His Grace Metropolitan Petar v Macedonian United Society of Western Australia Incorporated - [2003] WASC 15

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: HIS GRACE METROPOLITAN PETAR & ORS -v- MACEDONIAN UNITED SOCIETY OF WESTERN AUSTRALIA INCORPORATED & ORS [2003] WASC 15

CORAM: BARKER J

HEARD: 14 JANUARY 2003

DELIVERED : 29 JANUARY 2003

FILE NO/S: CIV 2179 of 1999

BETWEEN: HIS GRACE METROPOLITAN PETAR
First Plaintiff
REVEREND VESKO KARANFILOVSKI
Second Plaintiff
THE MACEDONIAN ORTHODOX CHURCH COMMUNITY "ST NIKOLA" PERTH WESTERN AUSTRALIA INCORPORATED
Third Plaintiff
AND
MACEDONIAN UNITED SOCIETY OF WESTERN AUSTRALIA INCORPORATED
First Defendant
CANE RAZMOVSKI
Second Defendant
NEDELKO PETKOVSKI
Third Defendant
CEVETAN RISTEVSKI
Fourth Defendant
BONE GAGORSKI
Fifth Defendant
LAZO ASLIMOVSKI
Sixth Defendant
ZIVKO NAUMCEVSKI
Seventh Defendant
PANDO BALTOVICH
Eighth Defendant
STEVEN DOJKOVSKI
Ninth Defendant
KIRO NIKOLOVSKI
Tenth Defendant
PECO RAZMOVSKI
Eleventh Defendant
GEORGE PARGOVSKI
Twelfth Defendant
CANE GLIGUROVSKI
Thirteenth Defendant
BORIS TANASOSKI
Fourteenth Defendant
SASHA CVETKOSKI
Fifteenth Defendant
ST GEORGE BANK LTD
Sixteenth Defendant
THE HON RICHARD FAIRFAX COURT, MLA
Seventeenth Defendant
THE REGISTRAR OF TITLES, WESTERN AUSTRALIA
Eighteenth Defendant

Catchwords:

Caveat - Application under the Transfer of Land Act 1893 - Whether caveat should be extended to prevent exercise of mortgagee's power of sale

Legislation:

Transfer of Land Act1893 (WA), s 138B, s 138C, s 140

Result:

Application refused

Category: B

Representation:

Counsel:

First Plaintiff                :     Dr P R MacMillan
Second Plaintiff            :     Dr P R MacMillan
Third Plaintiff               :     Dr P R MacMillan
First Defendant             :     No appearance
Second Defendant         :     No appearance
Third Defendant           :     No appearance
Fourth Defendant          :     No appearance
Fifth Defendant            :     No appearance
Sixth Defendant            :     No appearance
Seventh Defendant        :     No appearance
Eighth Defendant          :     No appearance
Ninth Defendant           :     No appearance
Tenth Defendant           :     No appearance
Eleventh Defendant      :     No appearance
Twelfth Defendant        :     No appearance
Thirteenth Defendant     :     No appearance
Fourteenth Defendant     :     No appearance
Fifteenth Defendant      :     No appearance
Sixteenth Defendant      :     Mr P S Bates
Seventeenth Defendant :     No appearance
Eighteenth Defendant     :     No appearance

Solicitors:

First Plaintiff                :     S S Ludher
Second Plaintiff            :     S S Ludher
Third Plaintiff               :     S S Ludher
First Defendant             :     No appearance
Second Defendant         :     No appearance
Third Defendant           :     No appearance
Fourth Defendant          :     No appearance
Fifth Defendant            :     No appearance
Sixth Defendant            :     No appearance
Seventh Defendant        :     No appearance
Eighth Defendant          :     No appearance
Ninth Defendant           :     No appearance
Tenth Defendant           :     No appearance
Eleventh Defendant      :     No appearance
Twelfth Defendant        :     No appearance
Thirteenth Defendant     :     No appearance
Fourteenth Defendant     :     No appearance
Fifteenth Defendant      :     No appearance
Sixteenth Defendant      :     CBA Legal
Seventeenth Defendant :     No appearance
Eighteenth Defendant     :     No appearance

Case(s) referred to in judgment(s):

Breskvar v Wall (1971) 126 CLR 376
Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42
Deputy Commissioner of Taxation (Cth) v Corwest Management Pty Ltd [1978] WAR 129
Deputy Commissioner of Taxation v Corwest Management Pty Ltd [1978] WAR 129
Hooke v Holland [1984] WAR 16
Kerabee Park Pty Ltd v Daley [1978] 2 NSWLR 222
Lydon v Ryding [2002] WASC 308
Midland Brick Corporation Pty Ltd v Welsh [2002] WASC 248
Perpetual Pty Ltd v National Australia Bank Ltd [2002] WASC 13
Pindan Pty Ltd v Sunny's Redevelopment Pty Ltd [2001] WASC 104; [2002] ANZ Conv R 51
R and I Bank of Western Australia Ltd v Lavery, unreported; SCt of WA; Library No 930567; 25 October 1993

Case(s) also cited:

McDiarmid v Burton [1981] ANZ Conv R 12
Merbank Corporation Ltd v Carter (1981) 1 NZCPR 279

BARKER J: By application filed 12 November 2002, the third plaintiff (the Church) seeks an order that the operation of caveat H165439 (the caveat), lodged on 13 July 1999 pursuant to the Transfer of Land Act1893 (WA) against all that piece of land comprising certificate of title volume 2013 folio 689 (the Westminster property), be extended until further order of the Court.

