Conveyancing - Land titles under the Torrens System - Caveat - Application by mortgagee in possession for order to remove - Sole registered proprietor and mortgagor the son of caveator - Caveator claiming land only transferred to son for purposes of mortgage - Written acknowledgment that caveator retained full estate and interest - Whether caveatable interest - Whether presumption of advancement - Whether arrangement disclosed to plaintiff - Effect

Transfer of Land Act 1893 (WA), s 138

Mason v Clarke [1954] 1 QB 460

1 ROBERTS-SMITH J: By originating summons filed 29 October 2001 the plaintiff called upon the defendants to show cause why caveat H72622 should not be removed from Certificate of Title Vol 2090 folio 724.

2 The application was supported by an affidavit of Christine Phelps sworn and filed 29 October 2001.

3 The first defendant filed an affidavit sworn 14 November 2001 in opposition to the application, an amended affidavit sworn 14 November 2001 and a further amended affidavit sworn 5 July 2002.

4 On 19 November 2001 Anderson J made orders by consent that the matter be tried on affidavit evidence with a right to each party to cross-examine witnesses and further orders as to the filing and serving of affidavits and the provision of discovery.

5 When the matter came on for hearing before me on 12 March 2003 the plaintiff called Ms Phelps and the first defendant gave evidence herself. Each was cross-examined. No other witnesses were called.

6 Ms Phelps is the Collections Manager for the plaintiff.

7 There is no dispute that on 25 October 1996 the first defendant's son, Anthony Daniel Weber ("the son") the registered proprietor of real property situated at 78 Hopkins Street, Boulder, Western Australia ("the property"), mortgaged the property to the plaintiff. That property was Boulder Lot R578 being the whole of the land comprised in Certificate of Title Vol 2090 folio 724.

8 The mortgage was registered against the title on 18 November 1996.

9 On 6 April 1999 the first defendant lodged caveat H 72622. The estate or interest being claimed was expressed to be "a right to the present and future possession of the aforementioned land as owner in fee simple" and she claimed an estate or interest as detailed in an attached statutory declaration dated 6 April 1999.

10 In her statutory declaration the first defendant stated:

"1. I have owned 78 Hopkins Street, Boulder in the State of Western Australia, more particularly known as Certificate of Title Volume 2090 Folio 724 (hereinafter referred to as 'the property'). I have owned said property since 1978, first as leasehold. Thereafter I purchased the property in fee simple.

2. In or about June of 1984 I went on an overseas holiday and in order to ensure Anthony Daniel Weber's (hereinafter referred to as 'my son') access to cash or land I enjoined him onto the Title as joint tenant, so as to ensure his immediate future in the event of my death.

3. When my son turned EIGHTEEN (18) on the 21st day of September 1995, We jointly and privately mortgaged the property to pay of (sic) debts which had accrued due to a failed business which I had. I explained to my son at the time, that the property would only go into his name when we re-mortgaged, because he was working and I was not. Although, it was also explained to him that while the Certificate of Title would be in his name temporarily the property was not his; nor would it be his until my death.

4. We wrote out a simple document setting out these facts on the 21st day of September, 1995, which was read, by him agreed by him and signed by him on the same date.

5. Since I purchased the property in 1978 until February, 1999, I have always managed the property at times on my own and at times in conjunction with Wades Estate Agency. I have always received all income from said property and dealt with all aspects of management in conjunction with Wades Estate Agency until January of this year when my son endeavoured to list the property for sale without my knowledge.

6. The reason for there being $30,000.00 (THIRTY THOUSAND DOLLARS) listed on the transfer dated 1st day of October, 1996, I simply because we had neither the time nor the money to hire solicitors to advise us on how to correctly do the Transfer of the property from me to him as trustee. We therefore took the bank's advice and transferred the property for the mortgage amount. However, Anthony Daniel Weber was and is aware that said transfer was done solely for mortgage purposes and in no way invalidated my full ownership of the property. The agreement was that the property would revert to me if I gained employment or once the mortgage was paid off. This was the sole reason we wrote the document and signed same annexed hereto and marked with the letter 'A'

7. When we last spoke about the property Anthony Daniel Weber clearly stated that he knew that he had no legal or moral right to sell, manage or interfere in any way with the property known as 78 Hopkins Street, Boulder, W.A. 6432."

