SUPREME COURT OF NEW SOUTH WALES
When can a CAVEAT withstand an application for removal when the Caveator has NO REGISTRABLE INTEREST IN LAND?
The general answer to this proposition is it cannot ... except, as Ms McIntosh submitted, in potentially ONE limited circumstance.....
In Ryan v Kalocsay [2009] NSWSC 1009 (10 August 2009) Ms McIntosh appeared for the Defendant on a Notice of Motion filed by the Plaintiff. The Plaintiff\'s application was to have a caveat lodged by the Defendant removed. The property was the object of the substantive proceedings. Ms McIntosh quite rightly conceded that the Defendant did not have a registrable interest in land, however, as said by His Honour Slattery at the hearing, Ms McIntosh may have stated the only answer in defence of its removal. The proposition is, supported in law, that a caveat may be ordered to stay in place if there is only a short time before trial and the balance of convenience so dictates.
The outcome of this motion was that after discussions between the parties and submissions before His Honour, the caveat was ordered to be removed however the Plaintiff entered into an undertaking not to increase borrowings against the property beyond an agreed amount. It was a satisfactory outcome for all parties.Quoting from the case,starting at paragraph 10:
\"In answer to these submissions Ms McIntosh, who appears for the plaintiff, has effectively conceded the underlying legal merits of Ms Mahmud\'s submissions on this point. She takes a different tack and submits that the balance of convenience requires the caveat to remain in place because there is now only a short time before trial. She refers to the decision of Young J in Beneficial Finance Corporation v Multiplex Construction Pty Ltd [1995] 36 NSWLR 510, and in particular to page 532 where his Honour said:
Again the Court will decline to remove a caveat for a short period of time even if doubtful about the existence of a proprietary interest: see Martyn v Glennan [1979] 2 NSWLR 234 and Kingstone Constructions Pty Ltd v Crispel Pty Ltd (1991) 5 BPR ¶11,987 at 11,991. Thus a proprietary interest in land in the common or garden sense of that term is not always required though at least some of these cases may be explained by the practice of this Court not to determine borderline cases at an interlocutory stage so that if there is an arguable case that the caveator has an interest in land the court allows the caveat to remain until the trial exacting an undertaking as to damages because of the inadequacies of s 74P of the Real Property Act 1900.
11 The two cases referred to by Young J in Beneficial Finance Corporation v Multiplex Construction Pty Ltd provide substantial support for Ms McIntosh’s submission. In Martin v Glennan & Anor (1979) 2 NSWLR 234 the Court held in relation to the former s 97(5) of the Real Property Act that where proceedings are on foot by the caveator to enforce the interest which the caveat has been lodged to protect, there is no bar to the exercise of the Court\'s discretion to remove the caveat. The principles applicable to a case where a caveator has commenced proceedings are similar to those where the caveator has not commenced proceedings. Justice Waddell in Martin v Glennan says that:
\"The correct principles to apply are those appropriate to an interim injunction, that is to say that the caveat should be removed unless the caveator can establish that he would be entitled to an injunction restraining the proprietor from dealing with the land until the determination of the proceedings brought by the caveator\"
12 Ms McIntosh says that here the caveator would be entitled to an interim injunction restraining the registered proprietor from dealing with the land until the determination of the proceedings and therefore the caveat should not be removed now. However both Glennan v Martin and Beneficial Finance are both authority for the proposition that the Court looks at the question as a matter of the balance of convenience.
