Jacem Pty Ltd v RMBL Investments Limited - [2010] SADC 97

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Interlocutory Application)
JACEM PTY LTD v RMBL INVESTMENTS LIMITED
[2010] SADC 97
Reasons for Decision of His Honour Judge Clayton
21 July 2010
REAL PROPERTY - TORRENS TITLE - CAVEATS AGAINST DEALINGS
Application for extension of caveat by plaintiff. Caveat lodged by plaintiff over title in which it is the registered proprietor of an estate in fee simple. Whether registered proprietor of an estate in fee simple can lodge a caveat on the certificate of title to its own land pursuant to s 191 of the Real Property Act 1886. Whether relevant question to be tried. Form of caveat.
HELD: A caveat may be lodged by a party over its own land provided it has an equitable interest different from its interest as the registered proprietor of an estate in fee simple. Identification of the interests claimed determined by wording of the caveat. Plaintiff has not identified any interest that is different from interest as registered proprietor and mortgagor. Caveat bad in form. Prohibition sought is too wide. Application dismissed.
Real Property Act 1886 s 191, s 191(fa) ; Real Property Act 1900 (NSW) s 72 ; Land Transfer Act 1952 (NZ) s 137; Transfer of Land Act 1958 (VIC) s 77(1) , referred to.
re Martin [1900] SALR 69; Sinclair v Hope Investments Pty Ltd [1982] 2 NSWLR 870; Haupiri Courts Ltd, Re an Application by (No 2) [1969] NZLR 353; Patmore v Upton [2004] TASSC 77, applied.
Nubanc Finance Pty Ltd v BNY Trust (Australia) Registry Limited ; Nubanc Finance Pty Ltd v BNY Trust (Australia) Registry Limited (No 2) ; RMBL Investments Pty Ltd v Lorbay Pty Ltd ; Whallin v Bailbart Investments Pty Ltd (1987) 47 SASR 198; Latec Investments Ltd v Hotel Terrigal Pty Ltd (In Liq) (1965) 113 CLR 265; Swanston Mortgage Pty Ltd v Trepan Investments Pty Ltd [1994] 1 VR 672; Mir Bros Projects Pty Ltd v 1924 Pty Ltd [1980] 2 NSWLR 907; Re McKean's Caveat [1988] 1 Qd R 524; re Pile’s Caveat [1981] Qd R 81; Shaw Excavations Pty Ltd v Portfolio Investments Pty Ltd (2000) 9 Tas R 444; Commonwealth Bank of Australia Limited v Kyriackou [2003] V Conv R 54-543; Re Cross v National Australia Bank Ltd [1992] Q ConvR 54-433; McCourt v National Australia Bank Ltd [2010] WASC 121; Roclin Investments Pty Ltd v Makris (1974) 7 SASR 485; Caravan & General Finance Pty Ltd v Clearview Developments Pty Ltd (1976) 15 SASR 404; Luther v Sayer [2009] VSC 595; Goldstraw v Goldstraw [2002] VSC 491; Does the Registered Proprietor have a Caveatable Interest? David M Wright 69 Australian Law Journal 935; Sykes Law of Securities Fourth edition p 274, considered.

JACEM PTY LTD v RMBL INVESTMENTS LIMITED
[2010] SADC 97

By a summons issued 18 June 2010 the plaintiff has sought orders including:
2. An order that the Notice issued by the Registrar-General to the Plaintiff dated 28 May 2010 to withdraw Caveat No 11313622 in respect of the land comprised in Crown Lease Book Volume 5947 Folio 885 be extended.
3. Alternatively, that leave be granted to the Plaintiff to file a further caveat in respect of the land comprised in Crown Lease Volume 5947 Folio 885.
The defendant's primary submission is that this action should be determined on the same basis as RMBL Investments Ltd v Lorbay Pty Ltd, a decision of the Supreme Court handed down 19 May 2010 (Action SSCIV-10-358). Judge Burley held that a caveator in the same position as the present plaintiff did not have a caveatable interest.
