However, the caveator may not lodge a caveat which goes beyond the legitimate claim necessary to protect the caveator's rights: DCT v Corwest Management Pty Ltd [1978] WAR 129 at 131 and Vandyke v Vandyke (1976) 12 ALR 621 at 624.
In this case, the trustee of the Binningup Trust has powers of sale which may be legitimately exercised, subject to the advice and direction of an advisory committee. If the property was sold by the trustee in the proper exercise of its power, the defendant would have no further interest in the property and no right to maintain a caveat. In short, the defendant's equitable interest may be overreached by a sale by the trustee within his dispositive powers: State Bank of India ... at 281. Only an ultra vires disposition by the trustee will not overreach: State Bank of India ... at 281.
On the point about the form of the caveat, the defendant referred to Midland Co Pty Ltd v Welsh [2002] WASC 248. In that case, an absolute caveat was extended in circumstances where the plaintiff, which was a brick maker, had sold adjoining land but on the condition that the defendant/purchaser would not subdivide the land without written consent of the plaintiff. The agreement permitted the plaintiff to lodge a caveat. The caveat was an absolute caveat, prohibiting any dealing. It was argued that this was too wide, but the court held it was maintainable. It was apparently argued that only a subject-to-claim caveat should have been lodged. Hasluck J held that a caveat in that form would not provide the plaintiff with protection. In effect, Hasluck J reasoned that a subject-to-claim caveat would not be appropriate because there would be no point allowing a subdivision and conveyance of title in circumstances where the plaintiff claimed a right to prevent that happening at all. In my opinion, that case is distinguishable and affords no reason for allowing an absolute caveat in this case. An absolute caveat would prevent any dealing whatsoever, even a dealing resulting from the proper exercise of the trustee's powers of sale, acting with the approval of the advisory committee. That is an inappropriate restraint.
In my opinion, the defendant had no right to lodge an absolute caveat based merely upon the existence of its interest as beneficiary in a unit trust.
Should the caveat be amended?
The appropriate caveat in such circumstances would have been a "notice" caveat. A notice caveat has the effect that the caveator is given notice of a proposed transfer or dealing. Fourteen days after notice is given, the proposed dealing or transfer may be lodged, whereupon the caveat will then lapse, unless in the meantime the operation of the caveat has been extended by the court pursuant to s 138C of the Transfer of Land Act.
The provisions of s 138 authorise the court to amend a caveat: Porter ... at 275.