The background

The sixteenth defendant (St George Bank Ltd or the Bank) is the holder of a mortgage registered on 27 March 1997 under the Act in respect of the Westminster property and bearing dealing number G434391 (the mortgage). As explained further below, the mortgage was initially granted to Advance Bank Australia Ltd at a time when the Church was the registered proprietor of the Westminster property. The St George Bank later became the holder of the mortgage.
On 28 October 2002, the Registrar of Titles, at the request of the Bank under s 138B of the Act, caused a notice to be sent to the Church advising that the caveat would lapse if no action were taken by the caveator within 21 days to obtain a court order to extend the operation of the caveat. On 14 November 2002, an order was made extending the operation of the caveat until further order and the application was adjourned to a special appointment. The adjourned application came on for hearing at a special appointment on Tuesday, 14 January 2003.
The determination of the adjourned application is attended by a degree of urgency, in that the Bank, in the purported exercise of its power of sale under the mortgage, has entered into a contract for the sale of the Westminster property to a third party, the Roman Catholic Archbishop of Perth. That contract is subject to a condition that the caveat be removed by an agreed date.
The particular circumstances in which this application for extension of caveat is made may be considered unusual. At the time the Bank's mortgage was registered in favour of Advance Bank, the Church was the registered proprietor of the Westminster property. Subsequently, however, the first defendant (the Society) became the registered proprietor of the Westminster property, subject, inter alia, to the Bank's mortgage. In essence, the Society assumed the obligations of the mortgagor under the mortgage. When the Society later defaulted in the performance of those obligations, the Bank (which had by then assumed the mortgagee's interests under the mortgage) entered into possession of the Westminster property. More recently, the Bank determined to exercise its power of sale under the mortgage and by contract for the sale of the land made on 20 November 2002, agreed, as mortgagee in possession, to sell the Westminster property to the Roman Catholic Archbishop of Perth.
The Society was registered as the proprietor of the Westminster property on 16 April 1999. The circumstances in which it came to be so registered are the subject of a number of affidavits sworn in support of the application for extension of the caveat, including those sworn on 21 November 2002 by the fifteenth defendant (Mr Cvetkoski), by the third defendant (Mr Petkovski) and by Mr Milko Stojanoski, as well as an affidavit sworn 27 November 2002 by the first plaintiff (Metropolitan Petar Karevski). Mr Cvetkoski has also sworn a further affidavit dated 9 January 2003 in support of the application that bears on these circumstances.
In the statement of claim in this action (CIV 2179 of 1999), the plaintiffs allege that the Society became the registered proprietor of the Westminster property on a number of impeachable grounds. First, it is said such registration occurred as a result of a false and fraudulent representation in the instrument of transfer concerning the authority of the second defendant (Mr Razmovski), Mr Petkovski and the fourth defendant (Mr Ristevski) to act in relation to the dealing. The plaintiffs allege that the Society holds the Westminster property pursuant to a constructive, or, alternatively, a resulting trust for the Church. In the alternative, the Church alleges that the Society became the registered proprietor of the Westminster property as a result of error or, in the alternative, fraud. The plaintiffs seek declaratory relief, as well as an order against the Society that it convey the Westminster property to the Church.
For the purposes of the determination of the application for extension of the caveat, the only party moving to contradict the application is the Bank. For some time past, the Society has effectively not been represented by solicitors in the action and at the time of hearing of the present application, the solicitors formerly on the record for the Society had ceased to act for the Society.
In any event, it appears from the affidavit materials to which I have referred that there is a serious issue to be tried between the Church and the Society in respect of the matters put in issue in the action sufficient to found a caveatable interest and the maintenance of the caveat as against the Society. In that regard, it is sufficient presently to refer to the affidavits mentioned above. The issues raised by them are also relevant to a consideration of the interests of the Bank in the determination of the present application.
Metropolitan Petar Karevski says that:
"We have been the Metropolitan for the Diocese of Australia and New Zealand of the Macedonian Orthodox Church since November 1995. We refer to ourself in the third person."
Metropolitan Petar thus refers to himself as "we" throughout his affidavit. Metropolitan Petar, in his capacity as Metropolitan (or Bishop) for the Diocese of Australia and New Zealand of the Macedonian Orthodox Church, states that in 1996 he became aware that there were certain difficulties in the "parish" of the third plaintiff. Each parish in the Diocese is controlled by an administrative council elected pursuant to that parish's constitution. Thus, the parish in this case is an incorporated association under the law of Western Australia. For convenience sake, it is called the "Church" in these reasons, although the expression "parish" is also used. According to the Metropolitan, the administrative committee of the Church had not been elected in accordance with the constitution of the Church. He says he also became aware that the finances of the Church were not independent of the Society. He says that he became aware that the Church's committee and finances had effectively been taken over by the Society. He suggested to the Church that it elect a fresh administrative council in accordance with the constitution, although for a period his wishes in that regard were not complied with.
Metropolitan Petar says that in 1996 he received correspondence from the Society's then President, Archie Noumcevski, and Secretary, Ljube Veljanoski, and had a number of conversations with them, concerning the Society's existing borrowing, which was secured over the Westminster property, and its desire to expand its borrowings. At that time, the Church was the registered proprietor of the Westminster property. He says he came to understand from these communications that the Society had substantial liabilities of nearly $2,000,000. The Society wished to restructure their finances by refinancing a loan with a Bank secured over the Westminster property in order to pay a lower rate of interest. The Westminster property is also often referred to as "the Club".
Metropolitan Petar says that the Society's President and the Secretary threatened him that, if he did not agree to the refinancing, the land on which the Society's premises were built (which I think is a reference to the Club) would be lost to the Macedonian community in Perth and would have to be sold. If this happened, they said they would tell the Macedonian community in Perth that it was his doing, because he would not agree to the refinancing they wanted to put in place. Metropolitan Petar says that, in the face of what was then put to him, he felt he had no choice and decided to agree to their request.
