• Lawyers in Sydney
• Lawyers in Melbourne
• Lawyers in Brisbane
• Lawyers in Perth
• Family lawyers
• Employment lawyers
• Criminal lawyers
• Wills and estates lawyers
• Find a lawyer

Representation: Counsel:
D K Smith (Plaintiff)
D A Woods with A Arenson (Defendant)
Solicitors:
Kamy Saeedi Law (Plaintiff)
MV Law (Defendant)

File Number(s): 2026/154609

Publication restriction: Nil

JUDGMENT

1. HIS HONOUR: Clinton Rory Seares is the executor of the will of the late Kerrie Carroll who died on 22 October 2023. At the date of her death, Ms Carroll was the registered proprietor in fee simple as a joint tenant with Yee Ching Cheam of a property at XX Macs Reef Road, Bywong. Ms Cheam became the sole registered proprietor of that property by survivorship upon Ms Carroll’s death.

2. Ms Cheam and Ms Carroll purchased the Bywong property in 2016 for $905,000. Their purchase was funded by a loan from the CBA. As security for the loan, the bank took mortgages over the Bywong property as well as a property owned solely by Ms Carroll at XX Barnet Close, Phillip in the ACT. Ms Carroll had purchased that property in 2006, funded partly by a mortgage from the CBA.

3. By early 2011, Ms Carroll and Ms Cheam had commenced a romantic relationship. That relationship ended in about mid-2021. In November that year, Ms Carroll and Mr Seares commenced a romantic relationship.

4. On 12 February 2025, Mr Seares entered into a contract for the sale of the Phillip property. That sale completed on 11 March 2025. At settlement, the CBA applied $234,218.85 of the sale proceeds of the Phillip property in reduction of the mortgage taken by the bank over the Bywong property.

5. On 15 October 2025, Mr Seares lodged a caveat against the title to the Bywong property claiming an estate or interest expressed as a “Charge of Estate in Fee Simple” dated 22 October 2023 based upon the following description:

“An outgoing mortgagee has appropriated $223,050.85 from the sale proceeds of a different prooperty [sic] owned by a third party to discharge indebtedness owing by the registered proprietor herein in respect of a home loan secured over this property.”

6. In response to a lapsing notice served upon Mr Seares by Ms Cheam, he commenced these proceedings seeking, among other things, an order extending the caveat. The power to extend a caveat arises if the caveator/plaintiff establishes that the claim has or may have substance: s 74K(2) of the Real Property Act 1900. A plaintiff is required to establish that the existence of the asserted estate or interest raises a serious question to be tried: Warner v Andrews [2011] NSWSC 956 at [4]; Allam Homes v Vocata [2003] NSWSC 628 at [9].

7. However, it became apparent quite quickly, and it is no longer controversial, that the details provided in the caveat are incomprehensible or at least so vague that any person examining it, even with the benefit of legal advice, would be unable to ascertain the precise nature of the estate or interest in the Bywong property that the caveat is said to support. Accordingly, for present purposes, the only question calling for decision is whether or not Mr Seares should be given leave pursuant to s 74O(2) of the Act to lodge a further caveat. For convenience, s 74O is relevantly in these terms:

74O Restrictions on lodgment of further caveats if earlier caveat lapses or is withdrawn

(1) This section applies if a caveat lodged under a provision of this Part in respect of any particular estate or interest in land or any particular right arising out of a restrictive covenant—

(a) subsequently lapses…

and the same caveator lodges a further caveat with the Registrar-General in respect of the same estate, interest or right and purporting to be based on the same facts as the first caveat.

(2) A further caveat to which this section refers has no effect unless—

(a) the Supreme Court has made an order giving leave for the lodgment of the further caveat …

8. It can be accepted that if Mr Seares were granted leave to lodge a further caveat, the estate or interest that he claims would be based upon the following alleged facts and circumstances:

(a) Mr Seares is entitled to be exonerated for the payment of $234,281.85 (the misapplied sum) made towards a loan secured over the Bywong property, of which Ms Cheam is the sole registered proprietor, and Mr Seares has an equitable charge over the Bywong property to secure payment of the misapplied sum. (b) Further or in the alternative, Ms Cheam has been unjustly enriched by the payment of the misapplied sum towards the loan secured over the Bywong property of which she is the sole registered proprietor made by mistake and for no consideration and that Ms Cheam is thereby bound in equity to repay the misapplied sum giving rise to a constructive trust secured by an equitable charge over the Bywong property. (c) Further or in the alternative,

(i) Ms Cheam and Ms Carroll were engaged in a joint endeavour whereby they agreed to purchase the Bywong property, share ownership of that property and Ms Carroll’s property at XX Barnet Close, Phillip and to conduct an animal sanctuary known as Lucky Stars Sanctuary Incorporated from the Bywong property; (ii) the joint endeavour failed when the relationship between Ms Cheam and Ms Carroll broke down irretrievably in January 2022; and (iii) Ms Cheam holds one half of the Bywong property on a constructive trust for Mr Seares in his capacity as the executor of Ms Carroll’s estate.

