Boensch v Pascoe

The case of *Boensch v Pascoe* concerned a dispute over a property held by Mr Boensch, who was later declared bankrupt. Mr Boensch claimed to hold the property on trust for his children, established through a Memorandum of Trust and later a Deed of Trust. The trustee in bankruptcy, Mr Pascoe, lodged a caveat over the property, asserting a legal interest. Mr Boensch sought compensation from Mr Pascoe under s 74P(1) of the *Real Property Act 1900* (NSW), alleging the caveat was lodged and maintained without reasonable cause.

The High Court of Australia was required to determine whether the property held by Mr Boensch on trust was capable of vesting in the trustee in bankruptcy. Specifically, the Court had to consider whether Mr Boensch possessed a valid beneficial interest in the property that would pass to the trustee, or if the trustee acquired an equitable interest through Mr Boensch's right of indemnity as trustee. Furthermore, the Court had to assess whether Mr Pascoe had reasonable cause for lodging and maintaining the caveat, considering the existence of a caveatable interest or an honest belief on reasonable grounds in such an interest.

The High Court reasoned that upon Mr Boensch's bankruptcy, his right of indemnity as trustee vested in the trustee in bankruptcy, Mr Pascoe. This right of indemnity conferred an equitable interest in the Rydalmere property, thereby establishing a caveatable interest. The Court found that Mr Pascoe honestly believed on reasonable grounds that such an interest existed, either on the basis that the trust was void or due to Mr Boensch's right of indemnity. Consequently, Mr Pascoe did not lodge or refuse to withdraw the caveat without reasonable cause.

The appeal was dismissed with costs.