//
[2025] ACTSC 539
General information, not legal advice.
Supreme Court of the ACT
2025-12-09
Muller AJ
Original judgment source is linked above.
Zoe will write a short plain-English brief of this judgment and email it to you: what it was about, what the court decided and why. It can take up to a minute.
General information, not legal advice.
Or create a free account to save it and ask Zoe follow-up questions.
Source: the ACT Courts (www.courts.act.gov.au). Converted to plain text by ZoeLaw. Not the official version.
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: Muhammad v Rahman Citation: [2025] ACTSC 539 Hearing Date: 28 November 2025, 9 December 2025 Decision Date: 9 December 2025 Before: Muller AJ Decision: (1) The application in proceeding dated 8 July 2025 is dismissed. (2) Costs of the application are in the cause. Catchwords: CIVIL LAW – CAVEATS – Application for removal of caveat over property – claim for equitable interest in property – asserted financial hardship resulting from caveat – no evidence of financial hardship resulting from caveat – serious case to be tried – application dismissed Legislation Cited: Land Titles Act 1925 (ACT), s 104 Cases Cited: Adrija Pty Ltd v Mohamed [2013] ACTSC 120 Kingstone Constructions Pty Ltd v Crispel Pty Ltd (1991) 5 BPR 11,991 Stone Living Pty Ltd v 3 Property Group 9 Pty Ltd [2020] ACTSC 149 Vella v Aliperti (1995) NSW ConvR 55-750 Parties: Atif Muhammad (Plaintiff) Mati-Ur Rahman (Defendant) Representation: Counsel J Holt (Plaintiff) K Miankhel (Defendant) Solicitors Eastwoods Legal (Plaintiff) SMS Chambers (Defendant) File Number: SC 95 of 2025 MULLER AJ: REVISED EX TEMPORE REMARKS
Introduction
By application in proceeding dated 8 July 2025 and lodged on 16 July 2025, the applicant-defendant applies for removal of the caveat lodged by the plaintiff over a property described as Unit 384, Block 1, Section 78, Greenway. The primary proceedings concern the same property. In those proceedings, the plaintiff makes a claim in equity for declaratory relief on the basis of an asserted interest in the property.
In short, the plaintiff says that he advanced funds to the defendant to enable him to purchase the property on the basis of an agreement that the plaintiff and defendant would each be registered as owners of the property on a tenants-in-common in equal shares basis. Upon completion of the purchase, the title was registered in the name of the defendant only.
The plaintiff seeks a declaration to the effect that the agreement between the two created an equitable interest for the plaintiff in owning the property. By his defence, the defendant disputes the plaintiff's claim to an equitable interest.
Defendant’s submissions
The defendant reads his affidavits, affirmed on 8 July 2025 and 20 November 2025. Those affidavits set out the basis for his defence of the plaintiff's claim and also explain a series of difficulties the defendant has experienced that underpin his assertion that he is prejudiced by the continuance of the caveat. The defendant points to the fact that he is currently unable to sell the property, or to refinance or access equity to pay rates, taxes and legal fees. He says that he owes thousands of dollars in land tax and rates and is continuing to accumulate interest monthly at rates of between 11 and 12 per cent.
The defendant says that he is struggling to pay his legal fees, being presently unemployed due to a shoulder condition. He has been a recipient of JobSeeker payments since ceasing work and he has also borrowed money from friends. In submissions before me today, the solicitor for the defendant added that the defendant says he is struggling to make mortgage payments.
There are some matters that are not addressed by the evidence relied upon by the defendant, namely the present state of the loan over the property. There is no evidence to suggest that the loan payments are not being met or that the mortgagee bank is taking any steps to realise its security. The plaintiff lives in Sydney, and the subject property is in Greenway in the ACT. It is currently leased to a tenant. I have no evidence before me concerning the rental arrangement.
The defendant’s solicitor says in her submissions that the rent is not enough to cover the outgoing costs for the property, but there is no detail before me that substantiates that assertion. The submissions of the defendant were focused on financial hardship; that is the financial hardship that is caused to the defendant by the continuance of the caveat. The defendant also sought to address the plaintiff's claim by pointing to the evidence the defendant will give about the arrangements that were in place at the time of the purchase.
Having heard those submissions, I am left in no doubt that there is a factual contest of substance between the parties concerning the reasons why the plaintiff paid large sums of money to the defendant in the period leading up to the purchase of the subject property. The defendant also highlights the fact that the plaintiff is an Australian-educated young man who has other property interests and did not require the assistance of the defendant to secure the purchase of a property like the one under consideration in this case.
Plaintiff’s submissions
The plaintiff reads an affidavit affirmed by him on 21 March 2025. It sets out in some detail the factual basis for the equitable interest claim, including annexing some documentary evidence supporting the payments to which I have just referred. The plaintiff also reads another affidavit of his, affirmed on 24 April 2025. It deals in short form with the allegations raised by the defendant in his affidavit of 8 July 2025. Although the plaintiff's April affidavit predates the defendant's affidavit of July, the plaintiff clearly had access to a draft of the defendant’s affidavit for the purpose of preparing his evidence. The plaintiff contends that the factual assertions he makes are sufficient to support the creation of a resulting trust in the property in his favour.
