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[2025] NSWSC 1509
General information, not legal advice.
Supreme Court of NSW
2025-12-15
Pike J
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Medium Neutral Citation: Luff v Lyons [2025] NSWSC 1509
Hearing dates: 8 December 2025
Date of orders: 15 December 2025
Decision date: 15 December 2025
Jurisdiction: Equity - Real Property List
Before: Pike J
Decision: Plaintiff’s claim succeeds, caveat to remain.
Catchwords: LAND LAW – Caveats – Extension of operation of caveat – where deed of family arrangement between mother, brother and sister – where brother lodges caveat over sister’s land pursuant to deed – where sister seeks to provide security to remove caveat pursuant to deed – whether adequate security provided LAND LAW – Caveat – Removal of caveat – whether Court should remove caveat pursuant to s 74MA of the Real Property Act 1900 (NSW)
Legislation Cited: Real Property Act 1900 (NSW), s 74MA
Cases Cited: Doust v Riveaux Holdings Pty Ltd [2024] NSWSC 1434
EFG Australia Limited v Kennedy [1999] NSWSC 922
Qantas Airways Limited v Australian and International Pilots Association (No 2) [2024] FCA 756
Texts Cited: Nil
Category: Principal judgment
Parties: Stephen George Luff (Plaintiff/Cross-Defendant)
Karen Lesley Lyons (Defendant/Cross-Claimant)
Representation: Counsel:
A d’Arville (Plaintiff/Cross-Defendant)
F McNeil (Defendant/Cross-Claimant)
Solicitors:
Clarke Kann (Plaintiff/Cross-Defendant)
Commins Hendriks (Defendant/Cross-Claimant)
File Number(s): 2025/00379219
Publication restriction: Nil
These proceedings concern a dispute between a brother and sister regarding a deed of family arrangement. Under that deed, the mother agreed to leave a legacy to the son on her death. The sister promised to pay any shortfall to the brother. That promise was secured by a charge over certain land known as “Miglen” and “Kagens” received by the sister, and the brother was permitted to lodge a caveat over that land to secure the performance of the sister’s obligation.
In the event she wished to sell the land, she had the right to have the caveat withdrawn on the provision of alternate security.
The sister wants to sell the land and wants the caveat removed. The brother says it should remain as sufficient alternate security has not been provided.
The proceedings were heard on 8 December 2025. Mr A d’Arville appeared for the plaintiff and Ms F McNeil appeared for the defendant.
For the reasons set out below, I have determined that the plaintiff’s claim succeeds and the defendant’s fails – the caveat should remain. I will hear the parties on the appropriate orders and as to costs.
Mr Kevin Luff (Kevin or the Deceased) passed away in October 2003. His widow (Connie) was appointed as sole executrix of his estate.
Connie and Kevin relevantly had two children. The plaintiff (Stephen) and the defendant (Karen).
In using first names in these reasons, I mean no disrespect or over familiarity.
Stephen subsequently commenced family provision proceedings against Kevin’s estate.
Those proceedings were ultimately settled. A Deed of Family Arrangement (Deed) was entered into between Connie, Stephen and Karen dated 12 September 2008. The Deed provides, in effect, for an intergenerational succession plan.
Under the terms of the Deed:
(a) title to the property known as “Bonnie Doon” (formerly held jointly between Kevin and Connie) was transferred to Stephen subject to certain conditions; (b) title to two properties known as “Miglen” (formerly held jointly between Kevin, Connie and Neath Luff) and “Kagens” (formerly held solely by Kevin) were transferred to Karen, subject to certain conditions.
8 As soon as is reasonably practical after making of the Orders Connie will publish a Will whereby she grants to Stephen a legacy in a sum equal to a Registered Valuer’s valuation at the date of her death (if no agreed value is reached) of the average value per acre of the combined properties Kagens, Miglen and Bonnie Doon multiplied by 134. If Stephen and Karen cannot agree upon the identity of the Registered Valuer the valuer shall be the nominee of the President of the New South Wales Division of the Australian Property Institute Inc and they will bear equally the costs of the valuation.
9 The Will is to provide, for the residue of her estate after payment out of the legacy, debts and funeral expenses, to be divided equally between Stephen and Karen with substitutional provisions for children of a deceased child of Connie to take the share to which the deceased child would otherwise have been entitled.
