Applying to remove a caveat?

The recent Victorian Supreme Court decision in Yuksels Nominees Pty Ltd v Nguyen & Anor[1] provides some useful guidance about the removal of caveats under the Transfer of Land Act 1958 (the ‘Act’). In particular, the decision illustrates:

  • circumstances where an application for removal of a caveat may or may not be considered ‘vexatious’ for the purpose of s 89A(3)(b) of the Act; and
  • the courts’ discretion when contemplating removal of a caveat under s 90(3) of the Act.

The facts

Yuksels Nominees Pty Ltd (‘Yuksels’), the plaintiff in the proceeding, was sole proprietor of a property in Sunshine. The first defendant, Ms Nguyen, lodged a caveat over the property, such caveat referring to part performance of an oral agreement said to exist between her and Yuksels and other parties.[2]

At the same time, Ms Nguyen was the plaintiff in a County Court proceeding seeking damages for breach of an employment contract she had with a number of parties including Yuksels. She alleged that it was a term of the contract that Yuksels or one of its related parties would grant to her, amongst other things, the right to purchase a penthouse at the Sunshine property at cost price. She also alleged various breaches of the contract. She sought, amongst other things, damages, debt, and a declaration that certain moneys were to be held in trust. 

Yuksels applied to the Supreme Court for removal of the caveat pursuant to s 90(3) of the Act. On Yuksels’ case, it could not borrow to finance the development while the caveat was in place. Ms Nguyen opposed the application on the basis there was another proceeding on foot to substantiate her caveat; any attempt to remove the caveat would be prima facie vexatious and ought be stayed.

The threshold issue arose, then, as to whether Yuksels’ application for removal of the caveat was ‘vexatious’ in light of the County Court proceeding.

Was the application for removal of the caveat ‘vexatious’?

T. Forrest J held that the County Court proceeding did not constitute ‘a proceeding in a court to substantiate the claim’ for a caveat within the meaning of s 89A(3)(b). Section 89A permits application to the Registrar of Titles for removal of a caveat, s 89A(3)(b) stating:

 ‘Upon receiving any such application and certificate and upon being satisfied that the applicant has an interest in the land in respect of which the application is made, the Registrar shall give notice to the caveator that the caveat will lapse as to the land and the estate or interest therein in respect of which the application is made on a day specified in the notice unless in the meantime either —
(a) ...
(b) notice in writing is given to the Registrar that proceedings in a court to substantiate the claim of the caveator in relation to the land and the estate or interest therein in respect of which the application is made are on foot.’

In addressing the question of whether there was another proceeding on foot in relation to the property the subject of the caveat, his Honour looked to the substance of the County Court Writ. His Honour found that Ms Nguyen had not sought a declaration, or any other form of relief, referable to the caveatable interest. There was, as his Honour observed, ‘no reference in the entire 27 page document to the caveat or to [s 89A(3)(b)] of the Act’.[3]

His Honour also found that Ms Nguyen’s claim for damages, although referable to the contract said to have been breached and which concerned the Sunshine property, did not demonstrate the existence of a proceeding on foot to substantiate the caveat. His Honour observed that:

‘In the County Court proceeding, [Ms Nguyen] does not seek to establish any proprietary interest in the [Sunshine] property, but rather seeks to claim damages for breach of an alleged agreement’.[4]

Consequently, his Honour held that the application in the Supreme Court was not prima facie vexatious.

Application for removal of the caveat

Turning to the merits of the application for removal of the caveat under s 90(3) of the Act and being guided by the principles in Piroshenko v Grojsman,[5] his Honour found, first, that there was no prima facie case justifying the maintenance of the caveat. Although Ms Nguyen had advanced in the County Court an argument about a constructive trust, the trust was referable to the holding of money rather than the property the subject of the caveat.

Secondly, in identifying where the balance of convenience lay, his Honour looked to whether damages might be an adequate remedy were the caveat to be removed and held that ‘[i]t is impossible, in my view, for [Ms Nguyen] to maintain that damages are an inadequate remedy when the only remedy claimed in the County Court action are damages’.[6] For that same reason, his Honour could not identify any prejudice to Ms Nguyen should the caveat be removed.

Finally, his Honour considered the prejudice to Yuksels in keeping the caveat in place. Specifically, his Honour considered Yuksels’ argument that financing of the development would be hampered whilst the caveat was in place and held that ‘[i]n a large property development such as this, it is plausible that having finance in place early would be highly desirable, particularly where sales off the plan are proposed’.[7]

His Honour proceeded to order the removal of the caveat.

Conclusion

When encountering an application for removal of a caveat, the decision in Yuksels Nominees Pty Ltd v Nguyen & Anor demonstrates the importance of identifying the caveator’s underlying claim. In that case, the form of relief the caveator sought was relevant both when considering the argument that removal of the caveat would be vexatious, and when determining whether there would be any prejudice to the caveator should the caveat be removed.


[1]: [2015] VSC 663.

[2]: The second defendant was the Registrar of Titles.

[3]: [2015] VSC 663 [7].

[4]: Ibid [8].

[5]: [2010] 27 VR 489.

[6]: [2015] VSC 663 [12].

[7]: Ibid [14].