The plaintiff's application also raises other considerations which I refer to below.
The Requirements for Extension of a Caveat or Leave to File Further Caveat
In order to obtain the order which is sought the plaintiff must establish that it has a caveatable interest, that the caveat is good in form, that there is a serious question to be tried and that the balance of convenience favours the granting of the extension in order to maintain the status quo pending the resolution of an action by the caveator to establish the validity of the claim on which the caveat is based pursuant to subs 191(fa) of the Real Property Act 1886. The caveator should offer the usual undertaking as to damages and must satisfy the test appropriate to the grant of an interlocutory injunction.[1]
[1] Whallin v Bailbart Investments Pty Ltd (1987) 47 SASR 198 per Cox J at 204.
The History of the Application
The first hearing of the application on 18 June 2010 proceeded ex parte and an order was made extending the time for removal of the caveat to 25 June 2010. At the next hearing on 25 June 2010 the defendant was represented by counsel and an interim order was made further extending the time for removal of the caveat until 9 July 2010.
The plaintiff was represented at the first two hearings by Mr Charitopoulos who claimed a right of audience by reason of a power of attorney. He is an undischarged bankrupt, neither a legal practitioner nor a director of the company and has no right of audience. He also signed the interlocutory application and summons and swore an affidavit stating that he was authorised to make the affidavit on behalf of the company. I accept the defendant's submission that there is no evidence that the plaintiff has authorised Mr Charitopoulos to commence these proceedings on its behalf, but nevertheless have considered the application on its merits.
The application came before the court next on 8 July 2010. Notwithstanding the fact that Mr Charitopoulos had been told many times by His Honour Judge Lovell at the earlier hearings that the plaintiff could only be represented by a director or legal practitioner, Mr Charitopoulos persisted in presenting the plaintiff's case. I did listen to all of what Mr Charitopoulos had to say because it seemed to me that was the best way of expediting the matter. On that day I reserved my decision but did not make any order.
The Underlying Facts
The plaintiff is the registered proprietor of the whole of the land comprised and described in Certificate of Title Register Book Volume 5947 Folio 885. The property is known as "The Ice Arena".
The defendant has made loans to the plaintiff which are secured by Registered Mortgage No. 10357347. The plaintiff is in default and the caveat was lodged to prevent the defendant from exercising its rights as mortgagee.
The Caveat
The caveat was lodged on behalf of the plaintiff on 17 December 2009. The caveat is in the panel form C1.
In the box in the panel form where provision is made for a description of the Certificate of Title Being Caveated the following appears:
Firstly the (Words struck out) Memorandum of Mortgage No. 10357347 over the Whole of the Land in Certificate of Title Volume 5947 Folio 585.
The words -"the Whole of the Land in Certificate of Title Volume 5947 Folio 885 and secondly" had been typed in the box but were struck out by hand.
Accordingly, on its face, the caveat states that it is a mortgage, not a certificate of title, which is being caveated.
The CAVEATOR is described in the document as Jacem Pty Ltd.
Where the third box in the printed panel form makes provision for insertion of details relating to the "CAVEATEE - REGISTERED PROPRIETOR" the names and addresses of both the plaintiff and defendant were originally typed, but the name and address of the plaintiff has been struck out by hand leaving the name and address of the defendant followed by the words "as Mortgagee exercising power of sale pursuant to Memorandum of Mortgage No. 10357347".
The next box in the printed panel form, which has the heading "THE CAVEATOR CLAIMING", refers to an attached annexure. I refer to the annexure later. In that box the caveat states that it:
FORBIDS THE REGISTRATION OF ANY DEALING WITH THE ESTATE OR INTEREST OF THE ABOVENAMED CAVEATEE IN THE SAID (Words struck out) MORTGAGE NO. 10357347 OVER the Whole of the Land in Certificate of Title Volume 5947 Folios 885, UNLESS SUCH DEALING IS MADE SUBJECT TO THE CLAIM OF THE CAVEATOR
In the annexure to the caveat, which is form B1, the "Land" is described as "Memorandum of Mortgage No. 10357347 over the Whole of the Land in Certificate of Title Volume 5947 Folio 885 (the "Mortgage"). That description confuses the land and the mortgage.