10 Connie covenants that she will not change the Will except with the consent of Stephen or Karen.
11 Karen acknowledges that in the event that there are insufficient funds in Connie’s estate to satisfy the legacy referred to in Clause 8, or in the event that Connie does not leave Stephen a legacy in terms of that described in Clause 8, she will pay the amount of the legacy or any shortfall of the amount of the legacy within twelve (12) months of Connie’s death. ln order to secure that obligation she will charge the title to Miglen and/or Kagens, with the obligation to make payment of the amount of the legacy or that shortfall within the said period of 12 months from the date of death of Connie. No interest shall accrue under the charge. For the purpose of this Clause Karen must charge the property or properties which have sufficient equity to pay the amount of the legacy or any shortfall of the amount of the legacy. The land will cease to be charged upon the shortfall being satisfied.
14 Stephen may protect his rights under clauses 2.2(d), 2.3(b) and 2.3(d) and 4(b) and his right to the legacy specified in paragraph 8 hereof by caveat on the title to Miglen and Kagens but the terms of any such caveat shall not restrict the right in Karen to encumber the property by registered mortgage provided that there is at all time sufficient equity to pay the amount of the legacy or any shortfall.
15 In the event that Karen may desire to sell Miglen and/or Kagens she shall have the right to have the caveat withdrawn on the provision of other security which in Stephen’s reasonable view is of sufficient value to protect the benefit derived by Stephen pursuant to Paragraph 8 hereof.
Stephen lodged a caveat on the titles of Miglen and Kagens in 2014.
Karen now desires to sell Miglen and Kagens and has sought Stephen’s consent to the withdrawal of his caveat.
Karen’s solicitor first wrote to Stephen in July 2024 regarding possible options regarding Miglen and Kagens. No response was received.
Karen subsequently obtained valuations of Bonnie Doon, Miglen and Kagens which were sent to Stephen on 22 November 2024. The valuation valued Bonnie Doon as at 11 October 2024 (216.5 hectares) at $3 million. The Miglen and Kagens valuation as at the same date (326.05 hectares) was $5,300,000.
On 10 July 2025, Karen’s solicitor wrote to Stephen. The letter stated that Karen had confirmed that she intended to move towards a sale of Miglen and Kagens. The letter sought Stephen’s consent to the removal of the caveat and attached a withdrawal of caveat form for him to sign. The letter attached the earlier valuations obtained in October 2024 and stated that the combined value of Kagens, Miglen and Bonnie Doon (approximately 542 hectares or 1339 acres) in accordance with the valuation is $8,300,000, or $6,199 per acre.
The letter went on to state:
As stated above, Karen intends to sell the properties in the spring and at that time, we would propose that the value of the 134 acres to be bequeathed to you pursuant to the terms of Connie’s Will which shall crystallise at the time of sale could be dealt with in either of the following ways:
Option 1
At settlement you could receive your proportionate value of the 134 acres. At that time you would enter into a Deed of Release with Karen and Connie to confirm that the terms of clause 8 of the Deed of Family Arrangement dated 12 September 2008 have been complied with during Connie’s lifetime and that you will not receive the legacy of the sum equal to the sum of 134 acres at the time of Connie’s death. We note that under the terms of Connie’s Will you continue to be the residual beneficiary as to 50% as is Karen; or
Option 2
If you do not agree to entering into a mutually agreeable Deed of Release, Karen at settlement will invest the sum equivalent to 134 acres of the three properties pursuant to the terms of her Will and in accordance with the requirements under the Deed of Family Arrangement the three properties would again be valued at Connie’s date of death and you would receive the legacy of the sum equal to 134 acres at that time.
Please consider the above and provide us with a response within 21 days of the date of this letter.
On 31 July 2025 Stephen responded saying he was away travelling and had forwarded the 10 July 2025 email to his solicitor and was awaiting his instructions.
On 1 September 2025, Karen’s solicitor sent a copy of the 10 July 2025 email to Stephen’s solicitor, asking him to respond. No response was received.
On 18 September 2025 a lapsing notice was served on Stephen.
On 2 October 2025, solicitors for Stephen wrote to Karen’s solicitor attaching a summons and indicating an intention to approach the Duty Judge seeking an extension of the caveat.
The summons was filed on 2 October 2025 and on 3 October 2025 the Duty Judge made orders extending the caveat until further order.
To complete the pleadings, a cross-summons was filed on 14 November 2025 by Karen seeking, inter alia, a declaration that Karen is entitled to deal with Miglen and Kagens and an order that Stephen withdraw the caveat. Alternatively, Karen seeks orders pursuant to s 74MA of the Real Property Act 1900 (NSW) (RPA) for the caveat to be removed.