11 The annexure marked "A" attached to the statutory declaration was a handwritten document in the following terms:

"I Anthony Daniel Weber hereby acknowledge that I have no moral legal or any other claim to the property known as 78 Hopkins St Boulder (more particularly known as Boulder lot R578 and being the whole of the land comprised in Certificate of title Volume 1710 Folio 138). It has been explained to me that the only reason I have joint tenancy is that my mother as a sole parent wished to safeguard my interests if she predeceased me while I was a minor. I understand I have no ownership rights or any other rights legally and morally over said property. I understand should she wish to sell no profits from the sale will be mine. My only benefit from the property is if my mother predeceases me. Further it is not now nor ever will be my intention to do away with my mothers (sic) legal rights, nor will I interfere in the management sale or otherwise invoke myself in the said property unless my mother requests same of me. The implications of this agreement have been explained to me in full and I hereby agree to abide by the aforementioned conditions. I understand the Title has only been transferred to my sole name for the purposes of the mortgage, and that is in no way gives me rights legal or otherwise to sell, manage or otherwise try to take my mothers (sic) property from her or to deal with said property in any underhand manner

Signed by both interested parties this 21st day of September 1995."

12 That document ("the acknowledgement") was signed by the first defendant and the son.

13 The mortgage was granted by the son to the plaintiff as security for a loan made by the plaintiff to the son in November 1996 for a sum the plaintiff says was $40,000 and which the first defendant says was $30,000. There is no dispute that it is also security for further loans made by the plaintiff to the son in November 1997 and April 1998 in the sums of $1,000 and $10,828.25 respectively. Those loans are still outstanding.

14 According to Ms Phelps, the matters set out in the statutory declaration and the acknowledgement were not disclosed to the plaintiff at the time the loans were made, and indeed no disclosure of them has ever been made to the plaintiff until the lodging of the caveat.

15 According to Ms Phelps, had the matters the subject of the statutory declaration and the acknowledgement been disclosed to the plaintiff prior to, or at the time the loans were made, it is likely that the loans may not have been made at all. She states that the risk factor would have to have been assessed "on a whole different set of circumstances" and that the ability or inability of the registered proprietor to give a mortgage over unencumbered land as secure repayments of the loans would have been crucial to any such risk assessment.

16 According to the first defendant, she purchased the property about 1970 and about that time arranged for the son (then four years of age) to become registered as a joint tenant because she wanted him to have the property when she died. Her further reason set out in her further amended affidavit tendered as Ex D1, was that she was a single parent and was concerned to ensure that if she were to die, the rental income of the property would be used for the benefit of the son. However, while she lived, she wanted the rental income for her own benefit and had hoped to return to live at the property at some stage later in life after completing her university studies.

17 Over the years she has spent considerable sums of money maintaining and improving the property and has earned rental income from letting it.

18 About 1994 she decided to commence studies at university and needed money. She was unable to obtain a loan due to her financial circumstances at the time, in particular because she owed a debt of $26,000 to Rothmans arising from a failed newspaper agency venture.

19 She arranged to transfer her interest in the property to the son, the idea being that he would then mortgage the property to the plaintiff and would pass the money to her so that she could use it to refinance an earlier loan.

20 It was to give effect to the first defendant's intentions that the acknowledgment was signed by her and the son on 21 September 1995.

21 The property was transferred by transfer dated 1 October 1996 from Andrea Katharina Weber and Anthony Daniel Weber to Anthony Daniel Weber alone for a consideration of $30,000.

23 The mortgage, as I have said, was entered into on 25 October that year.

24 The first defendant says the arrangement she had with the son worked well between 1995 to 1999. She received the loan money of $30,000 from him which he had obtained from the plaintiff under the mortgage. She used part of the money to repay the Rothmans' debt of $26,000 and the remainder to assist her financially during her university studies. (I understood her to mean by this that she used the money to refinance an earlier loan which she had obtained to pay the Rothmans' debt).

