The recent decision of Powell v Stone  NSWSC of
the Supreme Court of New South Wales has sounded a clear warning to
parties in family law proceedings regarding the lodgment of a
caveat over a property which is the subject of a court order. The
decision makes it clear the caveator must have an
"interest" in the property as they otherwise face an
indemnity costs order being made against them as the Court aims to
discourage the lodgment of caveats in these circumstances.
In this Alert, Special Counsel Alexandra Moles and Solicitor
David Hall highlight this case as a warning to parties to be
careful when attempting to further protect their assets during
family law proceedings.
Key take away points
A Family Court Order giving a party a right to the proceeds of
sale of a property is not a caveatable interest; and
There is a risk of an indemnity costs order being made against
parties who lodge a caveat over property in which they have no
caveatable interest even if the caveat is subsequently voluntarily
A right to proceeds of sale is not a caveatable interest
Powell involved factual circumstances which are common
in family law proceedings. An Order was made in the Family Court of
Australia that a husband was ordered to pay a wife a sum of money
and if he failed to do so by a specific date then the order
required him to sell a property and pay the wife a specific amount
out of the proceeds of the sale of that property.
In order to protect her payment the wife lodged a caveat over
In finding that the caveat was 'doomed to be removed'
Justice Brereton stated:
'A right to the proceeds of sale of property is not an
interest in property'
He cited the cases of Epple v Wilson  VR
440; Simons v David Benge Motors Pty Ltd VR 585 and
Efax Proprietary Limited v Charrer (Supreme Court (NSW),
Young J 30 October 1987, unreported)
Justice Brereton drew an analogy between the facts in this case
and that of a trustee who had an obligation to sell a property and
account for the proceeds to the beneficiaries. His Honour
considered that in both circumstances a right to part of the
proceeds of sale from a property was not a 'caveatable
interest in the land itself'.
Parties seeking to protect an entitlement to proceeds of sale
must look to an alternative to a caveat. Alternatives may include
seeking more prescriptive Orders about the sale of the property or
remedies where a party seeks to breach an order.
Risk of an Indemnity Cost Order
In awarding an indemnity cost order Justice Brereton was
extremely critical of the caveat being lodged in the circumstance
described above and stated it was a practice 'to be
depreciated and one which the court would do the utmost to
Justice Brereton was also not dissuaded from making an indemnity
cost order despite the wife removing the caveat before the hearing,
following negotiations between the parties.
Justice Brereton found that the caveat should not have been
lodged in the first instance or should have been immediately
withdrawn indicating that anything short of that should attract an
indemnity cost order.
Caveats are to be used with caution and only after careful
consideration. Particularly, a caveat should not be used to protect
a party's interest to a part of proceeds of sale of a property
following an order under the Family Law Act. Parties who do so risk
an indemnity costs order being made against them for any costs
incurred by the other side in attempting to remove that caveat.
If you are doing a Will, or you are the executor of a deceased estate, consider what taxes and duties could be payable.
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