The parties continued to correspond through their solicitors after the commencement of the proceedings.
On 30 October 2025, the solicitors for Karen wrote to Stephen’s solicitors. The letter stated that it was for Stephen to advise pursuant to the terms of the Deed what the security might be and that to date, this had not occurred.
The solicitors for Stephen responded later that day. That letter asserted that Karen’s interpretation of clause 15 of the Deed (as set out in their letter of 30 October) was nonsensical. The letter asserted that Karen has not provided “other security”, and that none of the options proposed by Karen amount to any form of security. It was then asserted that on any interpretation of the Deed, Karen therefore presently has no right to have the caveat withdrawn and had no right to issue the lapsing notice.
Later on 30 October 2025, Karen’s solicitor’s responded by email to the letter from Stephen’s solicitors. The email relevantly stated:
We are instructed enquire as to whether Stephen would consider the following as reasonable security in his view pursuant to clause 15 of the Deed of Family Arrangement dated 12 September 2008 (“the 2008 Deed”);
1 Karen provides an undertaking to the Court in the proceedings 2025/00379219 that at settlement, Stephen receives a lump sum of proportionate value of 134 acres of the three properties, namely Bonnie Doon, Miglen and Kagens, so as to meet his requirements under the 2008 Deed; no funds would be released from trust at settlement without Stephen’s benefit being paid into an account nominated by him, and the parties having prior to settlement entered into a further Deed confirming that the terms of clause 8 of the 2008 Deed will be complied with during Connie Luff’s lifetime and noting that Stephen will continue to be a residual beneficiary as to 50% of Connie’s estate with Karen also remaining 50% residual beneficiary;
OR
2 At settlement Karen will invest the sum equivalent to 134 acres of Bonnie Doon, Miglen and Kagens into an investment account approved by Stephen and both Stephen and Karen would be co-signatories to that account. Pursuant to the terms of the 2008 Deed the invested funds would be released to Stephen upon Connie’s death.
Breakdown of possible outcomes for Stephen Luff
With regard to the above reflecting our interpretation of the Deed, we are instructed to set out a breakdown of outcomes relevant to your client’s interest as follows:
a. If our client does not exercise her right to sell the properties, your client will receive the legacy as per clause 8 upon Connie’s death. Your client will also receive half of the residue of Connie’s estate, following payment of his legacy and other estate liabilities. We are instructed Connie is currently 92 years old, is of good health, lives independently and her family, as your client is aware, have all had well above average lifespans. Accordingly, it is our client’s hope that Connie lives for another five (5) hopefully more years.
b. If our client does exercise her right to sell the properties, your client will:
i. receive his benefit being the legacy per clause 8, which is currently estimated pursuant to the valuations obtained by our client, to be approximately $860,000. For compliance with the Deed, upon settlement of the properties our client would ensure that your client receives his legacy at settlement.
ii. As stated in our letter of 10 July 2025, Karen proposes that in addition to payment to your client of his legacy under clause 8 of the Deed at settlement, he would receive, upon Connie’s death, a half share of the residue of her estate. This will result in a benefit to your client as the legacy to be paid to him pursuant to clause 8 of the Deed requires that those funds firstly be obtained from Connie’s estate. Below is a scenario which is hypothetical however we trust may be of assistance.
• If Connie died leaving an estate with a net value of $500,000 all of those funds would be attributed to Stephen in part payment of the legacy set out in clause 8 of the Deed and Karen would be required to top up that amount, in effect contribute say $360,000, within 12 months of Connie’s death.
• Under the proposal as set out in our letter of 10 July 2025 Stephen would receive his proportionate benefit of 134 acres, again hypothetically say $860,000, at settlement of Miglen and Kagen’s in say 2026. In addition to that sum when Connie passes Stephen would receive half of the residue of her estate (hypothetically another $250,000). Accordingly, Stephen under the proposal Karen has suggested could be significantly better off if he agrees to remove the caveat and proceed to a sale of Miglen and Kagens now, alternatively Karen could wait until Connie passes to sell those properties.
We are instructed it is our client’s intention to have this matter dealt with now, so all parties may move on and enjoy the benefit of the legacy to each of them as opposed to waiting until some unknown time in the future. Our client is also cognisant that she wishes to resolve the obligations under the Deed now if possible, so as to avoid the possibility of our respective clients’ children having to deal with the matter should either she or Stephen predecease Connie.
