Long gone are the days when businesses could get away with lodging caveats on a person's property because they were owed money (without a specific agreement that gives rise to an interest in the land).
We are often asked to give advice on whether there is a sufficient basis to lodge a caveat. In each case the facts need to be carefully considered. A recent Supreme Court of Victoria case1 is a reminder that the Court will only allow a caveat to remain on a property where there is a clear interest in the land.
- A company owned a property and entered into a contract of sale to sell the property.
- The defendant (Monique) was the ex-girlfriend of the company's director (Jonathan) and lodged a caveat over the property.
- Monique argued that the caveat was valid because:
- She assisted with some paintwork on the property which took 1 – 2 days.
- She had been in a de-facto relationship with Jonathan and lived in the property for 1 – 2 years (there was some debate how long) – she claimed rights pursuant to their domestic relationship which was proceeding in the Federal Circuit Court.
- There was a trust relationship (which was not properly explained) between Monique and Jonathan.
- She wasn't paid in full for work she did in a restaurant owned by another company for which Jonathan was the director.
- She was removed as a shareholder of the company.
- Jonathan owed her money from a loan she had given him which contained a charging clause – the evidence suggested it was paid in full however regardless of this the Court found that it didn't justify an implied, resulting or constructive trust (as claimed in the caveat).
The Court held that none of these reasons were sufficient to establish Monique's interest in the property and therefore her caveat could not be maintained.
The Court made a special order for indemnity costs (costs on a higher scale to the usual) because (amongst other matters) there was no proper basis for lodging the caveat and the caveat was lodged 3 weeks prior to the settlement of the property.
The Court is prepared to take a firm hand with people who lodge caveats with no basis and force the registered proprietor to bring Court proceedings.
1 Burghley Pty Ltd v Soames & Anor  VSC 236
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. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.