9. Mr Seares contended that these facts and circumstances describe “the same estate, interest or right” and purport “to be based on the same facts as the first caveat” in compliance with s 74O(1) of the Act. His submissions in support of the existence of a caveatable interest in the three ways so described were as follows.

Exoneration

10. A person who has guaranteed the obligation of another person is entitled to have his or her interest exonerated out of the property of that other person. The right of exoneration is supported by an equitable charge. The authorities are clear.

11. There appears to be no doubt that the right of exoneration is protected by an equitable mortgage. In Gee v Liddell [1913] 2 Ch 62 at 72, Warrington J said:

“Now there is some authority on the question to which I will presently refer, but I should like first to deal with it as a matter of principle independently of authority. Two persons mortgage in one deed their respective estates to secure an advance made to one of them, and the deed gives to each of them power to redeem, and it appears on the face of the deed that as between the two the estate of the person to whom the money is paid is to be primarily liable. Has not the person who joins in mortgaging his own estate by virtue of that deed itself an interest in the estate of the person to whom the money is advanced? In my opinion he has, and I think that the nature of his interest is a charge upon the estate of the principal debtor by way of indemnity for the purpose of enforcing against that estate the right which he has, as between himself and the principal debtor, to have that estate resorted to first for the payment of the debt.”

12. Fisher & Lightwood’s Law of Mortgage (1st Australian ed, 1995, LexisNexis Butterworth) at par 30.7, quoted by the Full Court of the Federal Court in Parsons v McBain (2001) 109 FCR 120; [2001] FCA 376 at [18] says this:

“… ‘It is a well established principle that a person who has mortgaged his property to secure the debt of another stands only in the position of a surety and is entitled to be exonerated by the principal debtor. In this position is a wife who has mortgaged her property to secure money raised for the benefit of her husband. There is a similar equity in favour of a husband.

Where the property of the wife, or property over which she has a power of appointment, is mortgaged, and the money is paid to her and her husband, or to him alone, it is considered prima facie that it was borrowed for his benefit, and his property is first applied, as for payment of his own debt, unless the presumption is rebutted by proof on the part of the husband, that the whole or some part of the money did not come to his hands. If the debt was not originally incurred for the benefit of the husband, this equity of exoneration does not arise by reason of his giving a covenant as additional security. The result will be the same, where the husband has paid off the mortgage, and has taken an assignment of it in trust for himself.’”

13. The Full Court went on at [20]-[21] to make the following observations:

“The equity of exoneration is an incident of the relationship between surety and principal debtor. It usually arises where a person has mortgaged his property to secure the debt of another, whether or not that other has covenanted to pay the debt. However, it will also arise in a case where, although not an actual suretyship, the relationship is treated as one of suretyship. This is Lord Selbourne’s third class of suretyship mentioned in Duncan, Fox, & Co v North and South Wales Bank (1880) 6 App Cas 1 at 10. For the doctrine to apply in this class, the following facts will usually exist. First, a person must charge his property. Where the person is the beneficial owner of the property it will be sufficient if the charge is by his trustee. Secondly, the charge must be for the purpose of raising money to pay the debts of another person or to otherwise benefit that other person. Thirdly, the money so borrowed must be applied for that purpose. See generally Re Berry (a Bankrupt) [1978] 2 NZLR 373.

An equity of exoneration operates in the nature of ‘a charge upon the estate of the principal debtor by way of indemnity for the purpose of enforcing against that estate the right which [the beneficiary] has, as between [the beneficiary] and the principal debtor, to have that estate resorted to first for the payment of the debt’: Gee v Liddell at 72. Thus, where co-owners mortgage their property so that money can be borrowed for the benefit of one mortgagor, the other has an interest in the property of the co-mortgagor whose property is to be regarded as primarily liable to pay the debt.”

14. To a similar effect are the comments of Cole J in Caldwell v Bridge Wholesale Acceptance Corporation (Australia) Ltd (1993) 6 BPR 13,539 at 13,542 and 13,544:

“The plaintiffs call in aid the equitable doctrine of exoneration, asserting that where joint proprietors of property mortgage their property as security for the debts of one or some of the joint proprietors, a joint proprietor whose debts are not secured by the mortgage stands in the position of a surety and is entitled to have the debts secured by the mortgage discharged primarily out of the share of the proprietor whose debts they are.