25 The property was subsequently rented out and the rental income was utilised to repay the loan of $30,000. She had engaged Wades Estate Agents ("Wades") to manage the rental property and they were directed to pay any excess rental income to her.

26 The first defendant deposed that about 1998 the son came under his father's influence and realised that he held a registered interest in the property. About that time the first defendant had been admitted to the psychiatric ward at Sir Charles Gairdner Hospital where she spent some three months as a patient. She was released for about a week in order to attend her mother's funeral and it was about that time she learned from Wades that the son had tried to sell the property without her knowledge. According to Wades, he had asked them to obtain a valuation in preparation for sale and had given them instructions to pay the excess rental income to him instead of to the first defendant. He also took out the two additional loans to which I have referred. She stated that it was those circumstances which caused her to lodge the caveat.

27 The first defendant stated that after she had lodged the caveat, the son visited her in hospital about May 1999 and told her that if she did not remove it she "would not have a son". She has since lost contact with the son and she believes he does not appear to care if the property is sold. His last words to her about May 2002 were that he had had enough and did not care whether "they" sell the property.

28 According to the first defendant the property is earning rental income of approximately $600 to $700 a month, which income is being paid directly to Wades. The rental income is being allocated towards the loans repayments of $298 per month for the original $30,000 plus the additional loan repayments of $75 per month for the further loans to the son.

29 Further documentation was produced at the hearing. That included the original Crown grant in respect of Certificate of Title 1710 Folio 138.

30 It appears the first defendant originally leased the property from about 1970 and applied for the freehold in 1985.

31 The Crown grant was issued on 23 October 1985 to her and her son as joint tenants. In accordance with s 59 of the Transfer of Land Act 1893 (WA) ("the Act"), the grant notes that the son was a student and a minor born on 21 September 1977.

32 The property was mortgaged to Owen and Patricia Lowth on 22 September 1995.

33 It was the first defendant's evidence that the transaction with the Lowths was a private mortgage and she and the son went to the lender's solicitor to arrange it. She says that he was the one who suggested that she obtain something in writing from the son. She had explained to the lawyer what was happening with the property and why - namely that she wished to ensure that if anything happened to her, the son would have an asset and income - and it was the lawyer who asked whether she was aware she was signing away her rights. She said she told him she was not aware of that and he suggested that she get something in writing from the son. That was why the acknowledgment was prepared. I note in passing that explanation is consistent with the date of the acknowledgement and the date of registration of the Lowth mortgage.

34 In cross-examination the first defendant readily agreed that it was she who needed the money from the plaintiff. She said that she had initially applied for the loan, but her name "came off". She said she spoke to the plaintiff's loans officer at length about it. The reason her name was crossed off was because she was unemployed, being then a law student at Murdoch. She says it was the loans officer who suggested the loan just be in the son's name. She said the loans officer telephoned her later and asked whether it would be all right if her name was crossed off the application and she agreed to that. She was adamant that the plaintiff was fully aware by reason of the discussions with the loans officer, what the real position with respect to the property was.

35 I note that Ex P3 is an "authority and acknowledgment" produced from the plaintiff's file in the name of both Andrea and Anthony Weber, acknowledging that they had made application to the plaintiff for mortgage loan finance through Select Mortgage Services and authorising Select Mortgage Services to act.

36 The mortgage loan application form itself (Ex P2) shows two applicants, being the first defendant and the son, and details throughout the form are given in respect of both of them. Both of them have signed. The form is completed in black biro. The loan applied for is written as $35,000. However, there is blue writing on the form. The name and details relating to the first defendant have been ruled through in blue and the loan figure has been changed in blue biro to $40,000.

37 Both the loan application and the "authority and acknowledgment" forms are dated 12 September 1996.

38 The transfer document is dated 1 October 1996 and was lodged at the Titles Office by the plaintiff.

39 The principles to be applied on an application under s 138 of the Transfer of Land Act for an order for removal of a caveat were discussed by me in Bomford v Barrett [2002] WASC 304 (3 December 2002). I adopt without repeating what I said there at [25] to [33].

