LWZ223 Property Law Topic 11–Caveats and Unregistered Interests Part one of lecture delivered 8 May 2017

Readings Casebook (Hepburn) – Chapter 12 Land Title Act 2000 (NT), ss 137-147, 180-184

Overview of lecture Objectives of this lecture: Part one to define the interests a caveat may protect; Revision of equitable v legal interests Part Two – (week 11) to demonstrate an understanding of the application of priority rules between competing interests in Torrens land and the role of caveats in preserving priority. Revision of priority rules

Legal v equitable interests Common Law interests in land are ‘in rem’ and hence can be enforced against the world and included the remedy of seeking possession Originally the Equitable remedy for ‘uses’ or ‘trusts’ were enforceable only ‘in personam’ and did no lead to the recovery of the property Later beneficiaries’ rights improved to point where the beneficiary of the trust could enforce against all third parties except a bona fide purchaser for value of the legal estate without notice of the existence of the use/trust

Equitable and Legal Interests - differences Enforceability - Equitable title is more vulnerable because it will be postponed in favour of bona fide purchaser for value without notice of the equitable interest Bundle of rights of equitable interest holder differs from legal interest holder. The right to possession will reside with the legal interest holder unless a court orders otherwise see Hope JA in DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) [1980] 1 NSWLR 510 at 519 (p140 of text) Not all equitable title will constitute ownership. Some equitable interests confer ‘in personam’ rights See Kearney J in Burns Philp Trustee Co Ltd v Viney [1981] 2 NSWLR 216 at 223 Equitable interests may arise where expressly intended or may be imposed by the court as a remedial measure. Muschinski v Dodds (1985) 160 CLR 583 at 9

What is a caveat? A caveat is a document which when lodged in respect to a particular parcel of land which prevents any registration of any dealings relating to that land which are inconsistent with the interest claimed in the caveat. It is likened to a statutory injunction. A caveat gives notice of the interest claimed to anyone who searches the register, see: Butler v Fairclough (1917) 23 CLR 78; J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546; Black v Garnock (2007) 230 CLR 438.

Caveats and Caveatable Interests   Land Title Act 2000 (NT) ss 137-147, s 18 s137 Requirements of caveats (1) A caveat must be signed by or for the caveator. (2) The caveat must state: (a) the name of the caveator; (b) an address where documents can be served on the caveator; (c) unless the Registrar-General dispenses with it, the name and address of: (i) the registered owner of the lot affected by the caveat; and (ii) anyone else having the right to deal with the lot affected by the caveat; (d) the registered interest affected by the caveat; (e) the lot affected by the caveat or, if the caveat relates to only a part of a lot, a description of the affected part; (f) the interest claimed by the caveator; (g) the grounds on which the interest is claimed; and (h) the extent of the prohibitions as to dealings. (3) This section applies to all caveats under this Act.

Caveats and Caveatable Interests s138 Lodging a caveat (1) A caveat may be lodged by any of the following: (a) a person claiming an interest in a lot; (b) the Registrar-General under section 18; (c) the registered owner of the lot; (d) a person to whom an Australian court has ordered that an interest in a lot be transferred; (e) a person who has the benefit of a subsisting order of an Australian court in restraining a registered proprietor from dealing with a lot. Part 7 Other dealings Division 2 Caveats Land Title Act 61 (2) A caveat may be lodged by the agent of a person referred to in subsection (1)(a), (c), (d) or (e). s139 Notifying caveat The Registrar-General must give written notice of lodgement of a caveat to each person whose interest or whose right to registration of an instrument is affected by the caveat.

Caveats and Caveatable Interests s140 Effect of lodging caveat (1) A caveat lodged under this Act prevents registration of another instrument affecting the lot over which the caveat is lodged from the date and time endorsed by the Registrar-General on the caveat as the caveat's date and time of lodgement. (2) Subsection (1) has effect for a caveat until the caveat lapses or is cancelled, rejected, removed or withdrawn. (3) The lodging of a caveat does not prevent registration of the following: (a) an instrument specified in the caveat as an instrument to which the caveat does not apply; (b) an instrument if the caveator consents to it being registered; (c) an instrument executed by a mortgagee whose interest was registered before the caveat was lodged if: (i) the mortgagee has power under the mortgage to execute the instrument; and (ii) the caveator claims an interest in the lot as security for the payment of money or money's worth; (d) an instrument of transfer of mortgage executed by a mortgagee whose interest was registered before the caveat was lodged; (e) another interest that if it is registered will not affect the interest claimed by the caveator. (4) The exceptions in subsection (3)(c) and (d) do not apply to a caveat lodged by the Registrar-General. (5) The exception in subsection (3)(d) does not apply to a caveat lodged by the registered owner. Part 7 Other dealings Division 2 Caveats Land Title Act 62

What interests may be protected by caveat? Examples: Interest of a purchaser under an unconditional contract for the sale and purchase of land Interest of a purchaser under an option to purchase the land. A right of pre-emption or first refusal has been held not to give rise to a caveatable interest under the right of pre-emption crystallizes on the owner deciding to sell A mortgage’s interest in the land and the security interest of a creditor who is given a charge over the land A right to a profit a prende A purchaser’s lien for the return of a deposit and installment paid under a contract of sale where the contract is terminated without fault on the part of the purchaser A beneficial interest under a resulting, constructive, or implied trust such an interest may be claimed in a caveat without a prior court order that the beneficial interest exists.

Butler v Fairclough (1917) 23 CLR 78 Per Griffith Cj held that a failure to caveat should be treated as a representation inducing persons subsequently dealing with the registered proprietor to regard the title as clear of any outstanding equitable interest. Holder of an equitable interest cannot improve his or her interest by the lodgment of caveat

What is not caveatable interest? Examples of where the courts have held that the interest claimed is not a caveatable interest A right to possession of a building sit for the purposes of building works has been held not to confer an estate or interest in land and therefore is not a caveatable interest The interest of a partner in partnership land is not a caveatable interest because it does not give rise to a right to specific property but only to a right to a proportionate share of the surplus after realization of the assets and payment of debts A co-owner of land in respect of which a statutory trustee for sale has been appointed does not have a caveatable interest in the land. On the making of the court order appointing the statutory trustee for sale the interest of the co-owner is converted into personalty and is an interest in the proceeds of sale only

What is not caveatable interest? Equitable lien in favour of a vendor arising for a purchaser’s failure to pay all or part of the purchase money has been abolished by legislation in Qld and Nt and consequently a vendor does not have a caveatable interest on this ground. A mere personal or contractual rights will not support a caveat there must be an interest in land to support a caveat see Re P T Stevens Earthmoving Pty Ltd’s Caveat [1975] Qd R 69; Ex parte Goodlet and Smith Investments Pty Ltd [1983] 2 Qd 792 Municipal District of Concord v Coles (1906) 3 CLR 96 at 107 per Griffith CJ.   In Mijo Developments Pty ltd v Royal Agnes Waters Pty Ltd [2007] NSWSC 199 Hammerschlag J relied on the definition of interest in s36 of the Acts Interpretation Act to determine what constituted an right in relation to land. Held that this should be given its natural meand and should include legal and equitable interests. Must amount to an interest in the land