Resolution of this matter and the Supreme Court proceedings
If your client agrees to proceed on the basis that our client exercises her right to sell the properties under the Deed, the attached Withdrawal of Caveat (as attached to our letter of 10 July 2025) can be executed and either returned to our office where we will lodge and pay the filing fee, or alternatively the parties can agree to orders in the current Supreme Court proceedings so as to finalise this matter.
Please either return to us the executed Withdrawal of Caveat or advise it has been filed by your office and provide a copy of same, or confirm you have instructions to agree to orders reflecting finalisation of this matter by no later than 4:00pm Wednesday 12 November 2025**.**
If it is your client’s intention to continue to refuse to withdraw the caveat, please advise by no later than 4:00pm Wednesday 12 November 2025**,** and provide full particulars as to the reasons for such instructions and why he does not wish to respond to the proposed security set out in our email of 30 October 2025.
We note we intend to rely upon this correspondence on the question of costs should it be necessary to do so.
We refer to previous correspondence and in particular to your letter of 6 November 2025.
References in this letter to:
The Deed shall mean the Deed of Family Arrangement inter alia between our respective clients dated 12 September 2008.
The Property means the rural properties known as “Miglen” and “Kagens” collectively.
To clarify the correspondence from your client both to this firm and to our client there seems to be a misapprehension that your client is entitled to a withdrawal of caveat at the time she expresses an intention to sell the Property. As stated by you previously, clause 15 of the Deed deals with this aspect. In that respect it is quite clear that your client’s right to have any caveat withdrawn is dependent “on provision” of other security which in our client’s reasonable view is of sufficient value to protect the benefit which he receives under clause 8 of the Deed. In other words, no withdrawal of caveat is to be provided to your client unless contemporaneously alternative security as contemplated by clause 15 is provided. It is noted that to date this has not been acknowledged by your client as at all times she has been insistent on receiving a withdrawal of caveat prior to the provision of any further security. To date no security of any kind has been offered to our client. The result is that should for some reason your client suffer financial difficulties and her assets are available for creditors generally any amount proposed to be set aside by you would also be available to those creditors despite the fact that our client was a co signatory.
We note that in your correspondence under reference it is your client’s belief that our client’s mother Connie Luff (Connie) is expected to live for at least another 5 years (she being 92 at present). Contrarily we are instructed that 2 of Connie’s siblings have lived to an age in excess of 100 years and therefore in our client’s view it is not unreasonable to assume that Connie will live to at least 100 years of age.
Given that the Deed assumes that any security provided must cover the entire legacy under clause 8 of the Deed and given that it is not unreasonable to assume that Connie will live to at least 100 years the value of any security should take into account the value of the legacy at a time of Connie’s demise.
Your clients offers to date fail to take into consideration Connie’s expected longevity and therefore any increase in value that may be occasioned by that effluxion of time.
We are instructed that since the Deed was signed there has been significant annual increase in the value of the Property as well as our client’s property (Bonnie Doon). We are further instructed that in 2007 the Property and Bonnie Doon were collectively valued at $1,830,000.00. Taking into account your client’s valuation which has been provided to our client (which our client disputes - see later) of $8,300,000.00 in 2024- that suggests an annualised compounded increase of close to10% per annum. Given that an annual 10% increase in value is a reasonable yard stick, then if one was to annualise the figure contained in the valuations provided by you from 2024 for a period of 9 years (i.e. until Connie would turn 100) the figure that would be contemplated for payment would be $1,956,180.00 – a significantly greater sum than any figure offered by your client to date.
This however does not contemplate our client’s view as to the value of Bonnie Doon. Bonnie Doon presently has the benefit of an approved development application to carve our 6 blocks of 13 acres each. Our client has now received written confirmation from council that the development approval is still in place.
Applying a value of $250,000 per block would give a value for the 6 blocks of $1.5 million. Offset against this a sum of $85,000 per block that being the current value of 13 acres based on your client’s valuation i.e. a total of $510,000 for the 6 blocks. The total increase in value would therefore be $990,000 ($1,500,000 less $510,000) which would increase the value of the Property and Bonnie Doon from $8.3 million (as per your client’s valuation) by $990,000 to $9,290,000 with a resultant increase in value of the 134 acres to $928,563.00, In addition, after making several enquiries our client has the view that Bonnie Doon’s true value (not taking into account the uplift in the subdivided blocks) is currently $3.5 million as opposed to the $3 million stated in the valuations presented to our client by your client. On this basis the net effect of this would be to increase the overall values of the properties by $1,490,000 ($990,000 + $500,000) to $9,790,000.00.