In the margin of the annexed form are the printed words "The Caveator Claiming" alongside of which the following words have been typed:
An interest as registered proprietor and mortgagor pursuant to Memorandum of Mortgage No. 10357347 and claiming that the said caveatee has improperly purported to exercise its power of sale under the mortgage.
RMBL Investments Ltd (A.C.N. 004 493 789) ("the Mortgagee") has purported to exercise power of sale under the Mortgage when such power of sale has not arisen because:
1. The Caveator is not in default of the terms of the Mortgages; and/or
2. The Mortgagee has failed to provide the Caveator with Notice of the Default or a valid Notice of Default in writing as required sections 132 and 133 of the Real Property Act 1886; and/or
3. The Mortgagee has failed to provide the Caveator with an accounting of the monies it claims to be owed to it by the Caveator and pursuant to the Mortgages.
There is first the claim of "An interest as registered proprietor and mortgagor pursuant to Memorandum of Mortgage No. 10357347". That interest is already noted on the title and cannot be disputed.
Secondly, the caveat makes the claims that the defendant has improperly purported to exercise its power of sale under the mortgage and that the power of sale has not arisen because (1) the plaintiff is not in default, (2) the defendant has not served notice of the default, and (3) the defendant has failed to provide an accounting. Those claims do not specifically identify any interest at law or in equity in the land.
If there is no default under the mortgage, or if the necessary notices have not been served, the defendant would not have power to sell the land.[2] However the absence of a power of sale does not by itself give rise to any interest in the land additional to the plaintiff's interest as registered proprietor and mortgagor.
[2] Real Property Act s 132 & 133.
In this case the significant fact is that the defendant has not entered into a contract to sell the land as mortgagee. If the defendant did enter into a contract of sale before a right to sell had arisen, or if there was an exercise of the power of sale in breach of the duty of care or duty of good faith imposed on the mortgagee the plaintiff could have the sale set aside and the Registrar General might refuse to execute the transfer to give effect to the sale.[3]
[3] Sykes Law of Securities Fourth edition p 274.
The improper exercise of the power of sale by mortgagee can create an equitable interest in the mortgagor.
The caveat does not assert an equitable interest and in the absence of an actual sale by the mortgagor I cannot infer an equitable interest simply because the mortgagee’s power of sale has not yet arisen.
The defendant relies upon the fact that the caveat was lodged by the registered proprietor of an estate in fee simple on its own title. Mr Fragos submitted that the caveat does not disclose an interest capable of supporting a caveat. A question arises as to whether a caveat can be lodged against a title by the registered proprietor of an estate in fee simple. The defendant's submission is that question should be answered "no". If that submission is correct the plaintiff's application could be dismissed for that reason alone.
Can the Registered Proprietor of an Estate in Fee Simple lodge a Caveat on the Certificate of Title to its own Land Pursuant to Section 191 of the Real Property Act?
A caveat is the creation of statute. In order to understand the rights of the parties the starting point is s 191 of the Real Property Act which in the preliminary clause provides:
191. Any settlor of land or beneficiary claiming under a will or settlement, or any person claiming to be interested at law or in equity, whether under an agreement, or under an unregistered instrument, or otherwise howsoever in any land, may lodge a caveat with the Registrar General forbidding the registration of any dealing with such land, either absolutely or unless such dealing shall be expressed to be subject to the claim of the caveator, or to any conditions conformable to law expressed therein…
The following paras (a) to (l) of s 191 inclusive deal with procedural matters such as the form of the caveat, a direction that the Registrar General shall not register dealings contrary to the caveat and the procedure for removal of a caveat.
