By Russell Cocks, Solicitor
First published in the Law Institute Journal
Lodging a caveat in Victoria is intended to be, and in fact is, reasonably simple. As with all Land Use Victoria forms the preparation of the form of caveat has been changed to accommodate electronic conveyancing and the universal obligation to verify the identity of participants in the conveyancing process applies to the caveator. Whether the purpose of the caveat is to operate as a notice to all of the world of the caveator’s claim or as an entreaty to the Registrar not to register a competing dealing without notice to the caveator is a question that has occupied the attention of the courts on a number of occasions but the fact is, irrespective of the law, the caveat does achieve both of those outcomes.
Until electronic lodging of dealings becomes compulsory (presently planned for August 2018) it is still possible to lodge a paper caveat, but the preparation of the document is largely an on-line process conducted on the Land Use Victoria website and the form has been standardised and options provided for each of the categories to be filled in on the form. From there the caveat is either lodged electronically through PEXA or is printed and lodged as a paper dealing.
The fundamental requirement for the lodging of a caveat is that the caveator must establish, for the purposes of recording of the caveat on the Register, grounds of claim. These are divided into three categories:
- statement of claim;
- estate or interest; and
- prohibition.
Each caveat must address each of these three categories but only ONE of the various options available in respect of each category may be adopted for each category.
Statement of claim
A common caveat is a caveat lodged to protect the interest of a purchaser under a contract of sale. The drop-down menu includes an option to complete details of the parties to the contract and the date of the contract.
Other options include caveats based on mortgages, charges, leases, trusts and some more obtuse relationships, including an option for the registered proprietor ‘to prevent improper dealings’.
Estate or interest
Like the statement of claim category, the estate or interest claimed may be selected from a wide variety of options including a freehold estate, a leasehold estate, an interest as mortgagee, an interest as charge, even an interest arising pursuant to a restrictive covenant or easement.
Prohibition
Unlike the other two categories, prohibition is limited to 5 options. Traditionally the ‘absolutely’ option is commonly used but there are other, more limited, options such as ‘an interest that affects my interest’ or ‘unless I consent’.
Whilst a caveat is a reasonably simple form to complete and lodge, that does not mean that care should not be exercised in its preparation. A poorly worded caveat may fall foul of judicial analysis and be removed pursuant to s 90(3) Transfer of Land Act 1958, notwithstanding a discretionary power to amend a defective caveat. In Percy & Michele Pty Ltd v Gangemi & Anor [2010] VSC 530 a caveat that claimed ‘an estate in fee simple’ was removed because the appropriate claim was ‘an equitable interest as chargee’ and the Court was not prepared to allow an amendment. Equally, a caveat claiming ‘an interest as chargee’ based on an alleged trust (which claim, if proven, would justify a claim of an ‘an estate in fee simple’) was removed in Wells v Rouse & Ors [2015] VSC 533.
Care must also be exercised in relation to the prohibition. It is common for an ‘absolute’ prohibition to be claimed, indeed this situation was described as the default position in Sim Development Pty Ltd v Greenvale Property Group Pty Ltd [2017] VSC 335, but given the clear choices that are now presented by the on-line form a Court may refuse to allow amendment of an obviously inappropriate ‘absolute’ prohibition.
Joint registered proprietors also present a challenge to a caveator. In Lawrence & Hanson Group Pty Ltd v Young [2017] VSCA 172 an ‘absolute’ prohibition based on a charge given by one of the joint proprietors resulted in the caveat being defeated at first instance as it was held to unjustifiably encumber the interest of the other joint proprietor. However, the Court of Appeal upheld the caveat as the Court concluded that the wording of the interest claimed was sufficiently clear to be limited to encumbering the interest of the joint proprietor who gave the charge.
Tip Box
Whilst written for Victoria this article has interest and relevance for practitioners in all states.