…

There seems no reason in principle why, if there is established either by explicit evidence or as a permissible inference, an agreement between co-mortgagors that where funds are borrowed for the benefit of one mortgagor the portion of jointly owned property comprising his interest, is to be primarily liable for repayment of the debt and that any moneys provided by the other mortgagor were provided by way of loan, that equity should not give effect to such an explicit or implicit agreement.”

15. Applying these principles to the facts of the present case, it does not seem to me that an equity of exoneration applies in favour of Mr Seares. Parsons v McBain at [23] should be noted:

“If a surety receives a benefit from the loan, the equity of exoneration may be defeated. So, if the borrowed funds are applied to discharge the surety’s debts, the surety could not claim exoneration, at least in respect of the benefit received. But the benefit must be from the loan itself. The question suggested by the Lord Chancellor of Ireland is: ‘Who got the money?’: see In re Kiely (1857) Ir Ch Rep 394 at 405. In Paget v Paget [1898] 1 Ch 470 both the husband and the wife ‘got the money’ and this prevented the wife claiming exoneration.”

16. Simply put, the doctrine of exoneration provides that a loan against a jointly‑held property that is used for the benefit of just one of the joint owners should be repaid from the share of the property of the joint owner who received the benefit. The doctrine of exoneration is a presumption which can be rebutted if the person who would benefit from its application is found to have indirectly benefited from the relevant loan.

Consideration

17. The loan provided by the CBA secured over the Bywong property was advanced for the benefit of both Ms Carroll and Ms Cheam as joint tenants. Ms Carroll directly benefited from that advance: it was not advanced only for the benefit of Ms Cheam. The fact that Ms Carroll offered the Phillip property, of which she was the sole owner, as additional security for the advance does not alter that position. Ms Carroll’s contribution to the purchase of the Bywong property of funds also secured over the Phillip property does not mean that she received no benefit from the moneys secured by the mortgage over the Bywong property or that the money so raised was effectively only advanced to Ms Cheam. The equity of exoneration will not arise where the borrowed funds are received by both the “surety” and the “principal debtor”. Ms Carroll did not provide or offer the Phillip property mortgage as a surety or guarantor for Ms Cheam. They were joint borrowers under the CBA loan and acquired title to the Bywong property using the loan funds advanced to them both in that capacity.

18. Accepting this analysis, Mr Seares does not have a caveatable interest in the Bywong property.

Mistaken payment for no consideration

19. Mr Seares asserts that he has an equitable charge over the Bywong property arising out of Ms Cheam’s “refusal to repay an amount which she received by mistake and without consideration”. Mr Seares contends that at settlement of the sale of the Phillip property, his conveyancer permitted the misapplied sum to be paid by the purchaser to the CBA. That occurred without Mr Seares’ knowledge or agreement and ought therefore to be regarded as a mistaken payment. Mr Seares says that he would not have authorised settlement of the sale if he had known that the misapplied sum was to be directed to the bank.

20. In the events that occurred, the misapplied sum reduced the amount outstanding under the Bywong loan. Critically, Mr Seares maintains that as the surviving sole proprietor of the Bywong property, Ms Cheam was the person liable to repay the CBA for money secured by its mortgage over that property. Mr Seares submitted that the misapplied sum benefitted Ms Cheam and that he “received nothing”, a reference to the asserted absence of consideration upon which he relies.

21. Ms Cheam’s response is brief: the misapplied sum was not paid by mistake and there was consideration for the payment, namely, the reduction of the secured CBA debt that Mr Seares now jointly and severally owed to the bank in accordance with the loan contract made between the CBA and Ms Carroll and Ms Cheam. By the terms of that contract, Ms Carroll originally acknowledged and accepted in writing that her Phillip property mortgage extended to cover her obligation to repay the mortgage over the Bywong property. The mortgage over the Phillip property thereby came to secure any “Amount Owing” to the bank under its mortgages over both properties.

22. Ms Cheam took issue with Mr Seares’ contention that the payment to the bank occurred without his knowledge or authority, and that he would not have authorised it had he known it was going to be made. Ms Cheam submitted that any such contention contradicts the express terms of the mortgage and loan contracts and the contemporaneous correspondence of Mr Seares’ solicitor, such as the following:

“… my firm has now been instructed to take steps to force the separation of the respective properties. My client is placing the Phillip property on the market. I write to put your client on notice that, should her failure to take action in relation to obtaining the release of the Phillip property from the current security arrangements cause my client any loss, my client will pursue your client for those losses.”