Whether a person is entitled to lodge a caveat on a certificate of title must depend upon whether the interest claimed falls within the scope of the preliminary clause in s 191.
Mr Fragos relied upon the decision of Judge Burley in an action by the present defendant RMBL Investments Ltd as plaintiff against Lorbay Pty Ltd. The present defendant was the applicant for a removal of caveat. The defendant Lorbay Pty Ltd, is a company which is connected to the present plaintiff. Mr Charitopoulos was a director of Lorbay Pty Ltd. With the exception of the registration number of documents the form of the caveat in that case was identical with the form of the caveat which the court is presently concerned with.
In Lorbay Judge Burley decided that the caveat did not disclose an equitable interest capable of supporting a caveat and ordered that the caveat be removed.
Judge Burley concluded that the right of a registered proprietor of an estate in fee simple to prevent a mortgagee's sale is a "mere equity" and that the caveat relied upon by Lorbay Pty Ltd did not disclose an equitable interest capable of supporting a caveat. His Honour referred to cases where a different conclusion had been reached, including a decision of Judge Withers in Nubanc Finance Pty Ltd v BNY Trust (Australia) Registry Limited.[4]
[4] Unreported decision delivered 10 March 2010 in Action 1935 of 2009 as varied by further reasons delivered 9 April 2010.
The fact that the present case and the Lorbay case have the similarities which I have mentioned would normally provide sufficient reason to follow the decision of Judge Burley. If I could simple follow the decision of Judge Burley the plaintiff's application could be immediately disposed of. However, because there are diverging judgments it is necessary to consider the principles which underlie the decisions.
The question of whether the registered proprietor of land was entitled to lodge a caveat pursuant to s 191 of the Real Property Act was considered by the South Australian Supreme Court in Banco as long ago as 1900. In re Martin [1900] SALR 69 a caveat had been claimed by the registered proprietor of land who was also a lessor of the land. The court held that the registered proprietor was entitled to caveat his interest as lessor to prevent an assignment of the lease by the lessee. Way CJ observed at 76:
Turning from the right to relief to the procedure adopted, Sir Malcolm McEacharn disputes the right of the landlords to lodge a caveat, on the ground that they have no interest in the land within the meaning of section 191 of the Real Property Act 1886. If the landlords had no caveating capacity the caveat and the petition filed in support of it must both fail. The material part of section 191 is as follows: - "Any person claiming to be interested at law or in equity, whether under an agreement or under an unregistered instrument, or otherwise howsoever, in any land, may lodge a caveat with the Registrar-General forbidding the registration of any dealing with such land…" The argument was that the right of entering a caveat is limited to someone interested in the fee simple, where the fee simple is in dispute, and to someone claiming under the lessee, where an interest in the term is in question. The definition clause (section 3) enacts that "land" "shall extend to and include all tenements… and every estate and interest in land". The word "land", therefore, includes the term of years created by a lease. Even if it were restricted to this narrower meaning, the landlords would be interested in the "land" during the term of the lease, as they are entitled to the rent and to performance of the covenants, and have the power of distraining and re-entry under the lease. But the larger meaning of the word "land" is not restricted by the definition clause, and by the plain language of section 191 "any person claiming to be interested… in any land may lodge a caveat". I see no reason why the larger meaning should be cut down so as to prevent the landlords from entering a caveat to protect their interests.
Boucaut J agreed with the Chief Justice and said it was impossible to say that a lessor had no interest in the land within the meaning of s 191 of the Real Property Act.