This would bring the current value of 134 acres to $978,540.00. If this sum is annualised over the next 8 years at 10% the total amount to be contemplated by our client upon Connie attaining the age of 100 years would be $2,097,587.00. Given that figure what then would our client regard as satisfactory security for the payment of that sum.
Section 18 of the Trustee Act 1925 states that the amount to be secured must not exceed 2/3 of the value of the property being provided as security. When this is calculated against the expected amount of $2,097,587.00 it would take the security required to $3,146,380.00. This would be the security our client would seek if the security offered was real property. Given that it is contemplated that real property may not be offered but rather some form of security over monies deposited in a bank our client would expect a sum $2.5 million dollars would be deposited in a bank securitised by a charge over the deposit as well as our client being a co-signatory. Failure to securitise the deposit offers no protection against third party creditors.
If your client were to offer the above security plus payment of our costs to date in relation to a costs incurred as a result of your client filing a lapsing notice (which it was not entitled to do) our client would agree to hand over a withdrawal of caveat upon provision of the above security at settlement of the sale. He would be happy to encapsulate those terms by deed prior to the sale.
We note that outside the terms of the Deed your client has made an offer to pay a sum of money which will be paid on settlement of the sale of the property in full and final satisfaction of any claim which our client would have under the Deed. We are instructed that our client rejects that offer. However our client would be willing to consider another offer as an alternative to the provision of security on the following basis:
- Payment of $1,600,000 on settlement of the sale plus costs relative to the lapsing notice in full and final settlement of our client’s rights under the Deed including any right to receive any benefit under Connie’s Will. Mutual Releases would be entered.
The parties were at odds as to how the Deed operates. In my view, the proper construction of the Deed is tolerably clear.
I have set out above the relevant provisions.
Relevantly, on Connie’s death, Stephen has the right to receive a legacy (my emphasis) “in a sum equal to a Registered Valuer’s Valuation at the date of her death (if no agreed value is reached) of the average value per acre of the combined properties Kagens, Miglen and Bonnie Doon multiplied by 134” (the Legacy).
By clause 8 of the Deed, Connie promises to leave the Legacy to Stephen in her Will.
By clause 11 of the Deed, Karen promises to pay Stephen any shortfall in the Legacy. As security for that obligation, Karen agreed to charge Miglen and Kagens. Stephen was able to protect his rights to the Legacy by caveat on the title to Miglen and Kagens.
It is against this background that clause 15 falls to be construed. Under clause 15, if Karen desires to sell Miglen and Kagens she has a right to have the caveat removed provided, in effect, she offers sufficient security in place of the charge and caveat over Miglen and Kagens. The sufficiency of the security is determined by what in Stephen’s reasonable view is of sufficient value to protect the benefit derived by Stephen pursuant to paragraph 8 of the Deed.
The benefit derived by Stephen pursuant to paragraph 8 of the Deed is the Legacy. Counsel for Karen contended that the reference to “pursuant to paragraph 8 hereof” in clause 15 was only intended to pick up Stephen’s rights as a beneficiary under a Will which are no more than a right to have the estate properly administered. I do not accept these submissions.
Construed in context, the benefit being referred to in clause 15 of the Deed is the Legacy, secured by a charge which is supported by a caveat. This is also in the context of the security being for a future obligation namely one that arises on Connie’s death.
There was some debate before me as to how it is to be determined whether Stephen’s view is a reasonable one. Counsel for Karen relied upon what was said by Hodgson CJ in Eq in EFG Australia Limited v Kennedy [1999] NSWSC 922 (EFG) at [57]:
… I am inclined to think that “reasonable opinion” … means an opinion arrived at reasonably, as well as reasonably based on available material. In most cases, this would require natural justice to be afforded.
These observations were made in the context of an employment agreement. They have, however, been applied more broadly: see, for example, Doust v Riveaux Holdings Pty Ltd [2024] NSWSC 1434 at [5] per Hammerschlag CJ in Eq.