Metropolitan Petar says that, at the same time, he requested the Society to provide him with its profit and loss statements for recent years and a history of how it had come to be in such a poor financial position. However, no such report was ever received from the Society. He says he wanted to consider such a report in order to make an assessment as to whether the Society was able to sustain a borrowing of the sort which they proposed to embark upon. He also wished to ascertain the veracity of the proposition that the President and Secretary consistently advanced to him, namely, that the Society was funding the Church.
In late 1997 or early 1998, Metropolitan Petar suggested that a general meeting of the Church (or parish) be called in order to properly elect a "council" of the Church according to the constitution. (The reference to a "council" I take to mean "administrative committee", as previously referred to.) Eventually, by letter dated 31 March 1998, Metropolitan Petar directed the Church, or parish priest and the President of the Church's administrative committee, Mr Lazo Naumovski, to hold an extraordinary meeting no later than May 1998. He later received a letter, co‑signed by those two persons, informing him that a meeting had been held on 7 June 1998 in accordance with that direction and informing him that a new constitution had been approved for the Church at that meeting. Metropolitan Petar says that he understood the constitution so adopted was a form of common constitution that the Diocese had adopted in 1997.
Following this advice, Metropolitan Petar wrote to the priest of the parish and Mr Naumovski by letter dated 5 August 1998 directing them to convene an extraordinary general assembly of the Church to be held on 23 August 1998. This assembly was then held. However, according to Metropolitan Petar, the meeting was so disrupted by a number of members of the Society that it could not continue and had to be abandoned.
From that point on, serious conflict appears to have arisen between the Church and the Society concerning the establishment of a new Church, or parish, administrative committee. Metropolitan Petar says that he became aware that the Society purported to elect a committee for the Church at a meeting held on 28 February 1999. As far as he is concerned, however, and he says so far as the Church is concerned, that meeting was not duly convened and any committee elected at it was not duly and properly elected and had no authority to act on behalf of the Church.
Metropolitan Petar says that, as early as the middle of 1998, he had heard rumours that certain members of the Society were hinting that they intended to have the Westminster property transferred from the Church to the Society. He was disturbed about these rumours and by letter dated 15 July 1998 wrote to the "Council of the Parish" informing them that the only people authorised to deal with such matters were the "President of the Parish, namely, Mr Naumovski, and the Priest of the Parish".
Metropolitan Petar says that rumours persisted and his concern was such that, by letter dated 10 August 1998, he wrote to the Manager of the Department of Land Administration in Western Australia and the Manager of the Bank at 152 St George's Terrace, as well as the Manager of Bankwest in Balcatta, confirming that the only persons authorised to deal with Church land or borrowings by the Church were Mr Naumovski, and the parish priest, Reverend Karanfilovski. He says that the letter made it clear that no such matters should be pursued without his consent as head of the Diocese. The letter is annexed to the Metropolitan's affidavit.
So far as the Bank is concerned, it says it has no record of the letter signed by Metropolitan Petar and dated 10 August 1998. However, it acknowledges that it holds a letter from the Church signed by Mr Naumovski and the parish priest, Reverend Karanfilovski, dated 13 July 1998, which is in the following terms:
"We here by notify you that, Mr. Lazo Naumovski, President of the Macedonian Orthodox Church of St. Nikola (Inc.) and the Parish Priest Reverend Vesko Karanfilovski, are the Duly authorised Persons by the M.O.C. of St. Nikola to deal with and have the capacity to sign any documentation with regards to Church land.
No transfer of land, change of title status is to be enacted by DOLA without the consent of the above named.
Functionaries of the Church and the Church Diocese of Australia and New Zeland, its head, his Excellency Bishop Petar." [sic]
As noted above, the Society was registered as the proprietor of the land as transferee from the Church on 16 April 1999. The circumstances in which the transfer (which was expressly made subject to the Bank's mortgage) occurred appear to be as follows. By letter dated 31 March 1999, Birman and Ride, solicitors acting for the Society, wrote to the St George Bank, attention Mr Michael Saunders, enclosing documents described therein as follows:
"1.A letter dated 12 February 1999 from the Society to the President, The Administrative Committee, of … (the Church), countersigned and executed under seal by the Church;
2.The subject Transfer;
3.a statutory declaration by the President, the Secretary and the Treasurer of the Church;
4.Page 12 of a valuation dated 18th March 1999 by Rodney G Pember, a Certified Practising Valuer;
5.a discharge of the currently registered first mortgage held by The State Housing Commission over the Westminster property."
In the letter, Birman and Ride "confirmed" the Society's request to the Bank in these terms:
"1.As the successor in title of Advance Bank Australia Ltd transfer Mortgage G434391 … into the name of your Bank [I suggest a simultaneous lodgment with this firm that transfer and subject Transfer];
2.Consent to the subject Transfer and to it being registered, by signing and returning the enclosed Consent;
3.As the holder of duplicate Certificate of Title Volume 2013 Folio 689, produce such duplicate at DOLA for the purpose of registering the said discharge and the subject Transfer; and
4.Advance to (the Society) $96,565 (being the estimated stamp duties payable on $2,100,000) by way of a cheque made payable to "State Revenue Department … "
The Bank, as is recounted further below, says that it acted on the strength of this letter and the enclosed documents and did as the solicitors for the Society requested. As a result, the Westminster property was registered in the name of the Society. The Church then ceased to be the registered proprietor of the Westminster property. Subsequently, on 13 July 1999, the Church lodged the caveat.
The instrument of transfer, a copy of which was enclosed with the letter from the solicitors for the Society to the Bank, showed the seal of the Church affixed in the presence of three persons, being Mr Razmovski, Mr Petkovski and Mr Ristevski. Those same three persons made a joint statutory declaration, apparently on 28 February 1999 (the same date Metropolitan Petar alleges the Society purported to elect a committee for the Church as set out above), a copy of which was provided with the solicitor's letter to the Bank, in which they solemnly, sincerely and severally declared that they were the persons authorised by the relevant rules of the Church to affix or countersign the affixing of the seal of the Church to documents and stating that at the time they affixed and countersigned the affixing of the seal of the Church to the transfer "we were duly authorised to do so and we signed in the capacity of President, Secretary and Treasurer respectively".