Bundey J noted that the protection afforded by a caveat was not available under the English or the "old system" of conveyancing. His Honour observed that the extent to which the procedure protected the interest of owners of land was well illustrated by the particular case.[5] His Honour agreed that the caveator had a caveating capacity and said:
…To give this capacity it is only necessary that the person should be interested in the land in law or in equity, vide section 191 of the Real Property Act, 1886. The caveator has put in evidence the Certificate of Title of the land demised, which Certificate is conclusive evidence that he has the highest interest in such land known to the law, viz, an estate in fee simple. The covenant not to assign is one that runs with the land, which term in itself implies in the lessor an interest not only in the land but also in the term…
[5] at p 85.
The interest as registered proprietor of an estate in fee simple and the interest as lessor were treated as different interests.
Re Martin established that it was possible for a registered proprietor of an estate in fee simple to have a caveatable interest, but that caveatable interest had to be something different from the interest as registered proprietor. The ultimate question must be whether the other interest claimed by the caveator is one which falls within the terms of s 191 of the Real Property Act.
In Nubanc Finance Pty Ltd v BNY Trust (Australia) Registry Limited, the plaintiff, who was the registered proprietor of an estate in fee simple, lodged a caveat over a mortgage. The precise wording of the caveat and the interest claimed by the plaintiff are not described in the reasons for judgment. Judge Withers followed re Martin and a decision of Needham J in the Equity Division of Supreme Court of New South Wales in Sinclair v Hope Investments Pty Ltd [1982] 2 NSWLR 870. Judge Withers said that for a registered proprietor of the fee simple to have a caveatable interest he had to have, in addition to his legal estate, some further claim in law or equity such as a claim to prevent the completion of a voidable sale by the mortgagee.
In Lorbay Judge Burley distinguished re Martin on the basis that the decision predated the decision of the High Court of Australia in Latec Investments Ltd v Hotel Terrigal Pty Ltd (In Liq) (1965) 113 CLR 265. Judge Burley found that re Martin was no longer good law for the proposition that a registered proprietor/mortgagor may lodge a caveat to prevent the wrongful exercise of the power of sale. His Honour decided that the right to prevent a mortgagee sale was a "mere equity" and that the caveat relied upon by the defendant did not disclose an equitable interest capable of supporting a caveat. His Honour followed the decision of the Court of Appeal in Victoria in Swanston Mortgage Pty Ltd v Trepan Investments Pty Ltd [1994] 1VR 672.

The decision in Sinclair in 1982 post dated the 1965 decision of the High Court in Latec Investments. In Sinclair Needham J held that the registered proprietor of land whose mortgagee had entered into a voidable contract for the sale of the land had a proprietary right to restrain the completion of the contract and also had an equitable interest which was sufficient to found a caveat.
In Sinclair the defendant had lodged a caveat against its own title, claiming an estate or interest "as registered proprietor of the fee simple". The caveat had been lodged pursuant to s 72 of the Real Property Act 1900 (NSW), which is in different terms from s 191 of the South Australian Act. Needham J said:[6]
Although Hogg, The Australian Torrens System (1905), page 1031 said that "(t)he right of a registered proprietor to enter a caveat in the nature of a restriction on his own powers of disposition would seldom be contested", I would think that a caveat in the form of the present caveat could not be supported under s 72(1). The registered proprietor, as such, cannot be said to be claiming any estate; he has indefeasible title to the highest estate attainable. It may be, however, that there are circumstances in which he could, by lodging a caveat in a limited form, enjoin the registration of a particular, or a particular kind of dealing. That possibility was recognized by the Privy Council in Great West Permanent Loan Co v Friesen [1925] AC 208, at p 216, where it was said, in effect, that the lien of an unpaid vendor could support a caveat forbidding dealings with the land by the purchaser. (underlining added).
[6] at p 872.
Needham J referred to a decision of the Supreme Court of New Zealand in Haupiri Courts Ltd, Re an Application by (No 2) [1969] NZLR 353 where Richmond J said[7] that a registered proprietor who founded his claim to caveat solely on his position as registered proprietor, could not be said to claim an interest in the land "by virtue of any unregistered agreement or other instrument of transmission, or of any trust expressed or implied, or otherwise howsoever". That is the criterion required by s 137 of the Land Transfer Act 1952 (NZ) for lodging a caveat. The New Zealand provision is similar although not identical to s 191 of the South Australian Real Property Act.
