further caveats was found both in the Supreme Court Act 1986 s. 37 and in the Transfer of Land Act 1958 s. 90(3). [11]

7. There was a real risk that, unless restrained, the caveators would lodge or seek to lodge further caveats to forestall settlement of the sale. The making of an injunction would cause no hardship, or no unacceptable hardship, to them and accordingly, the plaintiff having given the undertaking as to damages, they would be enjoined from lodging any caveats, or causing anyone else to lodge any caveats, over the property pending registration of the transfer. [54]-[56], [57(c)]

 

Philip H. Barton

Owen Dixon Chambers West

Thursday, November 5, 2026