Both parties also placed some reliance on what was said by Goodman J in Qantas Airways Limited v Australian and International Pilots Association (No 2) [2024] FCA 756 at [105]-[108]:
[105] The onus of proving that the withholding of agreement was unreasonable is on the party making that assertion: Fulham Partners LLC v National Australia Bank Ltd [2013] NSWCA 296; (2013) 17 BPR 32,709 at 32,721 to 32,723 ([51] to [59]) (Basten JA; Barrett JA and Bergin CJ in Eq agreeing); University of Sydney v ObjectiVision Pty Limited [2019] FCA 1625; (2019) 148 IPR 1 at 63 [277(4)] (Burley J); EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2010] WASCA 78; (2010) 41 WAR 23 at 57 ([116]) (Buss JA; Owen and Newnes JJA agreeing).
[106] In determining whether the conduct of the party that withheld agreement was reasonable or unreasonable:
(1) that question is a question of fact: Re Idoport (in Liq) Pty Ltd [2012] NSWSC 524 at [50] (Ball J); which is to be determined objectively having regard to all of the circumstances of the case: Boss v Hamilton Island Enterprises Ltd [2009] QCA 229; [2010] 2 Qd R 115 at 130 [12] (Fraser JA; Chesterman JA and Margaret Wilson J agreeing); and as at the date on which such withholding occurs: St Barbara Ltd v Hockley (No 2) [2013] WASC 358 at [147] and [181] (Beech J); EDWF at 57 [116];
(2) the circumstances of the particular case include:
(a) any reasons given for withholding agreement: Idoport at [51] to [53]. In this regard, the party that has withheld its agreement is not restricted to reasons communicated at or about the time of such withholding: Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596 at 611; JA McBeath Nominees Pty Ltd v Jenkins Development Corporation Pty Ltd [1992] 2 Qd R 121 at 129 (Kelly SPJ; Ryan J agreeing); Fulham at 32,720 ([47] to [48]); EDWF at 57 to 58 ([121]);
(b) the terms of the contract in which the obligation not to unreasonably withhold agreement is to be found: Secured Income at 607 to 608 (Mason J, as his Honour then was); Cathedral Place Pty Ltd v Hyatt of Australia Ltd [2003] VSC 385 at [25] to [27] (Nettle J); Fulham at 32,719 [45]. In Cathedral Place, Nettle J stated at [25] that he treated as binding and plainly correct the observations of Mason J in Secured Income that “the terms of the contract are paramount”; and at [27] that “As a matter of principle, the question is one of contract and therefore the terms of the contract must always be determinative”;
(c) the subjective intention of the party that withheld agreement: Fulham at 32,719 [43] and 32,720 [47]; ObjectiVision at 62 to 63 [277(2)]; and
(3) the expression “reasonable” should be given a broad and common sense meaning: Idoport at [50].
[107] A withholding of agreement is less likely to be found to have been unreasonable where: (1) the reason for the withholding is a matter affecting the subject matter of the contract; and (2) the grounds for withholding agreement are held honestly. Conversely, a withholding of agreement is more likely to be found to have been unreasonable where: (1) the reason for the withholding is a matter extraneous to and disassociated from the subject matter of the contract; and (2) the grounds for withholding consent are not held honestly: see EDWF at 56 to 57 ([115]); Secured Income at 610; Fulham at 32,719 [44]; ObjectiVision at 62 to 63 ([277(1)]).
[108] The Court’s task is not to decide the correctness of the decision to withhold agreement or of the carrying out of that decision; rather it is to determine whether the withholding of agreement was reasonable or unreasonable: New Island Developments Pty Ltd v New Island Investments One Pty Ltd [2024] NSWSC 226 at [85(c)] (Rees J); St Barbara at [145]; Noranda Australia v Lachlan Resources NL (1988) 14 NSWLR 1 at 21 (Bryson J (as his Honour then was)). Thus, where a ground for withholding agreement is based upon the withholding party’s interpretation of the contract in question, the Court’s task is not to finally adjudicate upon the correctness of that interpretation, as opposed to determining whether the conduct of the party withholding its agreement on the basis of such an interpretation of the contract is reasonable or unreasonable.
Against these observations as to the proper construction of the obligations under the Deed, I turn now to consider the circumstances of the present case.
In considering whether clause 15 has been complied with by Karen, as she contends, it is important to keep firmly in mind that the benefit which Stephen currently enjoys is the right to receive the Legacy on Connie’s death. It is that benefit that Karen agrees to satisfy in the event of any shortfall, that is protected by a charge over Miglen and Kagens and supports the caveat. Alternate security which is to be put in place in the event of Miglen and Kagens being sold must be of sufficient value to protect the future right to the Legacy.