23. Ms Cheam submitted that Mr Seares was aware of the risk and proceeded anyway.

Consideration

24. It does not seem to me that the CBA’s requirement that its mortgage be discharged or that some proportion of the proceeds of sale be allocated to the reduction of the amount secured over the Bywong land gives Mr Seares an equitable or other interest in that land that is capable of supporting a caveat.

25. First, the payment was not made by mistake in any relevant sense. Mr Seares sold the Phillip property. Discharge of the mortgage over that property was an inevitable consequence of the sale. Mr Seares clearly knew, or should be taken to have known, that would occur. Moreover, even accepting his current protestation that he would have taken steps to stop the payment, it is difficult to understand precisely how that could have occurred: the contract for the sale of the Phillip property was due to be completed and Mr Seares could hardly have prevented the CBA insisting that its mortgage be discharged in any way it chose to proceed that was consistent with the terms of its security.

26. Secondly, even assuming that the payment was made by mistake in any relevant sense, it does not follow that the payment gave rise to a caveatable interest in the Bywong property. That is not to say that Mr Seares does not, or may not, have a claim against Ms Cheam based on his assertion that there existed some arrangement between her and Ms Carroll concerning the proportions in which they were to be responsible for the repayment of moneys secured over the properties in favour of the CBA. As Mr Seares accepts, there are currently competing contentions about the existence and the terms of any such arrangement which will need to be resolved at trial. In the absence of material that points his way, Mr Seares is not able to formulate a description of his alleged interest in the Bywong property that can yet withstand scrutiny as one that could support a caveat.

Constructive trust

27. Mr Seares referred to the following matters.

28. Ms Cheam says that there was an agreement reached when the Bywong property was purchased that:

(a) she and Ms Carroll would thereafter “share the equity in both the Bywong property and the Phillip property equally”; (b) Ms Cheam would be “substantially responsible” for the Bywong loan; (c) Ms Carroll would be substantially responsible for paying the loan secured over the Phillip property; (d) Ms Cheam would live at the Phillip property; (e) Ms Carroll would live at the Bywong property; and (f) Lucky Stars would operate from the Bywong property.

29. Mr Seares contended that, if these things be correct, there is a serious question to be tried which gives rise to a constructive trust arising from a failed joint endeavour: Baumgartner v Baumgartner (1987) 164 CLR 137. The joint endeavour failed when Ms Carroll and Ms Cheam fell out in January 2022.

Consideration

30. Mr Seares conceded that “greater clarity is needed on the evidence, but the idea seems to be that they would have equal ownership of the real property and would run Lucky Stars from the Bywong property”. (Ms Cheam says Lucky Stars was co-founded by them and operated by them together.) Mr Seares contended that “the consequence would appear to be [sic] that [he] has a 50% interest in the Bywong property, though there would need to be a working out of the parties’ exact interests by way of an accounting”. On almost any view, there is considerable doubt about the alleged or asserted terms of the arrangement upon which Mr Seares relies to support the existence of the trust in question. Clarity would need to be given to the proposition that Ms Cheam would be “substantially responsible” for the Bywong loan or that Ms Carroll would be “substantially responsible” for paying the loan secured over the Phillip property. The notion that Ms Cheam and Ms Carroll would, in effect, “share the equity” in the properties remains inadequately explained, particularly in the absence of a clear, even if only general, explanation of how their respective contributions to the reduction of the CBA loan were to be taken into account.

31. In these circumstances, accepting that a Baumgartner v Baumgartner constructive trust will support a caveat (see Young v Young [2011] VSC 188 at [45]), I consider that there is presently insufficient evidence to establish such a trust, even on a prima facie basis. It follows that I am not satisfied that there is evidence that Mr Seares has any estate or interest in the Bywong property that would support a caveat.

Balance of convenience

32. Properly understood, Mr Seares’ contentions have more force in the context of an application for freezing orders or similar proceedings to enjoin the dissipation of assets pending the hearing than in this application to establish a caveatable interest. Ms Cheam, by her counsel, has disavowed any present intention to dispose of the Bywong property so that the status quo will not alter before the proceedings are concluded. On the contrary, Ms Cheam’s opposition to the present application was in part based upon her need to raise funds for the improvement of the property in order to retain it for a commercial use. In those circumstances, I consider that the balance of convenience would in any event have favoured the refusal of the present application.

Orders

33. I will make the following orders:

34. Dismiss the plaintiff’s application for the relief sought in paragraphs 4, 5 and 6 of the amended summons filed in Court on 5 June 2026.

35. Revoke the order made on 15 April 2026 extending caveat AV515114.

36. Reserve the costs of the application for consideration by the trial judge.

37. List the proceedings for directions in the Real Property List on 26 June 2026.

**********