40 The onus lies on the caveator to demonstrate that there is a serious question to be tried, in the sense that she has, or may have, a valid caveatable interest (Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42 per Owen J (with whom Malcolm CJ and Walsh J agreed) at 48 - 50).

41 The caveat was lodged under s 137 of the Transfer of Land Act which affords a person a statutory right to protect a legal or equitable interest in land by way of the lodging of a caveat.

42 Section 138 of the Act gives the registered proprietor or a person applying to be registered as the proprietor, a right to summon the caveator to show cause in this Court why the caveat should not be removed. The court is empowered to make such order as the court may see fit.

43 By s 138C of the Act, where a caveator is served with a notice under s 138B(1) and does not obtain an order under s 138C within 21 days after the day on which the notice is served, the caveat will lapse.

44 Subsection 2 of s 138C empowers the court to extend the operation of the caveat or dismiss it. The caveat is to be extended if the court is satisfied that the caveator's claim has, or may have, substance. Section 138 contains no such qualification. Nonetheless it has been held that it would be unusual for a caveat to be set aside pursuant to s 138 of the Act unless the claim to the estate or interest appears to be without any validity or no longer exists.

45 In Porter v McDonald and The Registrar of Titles [1984] WAR 271, Brinsden J pointed out that a large number of the authorities under s 138 and comparative legislation had been discussed by him in Deputy Commissioner of Taxation v Corwest Management Pty Ltd [1978] WAR 129, particularly at 139 - 141 and reiterated his view that in such an application as had been made in Porter, where the existence of the caveatable interest was not challenged and the caveat by its terms sought to protect that interest, there was no room for an argument based on the balance of convenience that the caveat should be ordered to be removed (274).

"The practice with respect to the removal of caveats is one of long standing. The caveat will not be removed unless the claim to an estate or interest in the land appears to be without foundation. The courts will not, except in the most exceptional case, decide the matter on summons. I believe that those of us who learned of the Torrens System from Dr Kerr The Australian Lands Titles (Torrens) System (1900) will have no trouble with that statement (see pp 492-495). Brinsden J in Deputy Commissioner of Taxation v Corwest Management Pty Ltd [1978] WAR 129 collects many of the authorities.

It is true of course that the Transfer of Land Act does not expressly or by implication exclude the power of the courts to grant relief in personam: Walsh v Alexander [1913] HCA 24; (1913) 16 CLR 293 at 304 and 306. It is also true that in more recent cases courts have indicated that in the exercise of discretion they will have regard to matters that would be relevant to an application for an interim injunction (see Martyn v Glennan [1979] 2 NSWLR 234; Re Clement's Caveat [1981] Qd R 341; Re Jorss' Caveat [1982] Qd R 458). In all those cases the issue is whether the plaintiff or the caveator had an enforceable or existing interest in land. The Privy Council recently in Eng Mee Yong v Letchumanan [1980] AC 331 said at 335:

'The caveat under the Torrens System has often been believed to be a statutory injunction of an interlocutory nature restraining the caveatee from dealing with the land ending the determination by the court of the caveator's claim to title to the land in an ordinary action brought by the caveator against the caveatee for that purpose. Their Lordships accept this as an apt analogy with its corollary that caveats are available in appropriate cases for the interim protection of rights to title to or registrable interest in land that are alleged by the caveator but not proved.'

At 341 they reiterated the old rule 'in the normal way it is not appropriate for a judge to attempt to resolve conflicts of evidence on affidavit."

47 In Custom Credit Corporation Ltd v Ravi Nominees, Owen J examined a number of authorities, including Porter v McDonald, in which the relevant principles have been discussed, and concluded (at 50) that although considerations relevant to an interim injunction are applicable to an application under s 138 of the Act, they may not necessarily be used in the same way. The question has to be decided bearing in mind the peculiar statutory context. His Honour said (50):

"In my opinion, the balance of convenience is a factor to be considered in an application under s 138. However, it seems to me that interlocutory removal of a caveat where an arguable case as to the existence of the caveatable interest has been demonstrated, will be unusual."

