Today’s blog is the first of six brief entries discussing recent Supreme Court cases.
Whether a purchaser of a lot in land yet to be subdivided, who caveats over all the land, can, after subdivision and transfer to it of the lot sold, retain the caveat over the rest of the land.
Bisognin & Anor v Hera Project Pty Ltd & Anor  VSC 783 (15 December 2017) Daly AsJ.
The chronology was –
13 March 2015 Plaintiffs enter contract to sell the southern portion (“southern lot”) of their soon to be subdivided land to the first defendant, retaining the northern portion (“northern lot”).
4 March 2016 Sloss J holds the vendors contractually required to undertake water supply and sewerage facility works. Works remain unperformed.
3 June 2016 Purchaser caveats claiming an estate in fee simple over the whole of the land, the interest claimed being as purchaser.
16 December 2016 Court of Appeal holds the purchaser contractually required to pay fees (the “bonds”) on the vendors’ behalf to Water Authorities. Payments subsequently made.
22 May 2017 Riordan J orders specific performance of the contract. Vendors appeal seeking relief including recovery of southern lot. Appeal subsequently heard but judgment reserved.
15 September 2017 Registration of plan of subdivision creating both lots.
Caveat remains registered over both.
2 October 2017 Settlement of sale of southern lot.
27 October 2017 Application to remove caveat under Transfer of Land Act s. 90(3).
The purchaser argued that: the caveat was lodged to secure the vendors’ performance of their outstanding contractual obligations; by not undertaking the works the vendors had taken the benefit of the bonds; if the vendors did undertake the works and the bonds were refunded the vendors were required to repay the bonds to the purchaser, and this obligation created a lien or a resulting or constructive trust.
Daly AsJ removed the caveat, holding –
- A purchaser of land anticipated to be subdivided could caveat over the whole of the land before subdivision, and over the purchased land after subdivision. But on transfer of a subdivided lot the purchaser retained no interest in the unsold lot.
- The purchaser was in effect seeking to use the unsold lot as security for contractual obligations: but, absent a contractual term creating a charge, continuing actual or contingent liabilities of the vendor did not create a caveatable interest in the land retained.
- Referring to authority that a purchaser had a lien over the property to secure repayment of the deposit if the contract ended, even if the vendors’ contingent liability to repay the bonds automatically created a lien there was no serious question to be tried that this created the estate or interest claimed in the caveat.