Mr Petkovski, one of these signatories and declarants, and Mr Cvetkoski, who purports to have some knowledge relevant to these dealings, have sworn affidavits explaining from their perspective how the Westminster property came to be registered in the name of the Society. Mr Petkovski says, in short, that he did so at the instance of Mr Zoran Coseski, then the President of the Society, on the basis that, if he did not cause the seal to be affixed and executed, the Society would lose the Westminster property, which he refers to as the Club. The circumstances in which he says this happened are more fully set out in his affidavit. Mr Cvetkoski's account of events largely confirms that provided by Mr Petkovski.

The power of the Court under s 138B Transfer of Land Act 1893

It is well established that the onus lies on a caveator in proceedings under s 138 of the Act to demonstrate that there is a valid caveatable interest or, more correctly, that there is a serious question to be tried on the issue: Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42 at 48 per Owen J, with whom Malcolm CJ and Walsh J agreed.
Counsel of the Bank submitted that the "serious question" test applied in respect of applications under s 138 requiring the caveator to show cause why such caveat should not be removed, has no application where a caveator is obliged to obtain from the Supreme Court an order extending the operation of a caveat in the circumstances provided for by s 138B. Counsel points to s 138C, which prescribes the powers of the Court where a caveator applies for an order extending the operation of the caveat. By s 138C(2), the Court is broadly empowered to extend the operation of a caveat for such period as is specified in the order, or make an order extending the operation of the caveat until further order, or make such other orders as it thinks fit concerning the caveat, or the land in respect of which the caveat was lodged, "if satisfied that the caveator's claim has or may have substance".
For my part, I consider that the power of the Court to make an appropriate order of one kind or another "if satisfied that the caveator's claim has or may have substance" is akin to the approach usually taken by this Court to the determination of an application to maintain a caveat in proceedings under s 138.
The primary question, under both s 138 and s 138B, is whether the Court is satisfied that the caveator's claim has or may have substance, or to put that another way, whether there is a serious issue to be tried on the issue. Under s 138C, where that determination is made in favour of the caveator for the purposes of s 138B, the Court is broadly empowered as to the type of order, if any, it should make. However, there is nothing in s 138C(2) that obliges the Court to make an order extending the caveat if satisfied that the caveator's claim has or may have substance. On the other hand, by s 138C(2)(b), if the Court is not satisfied that the caveator's claim has or may have substance, the Court is obliged to dismiss the application. The terms of s 138C(2)(b) may suggest that, if the Court is so satisfied concerning the substance of the caveator's claim, then it must make an order of one type or the other. In my view, that approach would not be correct. Undoubtedly, there might be circumstances which lead a Court, notwithstanding the satisfaction that the caveator's claim has or may have substance, to decline to make the order.
Certainly, this is the approach which has been adopted in s 138 proceedings. As Owen J observed in Ravi Nominees at 50 and 62, the balance of convenience is a factor to be considered in an application under s 138. Thus, it will be "an unusual case" where the balance of convenience favours removal. His Honour observed as follows, at 50:
"However, it seems to me that interlocutory removal of a caveat where an arguable case as to the existence of the caveatable interest has been demonstrated, will be unusual. It is important to bear in mind the nature and purpose of a caveat under the Torrens System. By its very nature, a caveatable interest must be a proprietary interest in land. The purpose of the caveat is to restrain the registered proprietor from dealing with the land in a way which will defeat or derogate from the incidents attaching to that proprietary interest until the respective rights of the parties have been honoured (if there is an agreement) or determined (if there is disagreement). In many cases, removal of the caveat will have the effect of destroying for all practical purposes, the benefit of the proprietary interest. For example, a creditor, having a specific security interest in land, will rank as an unsecured creditor once the property, the subject of the specific security, no longer exists. This will often be the result of removal of a caveat which permits the registered proprietor to sell the property free from any practical obligation to account to the secured creditor for the proceeds of sale."
In Ravi Nominees at 62,Owen J, having confirmed that it will be an unusual case where the balance of convenience favours removal, nonetheless again acknowledged that the balance of convenience may well produce such an outcome. In the circumstances of Ravi Nominees, which is quite unlike that of the instant case, his Honour found that the case was not unusual. In that case, the respondent, Ravi Nominees, was the registered proprietor of seven parcels of land, which it held in its capacity as trustee of the Ravi Family Trust. Under the Trust Deed, the respondent had the power to deal with the trust fund "as if the trustee was the beneficial owner of the trust fund". The appellant, Custom Credit, advanced funds to a company in which the respondent held shares. The respondent also subscribed to a mortgage to secure that advance. Custom Credit registered a caveat against the titles to the land in reliance on the terms of the mortgage. The Full Court held that the onus lies on a caveator to demonstrate that there is a serious question to be tried on whether a valid caveatable interest exists and was satisfied that it did. As to the balance of convenience argument, Owen J stated, at 62:
"However, I incline to the view that removal of the caveat could, for all practical purposes, destroy the effect of the secured interest which the appellant would have if the charge is eventually upheld. On the other hand, the respondent has the protection of s 140 of the Act, (concerning the payment of compensation), there being no evidence or suggestion that the appellant would be unable to meet an award made under that section."
Whether the charge created by the mortgage would be upheld was an issue that the Court decided could not be determined other than after a trial of the issues. In those circumstances, the caveat of Custom Credit remained in place.
The reason why s 138B was introduced by amendment to the Act in 1996, was to provide a simpler means of removing a caveat other than requiring an applicant, or proprietor, or any person claiming under a transfer or other instrument signed by the proprietor, to summons the caveator to attend to show cause why the caveat should not be removed. It also appears to be a provision which enables a wider class of persons to apply for the effective removal of a caveat. By s 138B(1), the "proprietor of the land in respect of which the caveat was lodged may apply" for a 21‑day notice to issued by the Registrar. The expression "proprietor" is defined by s 4 of the Act in relevant terms to mean -
"(a)In relation to freehold land, the owner, whether in possession, remainder, reversion or otherwise, of land or of a lease, mortgage or charge over land."
This plainly includes a holder of a mortgage, such as the Bank in this case. Thus, s 138B might be taken advantage of by a person such as the Bank to cause a caveat to be removed without immediately having to incur the expense that would normally be associated with summonsing the caveator under s 138.
However, apart from that obvious difference, and the fact that s 138C prescribes the power of the Court to extend the operation of a caveat, the principles underlying s 138 and ss 138B and 138C would appear not to be dissimilar. For that reason, I consider that, while s 138C(2)(a) sets out the test by which a caveat may be extended, that particular provision does not require the Court to extend a caveat in circumstances where the balance of convenience plainly militates against the making of such an order. I note that, in Pindan Pty Ltd v Sunny's Redevelopment Pty Ltd [2001] WASC 104; [2002] ANZ Conv R 51, Murray J at pars [1] ‑ [9] formed a similar view, for reasons with which I also agree. This approach was also adopted in Perpetual Pty Ltd v National Australia Bank Ltd [2002] WASC 13.
As the decision of the Full Court of this Court in Ravi Nominees demonstrates, a Court in dealing with an application to extend the life of the caveat must be mindful of the purpose of a caveat and slow to act in a way which will defeat or derogate from the incidents attaching to a proprietary interest where it is found to exist until such time as there has been a proper determination of the issues arguably giving rise to the interest. This principle is perhaps recognised by the statutory scheme of the Act, which, by s 140, provides some measure of protection for a person who sustains injury by virtue of the lodgement of caveat without reasonable cause by permitting that person to obtain compensation. There may be a question, however, whether s 140 would have any application in circumstances where a Court orders the extension of a caveat pursuant to s 138B. The right to compensation is said to exist where the caveatable interest is eventually found not to have existed, or where, for example, the caveat had been lodged or maintained for an ulterior purpose: see Deputy Commissioner of Taxation (Cth) v Corwest Management Pty Ltd [1978] WAR 129; Hooke v Holland [1984] WAR 16; Ravi Nominees at 50. However, there is an onus on the person claiming compensation to show that the caveator lodged the caveat without reasonable cause. This, as the decision in Hooke v Holland shows, may not always easily be discharged.