48 Owen J saw his analysis as being consistent with the approach taken by Rowland J in Porter v McDonald, adding that in his opinion:

"... it would be wrong to confine Rowland J's approach to situations where the caveatee concedes that a caveatable interest exists."

49 Finally, Owen J drew attention to s 140 of the Act, which provides a mechanism whereby a person aggrieved by the lodging or maintenance of a caveat which has been improperly lodged or maintained, can seek compensation.

50 Counsel for the plaintiff submitted this is not a case which is to be resolved simply on the basis that the first defendant may have a caveatable interest, nor that it would be inappropriate for me to determine disputed questions of fact. His submission was that the hearing before me was a trial of the plaintiff's application under s 138. Evidence had been given orally and there had been cross-examination. It is for this Court, it was submitted, to resolve disputed questions of fact on this application. Again, it was said, this application is a trial of whether or not there is a caveatable interest. His final submission, of course, was that I should find the first defendant does not have such an interest and accordingly order removal of the caveat. On the substantive level the plaintiff's submission was that there is no prospect on the evidence that the first defendant has an equitable interest, but that if there is, it must be defeated on equitable principles.

51 The relevant paragraph in "Halsbury's Laws of Australia" ([355-8315]) dealing with the principles relating to removal of caveats, states that:

"An application to remove a caveat is essentially in the nature of an application for an interlocutory injunction: (Re Burman's Caveat [1974] 1 Qd R 123). The court will determine questions of law between the parties, provided that the factual matrix is established and there is sufficient time for the parties to make the necessary submissions: (Venios v Machon (1986) 3 BCL 171). In determining whether to order removal of the caveat, the court must take into account the balance of convenience between the parties: (Re Clement's Caveat [1981] Qd R 341). The caveator bears the onus of proving the caveatable interests: (Re Little; Ex parte Thorne's Bankstown Estate Ltd (1929) SR (NSW) 401; Ridge v Incentive Programmes Pty Ltd (in liq) (1985) Q ConvR 54-172; Custom Credit Corp Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42 at 48 per Owen J; Re Jorss' Caveat [1982] Qd R 458, SC(QLD), Full Court; Re Divoca Pty Ltd's Caveat [1991] 2 Qd R 121 qt 127 per Connolly J; Kralfly Pty Ltd v McVeigh (unreported, Fed C of A, Finn J, VG 703 of 1995, 8 September 1995, BC9502899; Andrews v Rooney (unreported, SC(WA), Cmr T E O'Connor QC, 1524 of 1994, 24 November 1994, BC9402125). Even if doubtful about the existence of a proprietary interest, the court will decline to remove a caveat for a short period of time to enable a substantive proceedings to be commenced: (Beneficial Finance Corp Ltd v Multiplex Constructions Pty Ltd (1995) 36 NSWLR 510 at 523 per Young J; Kingstone Constructions Pty Ltd v Crispel (1991) 5 BPR 11,987 at 11,991 per Young J."

52 Re Burman's Caveat [1994] 1 Qd R 123 was a decision of the Queensland Court of Appeal. The report notes that Porter v McDonald was not followed. However, the decision turned on a conclusion that the caveat there, which had been lodged by a registered proprietor of land with a view to preventing its sale by registered mortgagee in exercise of the power of sale, should be removed in circumstances in which, although the caveator claimed from the mortgagee unliquidated damages unrelated to the mortgage transaction itself, there was on any view of the matter, a substantial sum in excess of the value of the land due and unpaid on the mortgage and the caveator did not offer to provide alternative security. The court held that in such a case it must ordinarily follow that a caveat intended to prevent exercise of the power of sale cannot stand. The trial Judge was therefore held to have come to a correct conclusion in determining that the balance of convenience favoured removal of the caveat.

53 In my view the approach taken in Re Burman's Caveat is consistent with the view of Porter v McDonald expressed by Owen J in Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd.

