By a Summons filed on 13 July 2021, the plaintiffs seek an order under s 74MA of the Real Property Act 1900 (NSW) for the defendant to withdraw a caveat he lodged against the title to a property in Blakehurst that is owned by the plaintiffs.
The first plaintiff is the mother of the second plaintiff. The defendant is the father of the second plaintiff. The defendant and the first plaintiff remain married, but have separated and are now estranged from each other.
The Summons was supported by the affidavit of the first plaintiff, Young Mi Kim, sworn on 12 July 2021. The defendant, Decky Anwar, who opposes the making of the order, relies upon his affidavit affirmed on 23 July 2021. Each of the plaintiffs swore affidavits in reply on 27 July 2021.
The application has been brought on urgently in circumstances where the Blakehurst property is the subject of a contract for sale which is overdue for completion. The purchaser under the contract served a Notice to Complete which called for completion to occur by 6 July 2021, and is evidently watching to see what occurs in relation to the caveat.
The caveat, AR113232, was lodged on about 4 June 2021 in the unusual circumstances described in the affidavits of the first plaintiff and the defendant. In brief, it appears that the lodgement of the caveat was arranged between the first plaintiff and the defendant with the assistance of a solicitor (Ms Rosita Luk) who apparently acted for all of the parties in relation to the caveat.
The arrangement arose from a concern expressed by the first plaintiff that the price on the contract for sale ($2.7 million) was too low. She asked the defendant whether there was a way to change the contract. The defendant made a suggestion that a caveat be put on. The first plaintiff agreed to that occurring. She later gave instructions to Ms Luk to the effect that she consented to the lodgement of a caveat by the defendant.
The estate or interest claimed in the caveat is described as a charge said to be dated 1 November 2016 between the defendant and the two plaintiffs. The details supporting the claim state: "Marital Asset proceed of purchase from Caveator." It is not at all clear what is intended to be referred to by those words.
The defendant does not suggest in his affidavit that he has a charge over the Blakehurst property; rather, he deposes that he believes he has a constructive or resulting trust over the property. He deposes that, following the purchase in about 2005 of the marital home in Tempe, which was placed into the name of the first plaintiff, the first plaintiff engaged in a number of property transactions, including using the Tempe property as security for an overdraft; the acquisition of a property in Campsie; and the acquisition of the Blakehurst property in about 2016. It is suggested that the Tempe property was in some way used as security for the purchase of the Campsie property which was sold around the same time that the Blakehurst property was purchased.
The first plaintiff disputes much of the defendant's account. She deposed that she purchased the Campsie property using only her own savings, and funds she borrowed in her own name. She denies that the Tempe property was used as security in relation to the purchase of the Campsie property. I note that the defendant currently maintains a caveat on the title to the Tempe property.
Even taking the defendant's own evidence at its highest, it is difficult to see how any constructive or resulting trust for the benefit of the defendant has arisen in respect of the Blakehurst property. In any event, an interest of that character is not claimed in the caveat the subject of the present application. The focus must be upon the interest claimed in the caveat, which in this case is a charge.
On an application under s 74MA of the Real Property Act, the Court applies principles analogous to those that are appropriate to applications for interim injunctions. The caveator bears the onus of showing that there is a serious question to be tried as to the existence of the interest claimed in the caveat. If that onus is discharged, the caveator then has the onus to show that the balance of convenience is in favour of the continued operation of the caveat (see Hanson Construction Materials Pty Limited v Roberts (2016) 93 NSWLR 1; [2016] NSWCA 240 at [77] and [82]).
I am not satisfied on the evidence before the Court that there is a serious question to be tried as to the existence of a charge over the Blakehurst property in favour of the defendant. There is no evidence of any advance of money by the defendant. There is no evidence of any written instrument that provides for a charge that would extend to the Blakehurst property. The extent of any claimed charge is entirely unclear. Moreover, the stated details supporting the claim are ambiguous and, if anything, suggest a kind of claim other than a charge. The evidence given by the defendant and certain further matters raised by the defendant in his submissions rather suggest that the true nature of any claim he has in respect of the Blakehurst property may rest in the law pertaining to matrimonial disputes.
In any case, even if there was a serious question as to the existence of a charge, I do not think that the balance of convenience is in favour of the continued operation of the caveat. The caveat was not lodged until about 4 June 2021 even though it is suggested that the charge arose on 1 November 2016. By the time the caveat was lodged, the property was already the subject of the contract for sale to an innocent third party purchaser. The plaintiffs are required to remove the caveat in order to convey clear title to the purchaser on completion, so the continued existence of this caveat impedes the completion of the contract and gives rise to a risk that the purchaser will terminate the contract and sue the plaintiffs for damages. I note further that an earlier caveat lodged by the defendant on the property in April 2018 claiming a "marital interest" lapsed in September 2018 following the service of a lapsing notice.
In my opinion, the balance of convenience is clearly in favour of ordering the removal of the present caveat so as to allow the contract for sale to proceed to completion. Accordingly, the Court will order, pursuant to s 74MA of the Real Property Act, that caveat AR113232 be withdrawn by the defendant by 11:00am on 29 July 2021.
The plaintiffs seek their costs of the proceedings from the defendant. In ordinary circumstances such an order would be appropriate in accordance with the general rule that costs follow the event. However, the circumstances of this case are far from ordinary.
The caveat the subject of the application was lodged with the consent or concurrence of the first plaintiff in order, it seems, to hinder or undermine the completion of the contract for sale to which the plaintiffs were bound. Whilst it is submitted that there was no real consent or no informed consent, in the circumstances I do not think that the documentary evidence before the Court, insofar as it allows any firm conclusions to be drawn, justifies such a finding. I note in particular that there is apparently a dispute between the first plaintiff and Ms Luk as to what advice was given by Ms Luk in relation to the caveat.
I think it is inescapable that the plaintiff consented to the lodgement of the caveat and did so with a view to upsetting the orderly process towards completion of the contract for sale. In my view, the lodgement of the caveat amounted to an abuse of the caveat system, for which abuse the first plaintiff and the defendant are both responsible.
The caveat system is an important component of the wider Torrens system. It provides a relatively quick and inexpensive means for the protection of claimed interests in land. The system is undermined by the lodgement of frivolous caveats, or the lodgement of caveats for other than proper purposes as seems to be the case here. Abuses of this type, which have led to the present application, should be discouraged.
Whilst the costs of the proceedings can on one view be regarded as the result of the defendant's failure to withdraw the caveat when requested to do so, the costs can also be seen as a product of the original arrangement made between the first plaintiff and the defendant. In a sense, the first plaintiff has come to the Court without clean hands. Although that circumstance does not in this case provide a reason to deny relief, I consider that it is relevant to take into account on the question of costs.
In my opinion, the appropriate order for costs is that there be no order as to costs to the intent that each party bear their own costs of the proceedings. I consider that it is appropriate in the unusual circumstances of this case to depart from the general rule that costs follow the event. It is in my view certainly not a case where it would be appropriate for an order to be made in favour of the plaintiffs on the indemnity basis, as submitted by the plaintiffs.
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Decision last updated: 29 July 2021