The Supreme Court of NSW held in Bellissimo v JCL
Investments Pty Ltd  NSWSC 1260 that a landowner's
consent to a caveat being lodged was insufficient to grant an
equitable interest in the land to the caveator. Whether an interest
arises depends on construction of the document under
The plaintiff, a solicitor, lodged a caveat on land of the first
defendant. A lapsing notice was lodged. The plaintiff sought orders
to extend the caveat's operation. The application was unopposed
as the first defendant did not appear. The second defendant was the
Registrar- General. The Court noted there is no provision for it to
"dismiss a lapsing notice". The plaintiff still has to
justify the extension of a caveat.
On the caveat, the plaintiff described his caveatable interest
as "an equitable interest pursuant to a Deed of Guarantee
... between the caveator and registered proprietor." The
caveat stated that the interest arose by virtue of the following
An equitable interest in property as
a result of unpaid costs ...for legal services provided by the
caveator in accordance with deed of guarantee ... where the
guarantor gives consent to the caveator to lodge a caveat over the
The Deed of Guarantee recited that the plaintiff had been
retained to act for a company and Ms Lewis. Pursuant to clause 2,
the first defendant and Ms Lewis guaranteed the payment of the
plaintiff's costs and disbursements. Pursuant to clause 2(iii),
the first defendant consented to the plaintiff lodging a caveat
over the subject property "whereby it is hereby agreed that
Frank Bellissimo has a caveatable interest in the property and that
Frank Bellissimo will withdraw the caveat only upon payment of
costs and disbursements..."
In some cases, an agreement that one party has authority to
lodge a caveat in respect of the property of another impliedly
carries with it an agreement to confer an interest in the land. In
that case, the interest in the land will sustain a caveat.
That implication will be made only if "there is no
sufficient indication to the contrary": Coleman v
Bone (1996) 9 BPR 16,235; Iaconis v Lazar 
NSWSC 1103. This always depends on construction of the document
under consideration: Express Loans & Finance Pty Ltd v
Hunter  NSWSC 142.
In Express Loans, the defendant signed an agreement
authorising the caveator to lodge a caveat if fees as agreed were
not paid on demand. The Court held that the agreement was merely
for the lodgement of a caveat and did not create a charge over the
land. The purpose of that clause was to impede the registered
proprietor's path, but goes no further.
Where a borrower of limited commercial experience signs such a
clause without evidence that the lender explained the clause, the
Court may conclude that the borrower never intended to give a
The Court held that had the parties intended the Deed to create
a charge, that ought be explicit, rather than be left to
implication. It was more likely that the parties only intended
clause 2(iii) to prevent the registered proprietor from dealing
with the land without the plaintiff's consent. The Court
held that "[s]uch a negative covenant does not create an
interest in land."
Further, section 211 Duties Act 1997 (NSW) provides
that a mortgage is unenforceable to the extent of any amount
secured on which duty has not been paid. Duty had not been paid.
The plaintiff offered an undertaking to pay duty forthwith.
However, the Court applied Boral Recycling v Wake 
NSWSC 712 which held that there is no point allowing the mortgage
to be stamped as it would only make the mortgage enforceable from
the date of stamping.
The summons was also defective as it only sought an extension of
the caveat without seeking final relief.
Finally, the Court held the form of the caveat was defective as
it failed to adequately described the "equitable
interest" as required by section 74F Real Property
Act 1900 (NSW). An "equitable interest" in land
"could relate to a multiplicity of types of interest". To
merely describe the interest as an "equitable interest"
fails to comply with fundamental requirements.
Parties to "consent to caveat" clauses should ensure
that the clause reflects the party's intentions. The potential
caveator should ensure that the clause explicitly states that a
charge is being granted, and that stamp duty is paid before
lodgement of the caveat. Landowners should ensure that they are not
granting more than they wish to grant if they have no intention of
granting an equitable interest in the land.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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