54 The decision in Venios v Machon (1986) 3 BCL 171 is more pertinent to the present case. It can readily be accepted that either on an application for an interlocutory injunction or an application to remove a caveat under s 138 of the Act, a court can, and should, determine questions of law between the parties, provided the factual matrix is established. It is that last qualification which is important. The proposition so stated is consistent with the law as hitherto expressed (Hortico v Energy Equipment (1985) 1 NSWLR 545; Cohen v Peko-Wallsend [1986] HCA 70; (1986) 68 ALR 394; cf American Cyanimid Co v Ethicon Ltd [1975] UKHL 1; [1975] AC 396 per Lord Diplock at 407).

55 The essential factual matrix relied upon by the plaintiff here is that:

1. the first defendant transferred her estate and interest in the property to the son;

2. for the purpose of him being given a loan by the plaintiff;

3. secured by a mortgage of the property to the plaintiff;

4. the purpose of the loan was to obtain money for the first defendant;

6. that represented payment of the purchase price to the first defendant in exchange for her estate and interest in the property;

7. the arrangement between the first defendant and the son was concealed from the plaintiff;

8. had the plaintiff been aware of the facts concealed, the loan would not, or most likely would not, have been granted.

56 On the evidence, (6), (7) and probably (8) are disputed by the first defendant. Her evidence was that the payment of the initial loan moneys was made into a joint bank account of her and the son. She does say that all but $5,000 of it was immediately used by her to refinance the Lowth mortgage and for other personal purposes. She was adamant that the money received by her from the son was never seen by either of them as being the purchase price for the transfer of her estate and interest in the property to him.

57 The first defendant was also adamant in her evidence that the arrangement between her and the son as to ownership of the land was not only known to the plaintiff but was in fact the product of discussions between them and positive suggestion and action by the plaintiff's loan officer.

58 Ms Phelps was not personally involved in the transaction and is in no position to contradict this - although I am compelled to observe that this critical aspect of the first defendant's case was never put to Ms Phelps in cross-examination. Nor was Ms Phelps asked, either in evidence-in-chief or cross-examination, the basis for the assertion in her affidavit [14] - that if the arrangement had been disclosed, it is likely that the loans may not have been made at all. The plaintiff would still have had the security of a first charge against the property.

59 At a trial the first defendant would rely on a resulting trust. It would be contended that although she created a legal interest in the property in the son, she retained the equitable title. At trial, once that was properly put forward, the onus would be on the plaintiff to rebut it. In this regard, the first defendant relies upon the judgment of Wheeler J in Official Trustee in Bankruptcy v James [2001] WASC 66.

60 That was a case concerned with an application by a caveator for extension of a caveat under s 138C(2)(a) of the Act, and turned on the question whether there was sufficient evidence before her Honour to demonstrate that the caveator's claim did, or may, have substance. The caveator's interest in the property was said to arise out of a constructive, or alternatively a resulting, trust. Against that (and amongst other submissions) the defendant argued the presumption of advancement applied and there being no evidence to rebut it, there could be no caveatable interest. Her Honour concluded that on the material before her it could not be said the plaintiff's claim could not be made out. She declined to vary a previous order extending the operation of the caveat until further order. James turns on its own facts.

61 Mr Love, for the first defendant, contends there is a serious question to be tried here. That submission must be accepted. The serious question is whether the first defendant has an equitable interest in the property by way of a resulting trust.

62 It is arguable that in addition to establishing the primary facts to show such an interest, a presumption of advancement may arise in the circumstances of this case. Were it to do so, the onus would be on the first defendant to rebut it.

63 The plaintiff contends there is a presumption of advancement by way of a gift to the son. Whilst accepting that such a presumption may be rebutted by evidence of actual intention of the first defendant, it was submitted that here the presumption has not been rebutted because the evidence of the first defendant is not to be believed or alternatively she is now estopped from asserting that she has any beneficial interest. The latter proposition is advanced on the basis that the first defendant stood back and allowed the plaintiff to act to its detriment when she was clearly in a position to disclose to the plaintiff that she was in fact the beneficial owner of the son's registered interest. It was argued that the sale was not affected by the acknowledgement because that was executed well before the transfer of the property to the sole proprietorship of the son.