This is also in the context of where Connie is still very much alive. Although she is 92 years old, Karen’s solicitor’s letter dated 6 November 2025 stated that she is in good health, lives independently, and that it was Karen’s hope that Connie lives for another five, hopefully more years. The letter from Stephen’s solicitor asserted a life expectancy of at least another eight years.
According to the written submissions advanced by Karen prior to the hearing, the security relied upon as satisfying clause 15 was said to be the cash payment to Stephen on the terms proposed in paragraph 1 of the email from Karen’s solicitors to Stephen’s solicitors dated 30 October 2025. I have extracted that offer above. It is to be remembered that the effect of the offer is to satisfy the Legacy now by payment to Stephen, once Miglen and Kagens have been sold, of an amount calculated in accordance with the Deed – the average value per acre of the three properties multiplied by 134. Although not expressly stated, it appears that the value is to be determined by reference to the October 2024 valuations obtained by Karen. The payment is to be made in return for Stephen executing a deed confirming that the terms of clause 8 of the 2008 Deed will not be complied with and that Stephen will accept the payment in satisfaction of clause 8.
The principal difficulty with this position, in my view, is that on no view could this be said to be offering security for the benefit of the Legacy. It is seeking to make Stephen accept the Legacy now based on October 2024 valuations rather than at the date of Connie’s death, whenever that may be. As Karen’s counsel conceded, it effectively assumes that Connie passes away now.
In simple terms, the offer is seeking to impose on Stephen a new obligation instead of what he is entitled to under the terms of the Deed.
It was perfectly reasonable for Stephen to reject this offer as he did in the letter from his solicitors to Karen’s solicitors dated 13 November 2025.
A number of submissions were made by counsel for Karen seeking to criticise the position set out by Stephen in the letter from his solicitors dated 13 November 2025. It was said that this position was an unreasonable one, and I infer that clause 15 had therefore been satisfied by Karen. In my view, it has not.
In my view, it is not necessary for the Court to parse too heavily over the matters asserted by Stephen’s solicitor in the letter dated 13 November 2025 beyond the rejection of the offer made by Karen on the basis that it does not reflect the obligations under the Deed.
If the offer made by Karen does not offer any form of security to Stephen but rather seeks to force him to accept a new obligation now, any statements made by Stephen in his solicitor’s letter cannot be availed of by Karen as demonstrating some unreasonable view. The starting point is whether an offer of other security has been made by Karen. It has not. The focus is on what Karen has offered, not Stephen.
In any event, I record that I do not regard any of the statements made by Stephen’s solicitor in the 13 November 2025 letter as to what may happen to the value of the properties between now and Connie’s passing, as demonstrating anything unreasonable on his part. He is really saying no more than the obvious, namely that property values may go up between now and when Connie passes.
This obvious point is, in any event, made by Mr McLeod the valuer who prepared the valuations in October 2024. His two valuation reports state the obvious that the valuations are current as at the date of valuation only. Further, he stated:
The value assessed herein may change significantly and unexpectedly over a relatively short period (including as a result of general market movements or factors specific to the particular property).
In terms of what was said by Hodgson CJ in Eq in EFG, Stephen’s view was a reasonable one as well as reasonably based on the available material. It was based on a construction of the obligations under the Deed. It was not said that this view was not honestly held. As set out above, in my view it is the correct construction of the Deed.
After the conclusion of oral submissions, counsel for Karen indicated that she also relied upon the other option set out in the letter dated 10 July 2025. I have extracted in full that option above. The offer was for Karen to deposit a sum, on settlement of the sale of Miglen and Kagens, equivalent to 134 acres of the three properties. The three properties would then be revalued on Connie’s death and Stephen would then receive the Legacy of the sum equal to the 134 acres at that time.
As pointed out by counsel for Stephen, there are still a number of difficulties with this option. Most fundamentally, it fails to directly appreciate that the Legacy is a future obligation and property values may change between now and when that obligation falls due. The security offered by Karen must have regard to this possibility. The offer made by Karen does not. The offer simply implicitly asserts that the value ascertained now is sufficient security for the future obligation. To contend that Stephen’s rejection of that offer was not reasonable, Karen would be required to prove that Stephen was acting unreasonably in not accepting this security. In effect, Karen would be required to prove that there would be no real possibility of the properties rising in value between now and when Connie passes. There was no attempt to prove this.