[7] at p 355.
Richmond J had considered a number of Australian decisions including re Martin.
Returning to Sinclair, Needham J discussed Mir Bros Projects Pty Ltd v 1924 Pty Ltd [1980] 2 NSWLR 907 where Powell J had recognized the possibility that a registered proprietor who was a mortgagor could lodge a caveat to protect his interests against voidable action by a mortgagee.
Needham J also discussed Latec Investments and the position where a mortgagee had entered into a contract for the sale of the land which had not been completed. His Honour said:[8]
The question is whether the mortgagor, maintaining his registered title, has, nevertheless, in his proprietary right to enjoin the completion of his mortgagee's contract for the sale of his land, a caveatable interest in the land. I do not think that the fact that the mortgagor remains the registered legal owner makes it impossible for him to hold, at the same time, an equitable interest in the land. The right, which is an equitable right, to prevent the completion of a voidable sale, is not one which arises solely from his position as registered proprietor. It arises from (1) the charge created by him by entering into the mortgage; (2) the action of the mortgagee in entering into the voidable contract. It is no less "an equitable claim enforceable by reason on the principles of the Court of Chancery" than if the right existed shorn of the registered estate. Accordingly, in my opinion, the question whether the registered proprietor may lodge a caveat before the completion of the contract is not different from the question whether, after the contract has been completed and the transfer registered, the mortgagor may lodge a caveat to protect his right to have the sale set aside.
In my opinion, until a higher court decides otherwise, the registered proprietor should be held to be within s 72(1) where there is a voidable sale entered into by his mortgagee. The caveat would, I think, need to be drafted in such a way as to forbid only the registration of a transfer executed pursuant to the voidable transaction". (underlining added).
[8] at p 875.
I emphasise that Needham J considered the entry into a voidable contract to be a pre-requisite to the equitable interest which he contemplated.
The Victorian Court of Appeal arrived at a different conclusion from Sinclair in Swanston Mortgage Pty Ltd v Trepan Investments Pty Ltd (1994) 1 VR 672. In Swanston Mortgage Pty Ltd a caveat claimed an estate or interest described as "An equitable interest in the said land as mortgagor (and/or registered proprietor) pursuant to a mortgage… to Swanston Mortgage Pty Ltd as mortgagee." .The grounds for the claim of the caveator were stated to be "An equitable interest in the said land as mortgagor to prevent the completion of a voidable sale of the said land entered into by the mortgagee Swanston Mortgage Pty Ltd on or about 11 May 1993 in breach of the said mortgagee's duty to the mortgagor and without having regard to the mortgagor’s interest as required by s 77(1) of the Transfer of Land Act 1958 (VIC)". Initially the extent of prohibition claimed by the caveat was an absolute prohibition but the word "Absolutely" had been deleted from the caveat and the following words were substituted - "To forbid the registration of any transfer of the said land by the said mortgagee pursuant to its purported powers of sale in respect to a contract of sale made on or about 11 May 1993". Brooking J observed:[9]
Read alone, the description of the estate or interest claimed is confusing and inadequate, but when that description is read in conjunction with the "grounds of claim" the nature of the estate or interest claimed does sufficiently appear from the caveat. The caveat was, we were told by counsel for the mortgagor, drawn in reliance upon the decision in Sinclair v Hope Investments Pty Ltd… the correctness of which decision was said by him to be the main question raised by the appeal.
[9] at p 674.
Brooking J discussed the Latec Investments decision and the distinction between equitable interests and "mere equities". His Honour considered but did not follow the decision of Needham J in Sinclair. He concluded:[10]
In my opinion the present caveat claims an interest in the land which the facts alleged in the "grounds of claim" in the caveat are incapable of establishing. In other words, the interest set up as a caveatable interest is not an interest in land known to the law…
[10] at p 682.