64 Accepting for present purposes the plaintiff's submission that because the first defendant's claim is for an equitable interest, equitable principles must be applied to the determination of it, the evidence here is not such as to enable any final determination to be made.

65 The plaintiff's submission that the law would today presume that where a mother bought a property and put it into the name of her son, that was a gift by way of advancement, may well be correct in contemporary conditions, although that has not been the common law in the past (Bennett v Bennett [1879] 10 Ch D 474). I express no view about that; I merely observe relevantly to this case, that even where it applies, the presumption of advancement is no more than a prima facie presumption and the evidence here might well be found sufficient to rebut it.

66 It is a principle of equity that a person may not rely upon their own illegal act to rebut an equitable presumption (Tinsley v Milligan [1993] UKHL 3; [1994] 1 AC 340). This principle would assist the plaintiff only if the conduct of the first defendant can be shown to have been illegal. The point springs from a contention that the first defendant and the son actively concealed the arrangements between them about the property from the plaintiff for the purpose of obtaining the loan. Were such to be shown, it could well amount to a conspiracy to defraud. But the evidence as it stands is to the contrary. The first defendant's evidence is not only that the plaintiff's loans officer was aware of the situation, but actively promoted it.

67 The plaintiff has a similar evidentiary problem in seeking to rely upon the equitable principle that equitable relief will not be granted to support a right brought into existence or induced by unconscionable conduct (Moody v Cox & Hatt [1917] 2 Ch 71, 87 - 88; Meyers v Casey [1913] HCA 50; (1913) 17 CLR 90, 123 - 4; Hubbard v Vosper [1972] 2 QB 84, 99 - 101).

68 Mr Kavenagh advanced an alternative submission that notwithstanding any proper claim the first defendant may have, the caveat cannot stand because the interest claimed on its face cannot be a caveatable interest. That was a reference to the first defendant's description of her claim to state her interest as being "in fee simple". I would not regard that as fatal. The caveat itself expressly refers to the supporting statutory declaration. That and the acknowledgment annexed to it set out the equitable nature of the first defendant's claim in clear terms. The documents must be read together.

69 For the reasons expressed above, I am satisfied that there is a serious question to be tried in that the first defendant may have a caveatable interest in the property. The caveat should accordingly remain until that question is determined at a trial, unless the balance of convenience favours its removal.

70 The fact is there are no extant substantive proceedings and as Mr Kavenagh pointed out, if there were the plaintiff would not be a party.

71 The plaintiff is a mortgagee in possession seeking to exercise its power of sale. On the evidence it is not entirely clear why or how the loan has fallen into default. The indication is that it may have been because the son directed Wades to make the income payments from the property to him rather than to apply them to repayment of the loan, which had been the arrangement made by the first defendant. In any event, it was Ms Phelp's evidence that the loan currently the subject of the mortgage (which I took her to mean the original loan) is not in arrears. The default is in respect of the subsequent loans of $1,000 and $10,828.25 obtained personally by the son.

72 The first defendant deposed in her affidavit (Ex D1 [14]) that she had attempted to contact the plaintiff and its solicitors for the purpose of ascertaining the loan details and the amount owing, in an attempt to negotiate a resolution of the dispute but regrettably neither were prepared to divulge any details to her as she was neither the registered proprietor of the property nor the mortgagor in possession.

73 There is no particular imperative for the plaintiff to sell the property, other than to recover whatever is now outstanding on the loans.

74 If the first defendant is ultimately unsuccessful in pursuing her claim, the plaintiff will still have its security and would be able to claim interest, quite apart from its statutory right to compensation under s 140 of the Act.

75 On the other hand, if the caveat is removed, the property will be sold and (on her claim) the first defendant will lose an income generating asset of which she has had the benefit since 1985 and which she would continue to have into the future.

76 In my view there would be a greater risk of injustice were the caveat to be removed than were it to be permitted to continue. The balance of convenience accordingly militates in favour of the latter.

77 For the reasons expressed above, the plaintiff's application must be refused.