For many business and property owners, dealing with a caveat can be confusing and stressful. A common misconception is that if someone owes you money, you automatically have the right to lodge a caveat over their property. This is not the case, unless there is a written agreement which specifically charges the assets and property of the person who owes the money. You also need to be mindful of who has entered into the agreement – the company or the director.

At Madgwicks, we are often approached by clients seeking to remove caveats that should never have been lodged in the first place.

Application to the Land Use Victoria

If the matter is not urgent there is an application which can be made to the Registrar of Titles through Land Use Victoria which will result in either:

• the caveat lapsing and being removed; or
• the caveator informing the Registrar of Titles that there are Court proceedings on foot which deal with the caveat – in this instance the Registrar of Titles will not remove the caveat unless ordered to do so by the Court (or it is withdrawn by the caveator).

Application to the Court

If the matter is urgent, then the landowner can apply to the Court to have the caveat removed. In such an application the Court considers:

(a) whether the caveator has established a prima facie case to be tried – on the evidence before the Court whether the caveator has any rights in the land (legal or equitable); and

(b) if (a) is established, then the balance of convenience favours the maintenance of the caveat until a trial of the matter.

A Supreme Court example

An example in the Supreme Court of Victoria is where a caveat was lodged over a property by a company (Insert Pty Ltd (Insert)) claiming an interest as a purchaser pursuant to the contract with the landowner. The landowner had entered into another contract of sale with a third party.

The facts were as follows:

• A contract of sale was entered into the director of Insert and the landowner with Insert becoming the nominee – this contract was rescinded.
• After the contract was rescinded, there were extensive discussions between the parties and their agents, solicitors and conveyancers.

Ultimately the Court found that there was no agreement and no interest in the property by Insert or its director for reasons which included the following:

• there was email evidence which specifically stated that an enforceable agreement would occur unless contracts were executed and a 5% deposit payable by the purchaser – this didn’t occur;
• an action for a sale of land cannot be enforced unless an agreement is signed in writing;
• by opening a PEXA workspace (which invitation was not accepted by the landowner) and obtaining a mortgage if settlement went through, were not acts of part performance of an agreement – merely the preparation if an agreement was reached; and
• the balance of convenience favoured the removal of the caveat – there was an innocent third-party purchaser, and the caveator and its director had a lack of urgency in claiming their right of specific performance under the purported agreement.

The Court ordered that the caveat be removed.

Lessons

The example above would have resulted in a significant cost order against the caveator.

As this case demonstrates, under the right circumstances, the Court will remove a caveat urgently.

If you are dealing with a caveat issue, whether lodging, defending or seeking removal, obtaining timely legal advice is critical.

1 Wright v Insert Pty Ltd [2022] VSC 1

For further information or assistance contact Catherine Ballantyne, Principal on +61 3 9242 4766 and email catherine.ballantyne@madgwicks.com.au

The information provided in this article is general in nature and cannot be relied on as legal advice, nor does it create an engagement. Please contact one our lawyers listed above for advice about your specific situation.