Brooking J left open the question raised by the defendant in this case saying:[11]
I should make it clear that in my view this case is to be determined by holding that the caveatable interest asserted in this caveat did not on any view of the facts exist to support the caveat, because of the distinction between a mere equity and a caveatable interest. We do not have to consider in what circumstances, if any, the registered proprietor of land is entitled to lodge a caveat affecting the land of which he is proprietor.
[11] at p 682.
The court held that if a mortgagee sold land in breach of its duties to the mortgagor the mortgagor had an equity to have the sale set aside, but until the equity was made good in curial proceedings the mortgagor had no equitable interest in the land and therefore no right to lodge a caveat.
In Swanston Brooking J discussed the differences between equitable interests in land, mere equities and personal equities and concluded that because the respondent Trepan only held a "mere equity" but did not have an equitable interest in land there was no caveatable interest. It was that conclusion, which was based upon the interpretation by Brooking J of Latec Investments, which caused Judge Burley to arrive at the conclusion which he did in Jacem.
That interpretation of the judgments in Latec Investments by Brooking J has been criticised in later decisions and by academic writers.
A number of cases have considered the apparent differences between these authorities. Re McKean's Caveat [1988] 1 Qd R 524 and Re Cross v National Australia Bank Ltd [1992] Q ConvR 54-433 followed Sinclair v Hope Investments Pty Ltd. So did Judge Withers in Nubanc Finance.
The authorities were reviewed comprehensively by Underwood J in Patmore v Upton [2004] TASSC 77. Underwood J observed that while Kitto J in Latec Investments did discuss the distinction between equitable interests and mere equities that was not in the context of what amounted to a caveatable interest. Accordingly Underwood J observed that there was nothing in the judgment of Kitto J in Latec Investments to support the observation of Brooking J in Swanston[12] that "On the approach of Kitto J, the mortgagor in the Latec Investments case could not on any view be said to have had a caveatable interest".[13]
[12] at p 677.
[13] Patmore paras 47 and 48.
Similarly Underwood J observed that Menzies J in Latec Investments said nothing about a caveatable interest in land. He said that it is difficult to determine the basis for the opinion of Brooking J[14] "that on the approach of Menzies J the right of the mortgagor in that case should be regarded as a mere equity for the purposes of the right to caveat". Underwood J said:[15]
With deference and respect, I have come to the conclusion that there is no warrant for assuming that in the case of a voidable conveyance the mortgagor's equity will be classified in the same way as the court classifies that equity in a priority dispute.
[14] Swanston p 677.
[15] Patmore para 55.
After distinguishing re Pile’s Caveat [1981] Qd R 81 Underwood J decided:[16]
It seems to me that with respect to the question of whether a registered proprietor can lodge a caveat merely because he is the registered proprietor, the reasoning Haupiri Courts Limited and adopted in Sinclair and Swanston is to be preferred. The issue is one of statutory construction. The application of the ejusdem generis rule by Richmond J in Haupiri Courts Limited to the equivalent of the words "or otherwise" in the Act, s133(1)(b), was appropriate. The section is designed to protect unregistered interests, the estate of the registered proprietor being paramount. There is no authority to the contrary. Although I have referred to cases in which a registered proprietor has relied upon the interest created by the registration as a caveatable interest, in none of them does it appear that the issue was argued…
[16] Patmore para 58.
Underwood J[17] referred to the observation of Slicer J in Shaw Excavations Pty Ltd v Portfolio Investments Pty Ltd (2000) 9 Tas R 444 that:[18]
The registered proprietor has an interest in land, but that is recognized by the title document itself. I prefer to follow the line of reasoning applied by Richmond J in Re an Application by Haupiri Courts Limited (No 2) [1969] NZLR 353, an approach followed in Sinclair v Hope Investments Pty Ltd [1982] 2 NSWLR 870 and Swanston Mortgage Pty Ltd (supra), and determine that a registered proprietor must establish something over and above that status before it can be said that there exists a registrable interest.