The position of the Bank compared with that of the Society

As stated above, from the terms of the affidavits I have referred to, I consider there is a serious issue to be determined in the action between the Church and the Society, on the basis of the pleaded case referred to above, that supports the maintenance of the caveat as against the Society. Whether or not the Society's registration as proprietor of the Westminster property was procured by error, or as a result of fraud, is only capable of determination after a trial of the issues in this action and not on this application. However, the further question that requires determination on this application is whether the Church is entitled to maintain its caveat at this point as against the interests of the Bank.
As explained above, the Bank was, at material times in mid‑1998, on notice from the Church, given by representatives of the Church who the Bank then appears to have accepted as being appropriately authorised to give such notice, to the effect that no transfer of land or change of title status should be "enacted" by DOLA without the consent of the President of the Church's committee and the Parish Priest. By inference, the Bank was also on notice that it should not facilitate any such dealings.
It would also appear that the Bank was generally aware of the tensions between the Church and the Society at that time. By the further affidavit sworn by Mr Cvetkoski on 9 January 2003, the reading of which was not objected to by the Bank at the hearing of this application, a statutory declaration made by Mr Zoran Coseski on 9 January 2003 was produced. Mr Coseski's statutory declaration discloses that he was one of principal persons who dealt with Birman and Ride in early 1999. He says that he was advised by a solicitor at Birman and Ride in or about January 1999, that the transfer of the Westminster property into the name of the Society should not be a problem in the circumstances he outlined to a solicitor at the firm, but that he would need to speak with the Bank first. Mr Coseski says he then made arrangements to meet with officers of the Bank. He says that he and Mr Vic Markov of the Society met with Mr Michael Saunders and a Mr Bassett at the premises of the Bank in St George's Terrace, Perth. He says that they explained to these officers of the Bank the reasons for the transfer of land and also explained to them "the dispute the Society have been having with the Church and Bishop Petar over the last few years". According to his statutory declaration, Mr Coseski says that Mr Bassett, on hearing about these matters, said words to the effect of: "This is good, it will make things easier for the Bank, that way we only need to deal with one organisation." He also alleges that Mr Bassett said:
"The credit history in the past for the Society is not very good however things seem to be improving, the transfer of the land will help the Bank because we only need to deal with the Society and not the Church, we feel confident that the Society will be able to repay the loan for the land tax within 12 months."
In his statutory declaration, Mr Coseski further states as follows:
"Mr Saunders and Mr Bassett insisted that the only way the Bank was going to help the transfer was if the Society accepted their terms and conditions in the repayment of the loan for the land tax. Mr Bassett and Mr Saunders gave Mr Markov and me no option but to accept the Bank's terms and conditions.
As President of the Society I had no choice but to accept the Bank's conditions, otherwise the land would have stayed I the name of the Church.
I felt pressured by the Bank to accept their terms and conditions.
The next day after this meeting I went to Birman and Ride and explained to Mr Martin what Mr Bassett and Mr Saunders of the Bank had said to me. Mr Martin said words to the effect of,
'I would like to meet with the President of the Church committed Mr Cane Razmovski to discuss this issue'."
As I say, the affidavit of Mr Cvetkoski with the attached statutory declaration of Mr Coseski, was received by the Court and read without objection from counsel for the Bank. Indeed, the Bank filed an answering affidavit soon after, sworn by Mr Saunders, to which I refer below. Notwithstanding that that statutory declaration of Mr Coseski does not of itself constitute the best evidence of the matters therein set out, in circumstances such as these the hearsay evidence attached to the evidence of Mr Cvetkoski may be relied upon for the purposes of this application.
The Bank strenuously denies that any steps undertaken by it following its receipt of the Birman and Ride letter dated 31 March 1999, should entitle the Church to maintain its caveat as against the interest of the Bank as holder of the mortgage. By the affidavit of Graham Stanway, State Credit Manager of the Bank (in New South Wales as I understand it), a history of the Church's dealing with the Bank and its predecessor was provided to the Court. Mr Stanway did not purport to have a personal knowledge of the dealings or matters in question. In 1996, in order to secure financial accommodation from the Advance Bank, the Church agreed to permit the Westminster property, registered in its name, to be mortgaged, and also agreed to guarantee the Society's borrowings from the Bank. A Deed of Guarantee was then executed. The mortgage was then lodged with the Registrar of Titles on 27 March 1997 and duly registered.
At that time, the mortgage was a second registered mortgage over the Westminster property. The first registered mortgage, number E358050 lodged at the same time as the Bank's mortgage, was to secure money advanced to the Society by Bankwest. This mortgage was vested in the name of the then State Treasurer, the Honourable Richard Fairfax Court MLA, by virtue of cl 15 of Sch 1 of the Bank of Western Australia Act 1995. By a Deed of Priority, undated but stamped on 11 March 1997, and made between Bankwest and the Advance Bank, the Bank was given priority to the extent of $1.3 million.
As Mr Stanway says, and it plainly is correct, the dealing with the Westminster property in 1997 was carried out with the knowledge and concurrence of the Church. A letter from the Church to the Society signed by Metropolitan Petar and dated 29 December 1996 was produced by Mr Stanway and confirms this to be so. Nothing in the affidavit of Metropolitan Petar contradicts Mr Stanway's statement or suggests otherwise.
The financial accommodation secured by the Advance Bank's mortgage was a loan of $1.185 million to the Society to refinance an existing loan to Bankwest in the sum of $900,000 and to pay out other creditors. The term was for three years from the date of the facility. A further loan of $115,000 to the Society for one year was also provided to assist in the cost of raising the facility and the payment of private loans. That amount was due to repayment in early 1998.
By letter dated 27 June 1998 from the Bank (as successor to the interests of the Advance Bank) to the Society, the Bank agreed in principle to the Society's request for a variation to the 1997 facility. The variation rolled over the 1997 facility and permitted the transfer of the sum of $115,000 to a separate account to be paid off as a principal and interest loan.
By a facsimile transmission dated 13 July 1998 from Mr Vic Markov acting for and on behalf of the Society, a purported executed acceptance form for the loan variation was forwarded to the Bank. On 17 July 1998 (or thereabouts), the Bank received from the Church the letter referred to earlier informing it of the two individuals who were authorised to execute documents on behalf or the Church.
By facsimile transmission dated 3 August 1998, a Ms Sophie Sargent, acting for and on behalf of the Bank, informed the First Charter Finance Group that the signatories on the faxed acceptance were not authorised signatories of the Church and she requested that the Society arrange for the authorised signatories to sign the acceptance. In other words, in early August 1998, as a result of the Church's letter to the Bank dated 17 July 1998, the Bank acted strictly in accordance with the request of the Church not to facilitate dealings concerning the Westminster property that were not authorised by the nominated President of the committee and the Parish Priest.
It appears that the Bank was then asked by the President of the Society to forward to him a copy of the Church's letter to that effect. By facsimile transmission dated 25 August 1998, the Bank forwarded a copy and at the same time requested the President of the Society to have an original copy of the offer of variation signed by the authorised Church signatories and returned to it. The Society failed to act on this request and, according to Mr Stanway, the Bank "refused to proceed with the variation".
From the Bank's point of view, as at August 1998, the 1997 facility remained in place and the Society had failed to repay the moneys referred to and was therefore then in default under that facility. This, of course, had the potential to trigger the guarantee provided by the Church to the Bank under the Deed of Guarantee in respect of the Society's facility and to prejudice the interests of the Church in the Westminster property under the mortgage.
It was in those apparently unchanged circumstances that, in late March or early April 1999, the Bank received the correspondence referred to above from Birman and Ride as solicitors for the Society, advising that the Church had agreed to transfer its title to the Westminster property to the Society.
In his affidavit, Mr Stanway says that:
"The Bank was agreeable to the proposal … because it converted the Church's third party mortgage into a mortgage by the actual borrower (the Society) which was then the registered proprietor."

