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© Copyright 2017 - Marcus & Marcus

A Note on Caveats

In Lawrence & Hanson Group Pty Ltd v Young [2017] VSCA 172, the Court of Appeal dealt with an appeal from a caveator which sought to quash a decision by the trial judge to remove its caveat registered on jointly-owned property. The caveatable interest arose by virtue of a charging provision contained in an agreement entered into by the caveator and one of the joint proprietor of the property, Mr Young (but not entered into by his wife, Mrs Young, the other joint proprietor). There were two major issues in this case.

Firstly, whether the form of the caveat, as drafted, had the legal effect of restricting Mrs Young (the non‑charging joint proprietor) from dealing with her interest in the property. Second, the correctness of the learned trial judge’s assessment of the parties’ interests and the corresponding balance of convenience relating to their respective prejudices.

In the first instance, the trial judge ordered that the caveat be removed. The removal of caveat would enable the joint proprietors to refinance their first mortgage and gain access to greater funds to be applied to a number of substantial debtors, but (somewhat surprisingly) not the appellant.

 

On appeal, Redlich and Kyrou JJA, and Keogh AJA determined that the drafting of the caveat did contain sufficient particularity to restrict the operation of the caveat to only the proprietary interest in the land of the charging joint proprietor, thereby limiting the scope of the caveat to Mr Young, and not infringing on his wife’s rights. This finding comes despite the fact that the caveat appeared to be in a common, almost generic, form. This may be an indicator of how courts will interpret standard caveats in future cases.

 

It was also determined that the prejudice to the caveator arising out of the removal of the caveat actually outweighed the prejudice to the joint proprietors, and that the subrogation of the caveat or is interest to that of other debtors would be inappropriate, and therefore the balance of convenience favoured a finding that the caveat not be removed.

 

Whilst the Court of Appeal dealt with some interesting submissions based on New South Wales cases relating to similar caveat applications, it is clear that there is a reluctance to subrogate or ignore a properly-registered caveat based on a legitimate caveatable interest.

 

Nevertheless, it is always important to seek legal advice to ensure that a caveat is properly drafted before it is registered against a property to ensure that the caveat is not susceptible to judicial criticism and removal. Similarly, if in the course of business you are signing guarantees or agreements that include charging clauses, or if a caveat has been lodged against your property, it is important that you seek legal advice to ensure that you are aware of the legal ramifications and whether or not you are entitled to have any such caveats removed.

 

Our firm is able to assist you in lodging or applying to remove caveats. If you require assistance, or wish to discuss this article, please do not hesitate to contact us.

Marcus & Marcus - 2 October 2017