He says that the evidence on which he relies, when taken at its highest, establishes an equitable interest in the property. On that basis, and addressing the balance of convenience question, the plaintiff points to the offer that he made previously for the sale of the property to proceed on the condition of some agreement concerning his claimed interest, and the retention of funds to cover that interest and his legal costs.
As to the argument raised by the defendant, to the effect that the funds paid to him by the plaintiff were in the nature of wage payments for work performed in a business conducted by the plaintiff, the plaintiff points to the fact that the business was operated by a corporate legal entity, albeit one of which he was a director, and any argument about wage payments should have been addressed by the filing of a cross-claim or third party claim involving that legal entity. In summary, the plaintiff contends that there is a proper basis upon which to find a caveatable interest in the land and the balance of convenience favours leaving the caveat in place.
Does the plaintiff have a caveatable interest in the land?
Section 104 of the Land Titles Act 1925 (ACT) permits a person claiming an interest in land to lodge a caveat. A caveat must be supported by an interest in land. As Mossop M (as his Honour then was) observed in Adrija Pty Ltd v Mohamed [2013] ACTSC 120 at [20]-[21]: 20. Section 107 of the Land Titles Act allows a registered proprietor of an interest in land subject to a caveat to apply to the Registrar-General to have a caveat removed. The Registrar-General then gives notice to the caveator and, not less than fourteen days later, must remove the caveat from the register unless the Court otherwise orders. 21. In order to justify an order preventing the removal of the caveat, the caveator’s claim to an interest in the land must raise a serious question to be tried and the balance of convenience must favour the extension of the caveat as opposed to other options. (Citations omitted.)
In Stone Living Pty Ltd v 3 Property Group 9 Pty Ltd [2020] ACTSC 149 (Stone Living), McWilliam AsJ (as her Honour then was) dealing with an application to remove a caveat, observed at [13]: On an application seeking removal of a caveat, it has been said (to similar effect) that the Court must pay close attention to matters such as the nature of the interest claimed by the caveator, whether there is any dispute as to the existence or extent of the interest, and the likely consequences of ordering the caveat to be withdrawn. (Citation omitted.)
I am satisfied on the evidence before me that there is a serious question to be tried, in that there is a genuine dispute as to whether the agreement between the parties was such that in consideration of the sums of money advanced by the plaintiff to the defendant, the subject property would be purchased and that it would be jointly owned by the two of them. The evidence demonstrates that the plaintiff's claim has or may have substance, adopting the phrase used by Santow J in Vella v Aliperti (1995) NSW ConvR 55-750 at 55-772.
Having accepted that there is an arguable case for a caveatable interest in the land, it is necessary to address where the balance of convenience lies. The defendant says that he is facing serious financial hardship and, in short, that he cannot afford to service the loan over the property. I accept that there is clearly some ongoing financial prejudice to the defendant in that he is continuing to incur interest charges relating to the loan secured by mortgage over the property.
However, there is no evidence to the effect that the bank is proposing any imminent realisation of the security. I have been provided with no statements demonstrating the loan status, nor any evidence concerning the rental arrangement that is in place in respect of the subject property. In Stone Living at [36], McWilliam J referred with approval to the decision of Young J of the NSW Supreme Court Equity Division in Kingstone Constructions Pty Ltd v Crispel Pty Ltd (1991) 5 BPR 11,991, where his Honour said at 11,991: So far as balance of convenience generally is concerned, it is certainly the case that this court has ensured that caveats are not used as a blackmailing device so that a caveat can legitimately be lodged in respect of a relatively small claim and force the registered proprietor to pay out such a claim even though it is bitterly contested. The court has consistently taken the attitude that if the registered proprietor is prepared to put up an alternate security, then it will remove the caveat even though, as I have said, the caveat may be completely valid.
Orders
I certify that the preceding twenty-one [21] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Acting Justice Muller. Associate:
Date:
Muhammad
Rahman [2025] ACTSC 539
Her Honour went on to observe at [37] of Stone Living: Young J further indicated that the Court has to balance the ‘convenience’ of the registered proprietor being able to deal with the land with the ‘inconvenience’, if a Court should hold that the caveator has a valid equitable charge, of its interest losing priority to any interest which would be created by the registered proprietor if the subject property were to be sold or, in this case, refinanced.
I have reached the view based on the presently available evidence, that the balance of convenience favours the caveat remaining in place. In that regard, I have been influenced by the absence of evidence regarding the status of the bank loan and the lease, the absence of evidence concerning the defendant's capacity to otherwise meet the plaintiff's claim, and the failure of the defendant to propose any alternate means of securing the caveatable interest that is claimed, notwithstanding the proposal put by the plaintiff in his earlier affidavit that he would be open to considering an arrangement that involved the sale of the property but provided some protection for his asserted interest pending finalisation of the primary proceedings.
I therefore consider that the balance of convenience favours the caveat remaining in place for the time being. As a consequence, I dismiss the defendant's application in proceeding dated 8 July 2025, noting the substantial factual dispute that underpins the primary proceedings.
Notwithstanding that the application has been unsuccessful, I consider it appropriate in this instance to order that the costs of the application in proceeding be costs in the cause, on the basis that the ultimate question of whether or not the plaintiff is able to establish an equitable interest in the land is yet to be determined.