Mr Stanway confirms that the Bank acted in accordance with the request of Birman and Ride. The relevant officers of the Bank who appear to have handled the matter at that time are those identified by Mr Coseski's statutory declaration, namely, Mr Bassett and Mr Michael Saunders. Mr Saunders, in a affidavit sworn 10 January 2003 and filed by the Bank, says that he has read the statutory declaration of Mr Coseski and has read through the Bank's lending files to refresh his memory of the events referred to in it. He says that he does not recall any specific meeting involving himself, Gavin Bassett, Mr Coseski and Mr Markov in early 1999 and there is no memo on the Bank's file of a meeting where issues were raised such as those referred to in the statutory declaration. However, he does recall that he had a number of meetings at that time with representatives of the Society, usually with Mr Markov, who was the Treasurer. He says those meetings concerned the normal annual reviews of the Society's facilities with the Bank. He also recalls that, at one or more meetings, the Bank was informed that the mortgaged land was being transferred from the Church to the Society and that the transfer would be subject to the Bank's mortgage. He says that the first documentary confirmation of that information on the Bank's file was a letter from Birman and Ride dated 31 March 1999.
Mr Saunders denies that any pressure was put on the Society to accept the offer of an additional loan of $100,000 repayable over 12 months to fund stamp duty on the transfer. He says it was entirely a matter for the Society whether or not it accepted it.
Mr Saunders also says that, as far as the Bank was concerned, the Society's borrowings were already secured by the mortgage and the Church's guarantee, so, whilst the transfer would undoubtedly have had administrative advantages for the Bank, it did not improve the Bank's security in any way. He also confirms that, from an administrative point of view, it was more convenient for the Bank to have the borrower and mortgagor as one entity and in seeking the Bank's approval for the loan for the stamp duty it was stated that the proposed transfer "separates the reliance on the third party's security which simplifies the Bank's position and simplifies the customer's dealings with ourselves".
Mr Saunders says that he does not have any personal recollection of discussions involving alleged problems between the Church and the Society, although on the Bank's file there is a letter from the Society to the Church dated 12 February 1999 setting out the history of the Society's dealings with the Church, as referred to in Mr Stanway's affidavit. He says the impression he gained at various meetings was that the Church and the Society were at one in wanting to secure the position of the Society's Club premises and this was the prime motivation of the parties. He says the Bank did not seek the transfer of the Westminster property from the Church to the Society. Rather, the initiative for this came from the Society and the Bank was simply told that that was what was proposed.
In short, Mr Saunders expressly rejects any implication by Mr Coseski in his statutory declaration that the Bank was somehow complicit in a scheme by the Society to defraud the Church. He says the Bank had no possible interest in involving such a scheme, as its position was secure, irrespective of whether the Church or the Society owned the land. Indeed, the transfer of the land to the Society actually resulted in a diminution in the Bank's security because it operated to release the Church from its guarantee.
Mr Stanway also makes the point that "the Bank was not involved in the negotiations between the Church and the Society relating to the transfer of title. That was presented to the Bank as a fact and the Bank was required to produce the duplicate certificate of title pursuant to section 127 of the Transfer of Land Act 1893."
Mr Stanway also states that, as the title to the Westminster property was being transferred to the Society as borrower subject to the existing mortgage in favour of the Bank, the Bank was prepared to release the Church from its guarantee as the Church then no longer has any liability for the Society's borrowings.
He further says that, unlike the position prevailing in 1998, the Bank had no requirement for the Church to execute any of its documents and was not therefore called upon to satisfy itself as to whether the signatories were authorised. He further points to the fact that Birman and Ride had produced to the Bank statutory declarations of the capacity of the three signatories on the copy of the instrument of transfer to act for the Church.
Based on the documentation so received and the assurances as to capacity contained therein, the Bank says it then acted in the way that it did. There is no evidence before me to contradict this claim. However, at no time did the Bank make any attempt to verify the Church's intention to complete the proposed dealing. It appears to have ignored the notice it had received, by virtue of the latter dated 13 July 1998, referred to above.
In the action, the plaintiffs have foreshadowed an application to amend the statement of claim as against the Bank in which they plead material elements of the Bank's conduct referred to above and allege that the Bank failed to act in good faith in respect of the third plaintiff as mortgagor and by its conduct deprived the third plaintiff of its equity of redemption under the mortgage. They further allege that the plaintiffs have suffered loss and damage as a result of the Bank's conduct. The loss and damage particularised in the foreshadowed amendments are in the following terms:
"The third plaintiff has been prejudiced by reason of the said transfer of the Westminster property in that:
(a)the first defendant subsequent to the said transfer defaulted on payments pursuant to the mortgage pursuant to which the sixteenth defendant appointed an administrator and now proposes as mortgagee to sell the Westminster property;
(b)the third plaintiff has in the circumstances lost its equity in the Westminster property."
In the proposed amendments, the plaintiffs also plead that the Bank owed the Church a duty of care in tort which was breached as a result of which it is alleged the Bank is liable in damages to the Church. As a further alternative, the foreshadowed amendments claim that the Bank owed a fiduciary duty to the Church not to act in the way that it did and, as a result of the breach of such a duty, is liable to the Church for the loss and damage suffered by the Church.
Nowhere in the foreshadowed amendments to the statement of claim do the plaintiffs impeach the right of the Bank to exercise the power of sale under the mortgage. However, on the hearing of the application, counsel for the Church submitted that the Church was entitled to do so, effectively on the basis that the conduct of the Bank, vis-a-vis the Church as mortgagor under the mortgage at material times, failed to act bona fide by wilfully or recklessly sacrificing the interests of the mortgagor. Notwithstanding that the immediate result of the conduct of the Bank was to facilitate the Society becoming the registered proprietor the Westminster property in the place of the Church, and was not to cause a sale of the Westminster property pursuant to the right to effect a mortgagee's sale under the mortgage, counsel for the Church contended that the present conduct of the Bank in purporting to exercise that right of sale is relevantly connected to, or flows from, the conduct complained of.
In making this submission, counsel for the Church relied on the principle highlighted in the unreported decision of White J in this Court in R and I Bank of Western Australia Ltd v Lavery, unreported; SCt of WA; Library No 930567; 25 October 1993, when, at page 8, his Honour stated:
"In this State the exercise of a power of sale by a mortgagee is improper only if that power is not exercised in good faith, that is to say, the sale thereunder can be impeached only in the circumstances that the mortgagee has not acted bona fide by fraudulently, wilfully or recklessly sacrificing the interests of the mortgagor: Pendlebury v Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676; Southern Goldfields Ltd v General Credits Ltd (1991) 4 WAR 138; Cachalot Nominees Pty Ltd v Prime Nominees Pty Ltd [1984] WAR 380, 393; General Credits Ltd v Southern Goldfields Ltd (1991) ANZ Convey Rep 40, 42; Southern Goldfields Ltd v General Credits (supra) at 142, 148."
Similar approaches to the question of whether a caveat can be maintained to prevent the exercise of a power of sale of a mortgagee are to be found in other jurisdictions. For example, in Kerabee Park Pty Ltd v Daley [1978] 2 NSWLR 222 at 228, Holland J, having observed that the right to caveat is given by statute, not for the purpose of giving notice to the world by the caveator to an estate or interest in the land, but for the purpose of protecting the caveator's interests from being defeated by the registration of a dealing without the caveator having had the opportunity to invoke the assistance of the court to give effect to his interest, then stated as follows:
"If the foregoing correctly describe the nature and purpose of a caveat, it would seem to me to follow that a caveator should have no right to prohibit registration of a dealing to which his alleged interest in the land would not entitle him to object, if he were to invoke the assistance of the court. A subsequent encumbrancer, registered or unregistered, has no right whatever to interfere in, or object to, a proper exercise by a mortgagee of the mortgagee's power of sale, and would have no ground on which to seek the intervention of the court, notwithstanding the fact that registration of the transfer to the purchaser would discharge or defeat all mortgage interests in the land whether registered or not …
