National Australia Bank Limited v Nilsen & Anor  VSC 368
(2 July 2018) Kennedy J.
The chronology was –
- The plaintiff had a registered mortgage over land of which the registered proprietor was Petrina Pavlic.
- She died, her son William was her sole beneficiary, he obtained letters of administration and a new loan from the plaintiff with the mortgage as security. He defaulted and became bankrupt.
- The first defendant, who was William’s current or former de facto partner, caveated claiming an implied, resulting or constructive trust.
- In 2017 a consent order of the Family Court was made between her, William and his trustee in bankruptcy providing for the transfer of the property to her contemporaneously with payment of $550,000 by her by 5 October 2017, with liberty to the trustee to sell in default of such payment. No payment was made.
- The plaintiff initiated a sale of the land to a third party with settlement due in May 2018 but subsequently extended to 4 July 2018
- On 4 June 2018 a judge ordered that caveat be removed.
- On 8 June 2018 the defendant again caveated on the same grounds as the first caveat.
- The plaintiff commenced further removal proceedings under the Transfer of Land Act s. 90(3). The defendant argued that she had an interest pursuant to the Family Court Order which was different from, and arose subsequent to, the interest relied upon for the first caveat (which had been based on alleged contributions). Shealleged, without evidence, that the trustee in bankruptcy had agreed to extend the time for her to pay the money to obtain the land and that this ongoing indulgence gave rise to a trust.
Kennedy J ordered removal of the caveat, holding –
- There was no serious question to be tried. The Family Court order did not create any interest in the land in circumstances where no money had been paid. In any event the bank’s interest as registered mortgagee defeated any unregistered interest. -
- The following balance of convenience factors also favoured removal –
- The interests of the innocent purchaser;
- Delay in disposing of the property;
- The caveator had not commenced proceedings to substantiate her claim;
- If she had a cause of action the caveator could sue the bank for damages;
- The caveator had not paid the money ordered by the Family Court and there was no evidence of her capacity to do so;
- Sale was the best chance of reducing the amount of approximately $2.7 m. owed. -
- The plaintiff also argued that s. 91(4), which provided that a lapsed or removed caveat shall not be renewed by or on behalf of the same person in respect of the ‘same interest’, was breached. Her Honour did not deal finally with this argument but stated that the better view appeared to be that this section did not apply because the source of the second caveat was the Family Court Order which postdated the first caveat.
- As to her Honour’s statement that “The Family Court order did not create any interest in the land in circumstances where no money had been paid as provided for in that order” –
There is authority that a Family Court order can create an interest in land: Bell v Graham  VSC 142 at . However her Honour’s statement is authority for a different view if no money has been paid pursuant to the order. Presumably, however, if it had been paid the payor would have a lien giving rise to a caveatable interest: see eg SixBruce Pty Ltd v Milatos  VSC 784 (See my earlier blog here)
- The fact that the sources of the two caveats was different did not mean that they were not in respect of the same interest: Layrill Pty Ltd v Furlap Constructions Pty Ltd VSC 51 at .
Charges giving rise to caveatable interests.
The indirect ability of the Court of Appeal to remove a caveat.
A competition between cash in a solicitor’s bank account and a caveat supporting a charge for potentially a greater amount.
Sim Development Pty Ltd v Greenvale Property Group Pty Ltd  VSC 335 (16 June 2017) Sifris J.
Sim Development Pty Ltd v Greenvale Property Group Pty Ltd  VSCA 345 (17 November 2017) Tate and McLeish JJA.
The plaintiff/appellant (“Sim”) provided services under a consultancy and management agreement for a proposed development on land of which the defendant/respondent (“Greenvale”) was registered proprietor. Greenvale notified Sim of its intention to terminate the agreement at a specified date. Sim caveated to secure moneys allegedly owed under the agreement and sued to recover $380,280 and for other relief. Greenvale counterclaimed and commenced a separate proceeding under the TLA s. 90(3) seeking removal of the caveat.
Sifris J held Sim to be entitled to payment of $152,600.03 and Greenvale to be entitled to some payment on the counterclaim. His Honour dismissed the caveat proceeding on the ground of a clause providing that on termination of the agreement before completion of the project Greenvale gave Sim “the right to register a charge over the property … and any other property owned by [Greenvale] and such charge is to be applied to the payment in full of any money owed to [Sim Development]”. Sifris J held that the contractual right to register a charge, in the event of termination, supported the existence of a caveatable interest; and while the clause did not specifically adopt the language of lodging a caveat, its reference to the concept of registration, and lack of sufficient indication to the contrary, supported the conclusion that it gave rise to a caveatable interest.