Further, the offer does not indicate where the monies would be invested. Are they to be invested securely? The offer also does not offer any security, by way of a charge for example, in a manner similar to the charge over the property provided for in the Deed. Absent a charge, Stephen could potentially be at risk to a claim over the monies by creditors of Karen.
For completeness, I also record that I reject the contention by counsel for Karen that by failing to respond to the offer made on 10 July 2025, Stephen was acting unreasonably such that Karen was entitled to serve the lapsing notice on 18 September 2025. The contention appeared to be that the effect of Stephen not responding was that the caveat should be removed with no security in place of it.
I do not accept these contentions. The delay between 10 July 2025 and 18 September 2025, whilst no doubt frustrating to Karen was not, in my view, unreasonable. The properties were not being marketed at this time, and have still not been marketed. Furthermore, there is nothing in the Deed which suggests to a reasonable person, in my view, that the parties intended that if there was such delay, Stephen would forfeit his right to any alternative security. Consistent with the approach adopted in the authorities, including those referred to by Goodman J in Qantas, the more orthodox approach would be that the Court, in assessing whether any view of Stephen’s was reasonable, would consider the fact that he had not provided reasons for that view.
The question should thus be considered at the present time and not, in my view, simply at the time that the lapsing notice was given.
For these reasons, I reject Karen’s contention that pursuant to clause 15 of the Will, she is entitled to have the caveat removed. In my view, she has not yet offered sufficient security to enliven her right to have the caveat removed. Such security would need to take into account, at the least, the fact that the Legacy is a future obligation and may not arise until some years in the future.
Karen also mounted an alternative argument seeking withdrawal of the caveat pursuant to s 74MA of the RPA.
An aspect of Karen’s argument in this regard contended that clause 15 had been satisfied by her and accordingly the Court should order the caveat be removed pursuant to s 74MA. As set out above, I have rejected Karen’s contention that she has complied with clause 15.
Counsel for Karen also referred to the discretion that the Court possesses under s 74MA to order that a caveat be removed. Reference was made to the authorities that approach the exercise of discretion in a manner akin to an interlocutory injunction, asking whether there is a serious question to be tried as to whether a caveatable interest exists and, if so, considering the balance of convenience.
The present case is, in my view, quite different to the usual case of the extension of a caveat under s 74MA. Ordinarily, such cases are dealt with on an urgent basis where the caveat is said to support a disputed interest in land and the question for the Court is whether the caveat remains on title whilst the proceedings to determine the underlying disputed question proceed, or whether the caveat is removed.
In the present case, I have determined above the underlying question.
The occasion for the Court to balance the competing interests between the parties arguably does not arise.
In any event, if the balancing exercise was to be engaged in, the price for Karen obtaining an order that the caveat be removed would ordinarily be the provision of adequate security to Stephen, coupled with an undertaking as to damages from Karen. As set out above, no adequate security has been offered. Further, no undertaking as to damages has been given.
It was also suggested that the existence of the caveat was preventing a sale of Miglen and Kagens. This was only a suggestion. There is no evidence that the properties have even been marketed. I do not accept that, as a universal proposition, the existence of a caveat on title prevents a sale of property. The obligation to provide title free from encumbrances arises on completion.
For these reasons, I see no basis on which the Court should exercise its discretion under s 74MA to order the removal of the caveat.
For the reasons set out above, Stephen’s case succeeds and Karen’s fails.
It seems to me that the relief that should be granted is as set out in the summons extending the caveat until further order, with the cross-summons being dismissed. I will however, give the parties an opportunity to seek to agree orders.
It also seems to me that costs should follow the event and Karen should pay Stephen’s costs of the proceedings. I will, however give the parties a short opportunity to agree on costs, failing which I will direct submissions to be filed and I will determine the remaining issues on the papers.
The Court orders that:
Direct the parties to confer and seek to agree final orders to give effect to these reasons, including as to costs.
Direct the parties to provide any agreed orders, or competing orders, to my Associate by no later than 5pm on 30 January 2026.
In the event there is no agreement, including as to costs, direct the parties to provide to my Associate by no later than 5pm on 30 January 2026 any submissions and supporting material, such submissions not to exceed 3 pages.
Direct the parties to provide to my Associate by no later than 5pm on 6 February 2026 any submissions and supporting material in reply, such submissions not to exceed 3 pages, whereupon the remaining issues will be determined on the papers.
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Luff
Lyons [2025] NSWSC 1509
(2019) 148 IPR 1
(2010) 41 WAR 23
(1979) 144 CLR 596
(1988) 14 NSWLR 1