The only class of case which the defendants suggest might lead the court, at the instance of a subsequent mortgagee or encumbrancer, to interfere to restrain registration of a transfer to a purchaser upon the exercise of a mortgagee's power of sale is that of fraudulent or improper sales, such as were instanced above. Assuming for the moment that the mere possibility of a fraudulent or improper mortgagee's sale would entitle the holder of an unregistered mortgage to lodge a caveat prohibiting the registration of all dealings with the land except upon notice to him, it would not follow, in my opinion, that a caveator would be justified in continuing to maintain his caveat, when requested by the mortgagee to withdraw it for the purpose of promoting the prospects of a successful sale by the mortgagee, when the caveator could not point to any circumstance suggesting that the mortgagee was, or might be, going to exercise his powers improperly, or might fail to apply surplus proceeds in the manner required by the law."
In Kerabee Park, the plaintiff pursuant to a registered first mortgage was put into possession of the land as mortgagee by a court order and later proceeded to exercise its power of sale as first mortgagee. It arranged a public auction and gave notice to the solicitors acting for both the registered proprietor and the two defendants. The defendants had each lodged caveats in respect of unregistered equitable mortgages which were subject to the registered first mortgage both in time and in law. The caveats substantially claimed "an estate or interest as mortgagee". The defendants claimed they were entitled to maintain their caveats on the title until completion of the sale by the plaintiff. Holland J refused to accept this argument. As his Honour stated at page 229, in the case before him, when asked by the plaintiff to withdraw their caveats, the defendants were fully aware, and had no grounds for making, and did not in fact make, any objection or criticism, of the course proposed by the plaintiff for the purpose of exercising its power of sale. As his Honour observed:
"At the time of the hearing, they were unable to point to anything on which they might have been able to found proceedings to restrain the registration of a transfer from the plaintiff to a purchaser. The plaintiff had provided their solicitors with details of the proposed auction, including the auction advertising programme and the estimated cost thereof. The plaintiff made it clear that it did not object to the defendants' substituting caveats which prohibited dealings other than the dealings by which the plaintiff proposed to realise the security … The question is, I think, whether in these circumstances it was reasonable for the defendants to refuse to comply. In my opinion, it was not."
At page 230, Holland J made it clear that the defendants had no reasonable cause for maintaining their caveats after having been requested to withdraw them. He found it unnecessary to decide the plaintiff's further argument that the defendants' claimed interests did not entitle them even to lodge a caveat forbidding the registration of any dealing with the land because this would prevent dealings by a registered mortgagee exercising his power of sale. The argument was that a subsequent encumbrancer had no claim of right to prevent such dealings. It was submitted that the effect of s 58 and s 59 of the New South Wales Real Property Act 1900 was to preclude even a registered subsequent mortgagee or encumbrancer from lodging a caveat to prohibit such dealings; and that if this were so, a person claiming as equitable mortgagee under an unregistered dealing could not claim a higher right. As to this argument, Holland J stated:
"In my opinion this ground raised the question whether the mere possibility of improper dealing by a registered mortgagee in purported exercise of his power of sale is enough to entitle a subsequent mortgagee, registered or unregistered, to lodge a caveat against all dealings, so as to ensure that he will get some notice either, as in this case, of a proposed sale, or of a completed sale before the transfer is registered, and thus have an opportunity to investigate or inquire and take steps to prevent an improper dealing from being registered: cf Re Victorian Farmers' Loan and Agency Co Ltd (1897) 22 VLR 629. As a subsequent mortgagee or encumbrancer may be entitled to claim that his position as regards a first registered mortgagee is as strong as, if not superior to, that of the mortgagor, the question would arise whether the mortgagor also was entitled to lodge a caveat against dealings by the first mortgagee. In Vandyke v Vandyke (1976) 12 ALR 621 at 644 Mahoney JA held that it was the intention of the legislation that the prohibition set forth in the caveat should not extend beyond the proper protection of the estate or interest claimed. The reasons for judgment of Bowen CJ in Equity in Easton v Ardizzone [1978] 2 NSWLR 233(n) provide support for the plaintiff's contention that a caveat against all dealings is wider than an unregistered mortgagee might be entitled to prescribe."
There arises then a question whether any conduct of the Bank referred to above, vis‑a‑vis the Church, arguably disentitles the Bank from relying on its power of sale under the mortgage, or to put it another way, whether it is arguable that, by reason of the Bank's conduct which is the subject of the Church's complaint, the Bank should not be permitted to exercise the power of sale against the interests of its earlier mortgagor, the Church.
In that regard, the Bank contends that its mortgage interest predates whatever claim the Church now may arguably have against the Society. It denies that it is guilty of any fraudulent conduct against the Church. Counsel for the Church expressly desists from alleging any fraudulent conduct on the part of the Bank, although he makes a submission that the right of the Bank to exercise its power of sale under the mortgage is "tainted" by the alleged fraud of the Society in procuring the registration of the transfer in its favour. I proceed on the basis that there is no allegation of fraud against the Bank, nor any allegation that the Bank condoned any fraud, or acted in the knowledge, actual or constructive, of any fraud on the Church.
When pressed as to the precise nature of this "tainting", counsel for the Church relied on the proposition, already stated, that the conduct of the Bank in failing to act on the notice of the Church not to facilitate any dealings concerning the Westminster property, except by or through the two authorised persons notified, constituted a lack of bona fide conduct by wilfully or recklessly sacrificing of the interests of the Church under the mortgage.
The Bank presents itself as a bona fide holder of a pre‑existing mortgage and a mortgagee whose right to exercise the power of sale under the mortgage in question is unimpeachable. The Bank says that its mortgage was initially lodged against the Westminster property at a time when the Church was the registered proprietor. It says that, in effect, nothing has changed since that day. So far as the transfer of proprietorship from the Church to the Society is concerned, the Bank notes that no fraud is alleged against it in respect of that dealing. It denies that it is "tainted" in any respect in relation to that dealing, or at least in any way which can be said to impeach, even arguably, its right to exercise the power of sale under the mortgage.
Despite the circumstances recounted above in which the Bank acceded to the dealings that resulted in the Society becoming the registered proprietor of the Westminster land subject to the Bank's mortgage, it has not been made sufficiently plain to me in argument on behalf of the Church that the Church arguably can impeach the right of the Bank to exercise its power of sale under the mortgage. If the Bank has acted negligently or in breach of a fiduciary duty it may have owed the Church at material times, it is not clear that such causes of action of themselves would entitle the Church to impugn the Bank's right to exercise the power of sale under the mortgage. While remedies in damages or equitable compensation may possibly be available to the Church, if it were to succeed on these causes of action, the question is whether a remedy would be available to prevent the Bank from exercising its power of sale under the mortgage in respect of the subsequent proprietor of the land who has taken the proprietorship subject to that mortgage.
Thus, one returns to consider the primary submission put on behalf of the Church that, by the conduct of the Bank complained of, the Church has lost its equity of redemption in the mortgage and with it any prospect that it may have had, compared with the Society, to avoid a mortgagee sale of the Westminster property in the event that the default of the Society that was extant at and before the Society was registered as proprietor of the property, might have led.
It is arguable, as a matter of fact, that the taking of steps by the Bank which it had effectively been asked not to take by certain persons it had earlier accepted as the proper representatives of the Church, and which facilitated the transfer of the fee simple in the property from the Church to the Society, in the most fundamental of ways resulted in the Church being deprived of the mortgagor's equity of redemption under the mortgage; indeed, it resulted in the complete destruction of the Church's interest in the property, both as the holder of the fee simple and under the mortgage. While the authorities relied on by the Church, and referred to in Lavery (supra), are directly to do with the exercise of a power of sale under the mortgage, it is, perhaps, arguable as a matter of law that the conduct of the Bank complained of, even though antecedent to, and not directly concerned with, the purported exercise of the power of sale, is sufficiently connected with it to impeach the power of sale.