Sim applied for leave to appeal, seeking orders in substance as sought at first instance. Greenvale did not seek leave to appeal against the caveat proceeding order. However, desiring to be rid of the caveat, it made an interlocutory application in the application by Sim for leave to appeal, seeking an order directing Sim to withdraw its caveat on Greenvale paying $152,600.03 into an interest-bearing account of Greenvale’s solicitors and undertaking not to sell the land pending determination of the application for leave to appeal and any appeal.
Tate and McLeish JJA held:
- The application by Greenvale was competent, being permitted by s. 10(3) of the Supreme Court Act 1986.
- Sim would not be ordered to withdraw its caveat, because:
- the caveat was supported by its right under the agreement to a charge over the land. The withdrawal of the caveat would in effect remove the protection of the security interest the parties provided for in the agreement;
- if Sim succeeded in any appeal Greenvale may be ordered to pay $380,280. In those circumstances, the amount offered, $152,600.03, would be inadequate and Sim would have lost the protection of the caveat supporting its entitlement to monies owed. This could render any appeal effectively nugatory;
- Greenvale had not adequately specified how the caveat would impede the development’s progress. Accordingly, applying a test of balance of convenience, Sim had discharged its onus of establishing that the prejudice that would flow to it from an order directing it to withdraw the caveat outweighed any demonstrable prejudice to Greenvale.
Commentary: A novel case of a creative attempt to get rid of a caveat pending an appeal. As to caveats supporting charges see also: Evans v Advertising Department Pty Ltd  VSC 587; West Coast Developments Pty Ltd v Lehmann  VSC 617, also  VSC 293.
Tawafi v Weil  VSC 643 (21 August 2017) Digby J.
Section 90(1)(e) of the Transfer of Land Act 1958 provides that, subject to certain exceptions, a caveat lapses as to land affected by a transfer upon the expiration of thirty days after notice by the Registrar that a transfer has been lodged for registration. If within this period the caveator appears before a court and gives an undertaking or security the court may direct the Registrar to delay registration for a further period, or may make such other order as is just (s. 90(2)). If the Registrar is of opinion that the doing of any act is necessary or desirable, then, if the act is not done within such time as the Registrar allows, the Registrar may refuse to proceed with any registration (s. 105(a)).
The timeline was –
11 April 2017 Plaintiff enters contract to purchase certain land.
30 May Defendant caveats on the grounds of “part performed oral agreement” et cetera with the registered proprietor.
26 June Settlement of the purchase without the caveat being removed.
28 June (about) Lodgment of the instrument of transfer (Transfer) for registration.
29 June Registrar notifies caveator that pursuant to s. 90(1) the caveat would lapse on 31 July unless the caveator obtained an order pursuant to s. 90(2). No order was obtained.
2 August Caveator commences a proceeding against registered proprietor inter alia claiming declarations of a proprietary interest in the land and for other relief in substance supporting the existence of the caveat and preventing registration of the Transfer. An
agreement with the registered proprietor proprietor in early 2016 is alleged whereby the caveator agreed to lend $86,000 on security of this land, followed by that loan. The second defendant was the conveyancer acting for both sides and the third defendant was the purchaser.
3 August The Registrar accordingly issues a Notice of Action prohibiting registration of further dealings until withdrawal of that notice or further order.
16 August Purchaser files Originating Motion seeking order for registration and Summons for dismissal of the caveator’s proceeding.
Digby J ordered the Registrar to register the Transfer and remove the Notice of Action. His Honour reasoned –
- The counting of days under s. 90(1) commenced from 30 June, being the day after the notice, thirty days elapsed on Sunday 30 July, and so the expiry date was 31 July. Accordingly the caveator was out of time. It was irrelevant that s. 105(1) might have achieved a similar result in suspending the progress of registration. -
- The judicial approach to caveat removal applications was analogous to that in applications for injunction, ie the burden of proving the caveatable proprietary interest and maintaining the caveat was upon the caveator who must also establish on the balance of convenience that the caveat should be maintained until the trial of the contested proprietary interest. However, because the caveat had lapsed this case was not the usual caveat removal contest. -
- In any event the caveator had not raised a sufficient prima facie case of or arguable triable issue concerning the asserted proprietary interest. Further, the balance of convenience heavily favoured the purchaser because: the asserted triable issue was palpably weak; and the purchaser would be prejudiced by deferral of registration, particularly having entered a building contract to improve the property which could not be financed until the financier could register a mortgage. , -
- Indemnity costs were awarded against the caveator, particularly because of her very weak case, the purchaser having previously asked the caveator in writing to identify an arguable caveatable interest, without proper response, and given appropriate warning to the caveator.  –