However, even if, for the sake of argument, it is accepted that the caveator's claim has or may have substance by virtue of the allegation that the Bank's conduct was a cause of the Church losing its registered proprietorship of the Westminster property, and with it the "benefit" of the mortgage and the equity of redemption thereunder, such that the conduct should be classified as wilful or reckless conduct in disregard of the interests of the Church and so entitle the Church to impugn the Bank's right to effect a mortgagee sale of the property, this is a case where the balance of convenience must be considered.
On any view, the circumstances of this case are "unusual", to adopt the expression used in Ravi Nominees and other cases. This is also a case where it is not immediately obvious that the Bank would have the protection of s 140 of the Act. Apart from the difficulties in establishing the application of s 140 in a case like this, it is not altogether clear whether the Church would be able to meet an award made under that section. This case is not easily equated with that considered in Ravi Nominees. Here, the evidence suggests that the Church at material times prior to the Society becoming the registered proprietor of the Westminster property, was registered as the proprietor of the Westminster property, as well as the property upon which St Nikola's Church is built at 69 Angove Street, North Perth, Western Australia. There is little evidence concerning that particular piece of land, the nature of any development on it, and whether or not it is encumbered in any particular way, before the Court.
The real difficulty facing the Church in this case, however, in relation to the matter of balance of convenience, is that, at all material times prior to the conduct of the Bank complained of, and the registration of the Society as proprietor of the Westminster property, the Church had agreed to the earlier provision by the Advance Bank of financial accommodation to the Society and had voluntarily provided a Deed of Guarantee in respect of such accommodation, as well as security in the form of the mortgage over the Westminster property then registered in the Church's name. At and prior to the registration of the dealing whereby the Society became the registered proprietor of the Westminster property, the Society was in default under the terms of that financial accommodation and the Church was exposed to the Bank acting under that Deed of Guarantee and exercising its rights and powers under the mortgage. In other words, even if the dealing that resulted in the Society becoming the registered proprietor of the Westminster property could be unwound, in equity, if not in law, there is no reason to consider the Church would not remain indebted to the Bank under the mortgage.
Nothing was put in any of the submissions made on behalf of the Church to the effect that, if successful in the action and if remedies were granted in accordance with those sought as against the Society, or the Bank, the mortgage would be undone and the Bank unable to rely upon it in any way. Indeed, counsel for the Bank submitted that, properly analysed, the caveat lodged by the Church, which prohibits absolutely all dealings with the Westminster property, is too broadly drafted. Rather, it was argued on behalf of the Bank that any caveat that the Church is entitled to maintain should be and have been expressed as subject to the rights and powers of the Bank under the mortgage. While not necessarily fatal to the success of an application, the interest caveated should usually be expressed with particularity. An irregular caveat should not be extended: Deputy Commissioner of Taxation v Corwest Management Pty Ltd [1978] WAR 129; Midland Brick Corporation Pty Ltd v Welsh [2002] WASC 248; Lydon v Ryding [2002] WASC 308.
In my opinion, there is considerable force in the submissions made on behalf of the Bank in this regard. Even if the Church were to be successful in its action against the Society, and were successful against the Bank in damages for negligence or equitable compensation for breach of fiduciary duty, I find it difficult to see how any form of relief could be granted which would, in effect, set aside the security that the Bank held by way of the mortgage that pre‑existed the conduct of the Society and the Bank complained of.
The Bank further argues that the system of indefeasibility of title, created by the Transfer of Land Act1893, as explained in Breskvar v Wall (1971) 126 CLR 376, protects the Bank in the exercise of its power of sale under the mortgage in circumstances such as these. The Bank contends that, whilst the Society remained the registered proprietor, albeit under a defeasible title in the face of the allegations of error or fraud, the Society could, nonetheless, create a valid interest in third parties such as the Bank. Therefore, even if the Bank had granted a mortgage to the Society whilst the Society was the registered proprietor, and had the mortgage been registered prior to the Church's caveat being lodged, the Bank's legal mortgage would take precedence over the Church's equitable interest that is the right to reconveyance of the property. They, of course, are not the facts here. Thus, the Bank argues that this case is much stronger than suggested in this hypothetical example, because the Church itself granted the mortgage when it was indisputably the registered proprietor and before the alleged fraud was perpetrated. The subsequent disputed transfer of title was subject to the Bank's existing legal interest as mortgagee. Thus, the Bank contends, if the land were to be reconveyed to the Church, it would be reconveyed subject to the Bank's mortgage and the Church, as mortgagor, would still be in default under that mortgage.
This argument has some force, although it may be argued that the Bank's interest as against the Society was only created after the Society was registered as proprietor. In that sense, the Church's arguable right to be restored as registered proprietor might have come into being before the Bank's interest as against the Society.

Conclusion

As I have indicated, put one way or the other, I do not consider the Church's claimed entitlement to impugn the Bank's power of sale under the mortgage to be strongly arguable. Notwithstanding that the Church has raised a serious question to be tried in its action against the Society, and has also, in my view, raised serious questions to be tried against the Bank in causes of action in tort and breach of fiduciary duty, I do not consider that it is strongly arguable that the conduct of the Bank complained about, if proved, would result in the Church being entitled to impugn the right of the Bank to exercise its power of sale under the mortgage in circumstances such as these.
In my view, even if the Church has a relevant caveatable interest, it is one that must be expressed subject to the Bank's mortgage.
In these circumstances, and also because I consider the balance of convenience in a case such as this to be in favour of the Bank, primarily because, however one looks at the facts of the matter, the Bank would be entitled to exercise its power of sale against the Church if it were still in possession of the Westminster property, as it is currently against the Society as registered proprietor, this is an unusual case where the usual considerations designed to protect the proprietary interests of the caveator in land must give way to the right of the registered mortgagor to effect a sale under the mortgage.
In these circumstances, and for these reasons, I refuse the application for an order extending the caveat.