[17] Patmore para 58.
[18] at p 454-455.
Underwood J continued:[19]
The more difficult question is what other interest in land must a registered proprietor show in order to sustain a caveat? Is the equitable right of a registered proprietor to prevent completion of a voidable sale following the exercise of a mortgagee's power of sale a sufficient interest in land to create a caveatable interest? The decision of Swanston stands in the way of accepting that proposition, but is sustained by the reasoning in Sinclair, Re McKean’s Caveat and Cross v National Australia Bank Ltd…
[19] Patmore para 59.
Underwood J acknowledged that Swanston, being an appellate decision in another Australian jurisdiction, commanded the utmost respect and should be followed as a matter of comity unless he was of the view that the decision was clearly wrong.[20] His Honour mentioned that Swanston had been applied in Commonwealth Bank of Australia Limited v Kyriackou [2003] V Conv R 54-543 and noted that Swanston had been vigorously criticised by Mr David Wright in an article published in the Australian Law Journal.[21]
[20] Patmore para 59.
[21] Does the Registered Proprietor have a Caveatable Interest? David M Wright. 69 Australian Law Journal 935.
Underwood J noted[22] that the authors of Meagher Gummow and Lehane, Equity Doctrines and Remedies, fourth edition say at 151:
Even if the competition were viewed as between the mortgagor entitled only to an equitable interest (his equity of redemption) and the purchaser asserting his equitable interest under the contract, the former must succeed on the ordinary rules as to priority. Before completion of the contract there was no conveyance to be set aside and thus no "impediment" to the assertion of the mortgagor's equity of redemption; so, in contrast to Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (references provided), the mortgagor's interests had not been degraded to a ‘mere equity’ and in a suit to restrain completion of the contract the earlier equitable interest was to prevail. These principles were applied by Needham J in Sinclair v Hope Investments Pty Ltd [1982] 2 NSWLR 870 and Ryan J in Re McKean's Caveat [1988] 1 Qd R 524. They were ignored in Swanston Mortgage Pty Ltd v Trepan Investments Pty Ltd [1994] 1 VR 672, where Brooking J was beguiled by the reasoning in Latec's case into holding that a registered proprietor whose mortgagee had entered into, but not completed, a contract in fraudulent exercise of its power of sale lacked an interest in the land sufficient to support a caveat. That decision has been rightly condemned by D Wright (1995) 69 ALJ 935.
[22] Patmore para 60.
Underwood J. said:[23]
For the reasons expressed earlier in this judgement, I have respectfully come to the conclusion that insofar as Swanston is authority for the proposition that the equitable interest of a mortgagor in the case of a voidable sale by a mortgagee, not yet completed, is insufficient to create an equitable interest in land, it should not be followed. Until the contract is completed there is no conveyance to set aside and thus no impediment to the mortgagor asserting an equity of redemption.
[23] Patmore para 61
The issue was considered more recently in McCourt v National Australia Bank Ltd [2010] WASC 121, a decision handed down on 28 May 2010. Murphy J referred to the authorities but concluded that in that case it was unnecessary to reach a final view on the divergence of opinion because even if the plaintiff did have a caveatable interest the caveat in that case ought not to be permitted to continue.
I therefore proceed on the basis that there is no impediment to the plaintiff lodging a caveat over its own land, but before it can do so it must have an equitable interest. It becomes a question of identifying the interest which is claimed and deciding whether the interest is one which is recognized by s 191 of the Real Property Act. The interest must be different from the interest of the registered proprietor in an estate in fee simple. In Haupiri Richmond J said:
…that a registered proprietor cannot lodge a caveat against dealings merely because he is the registered proprietor. He must go further and establish some set of circumstances over and above his status as registered proprietor which affirmatively gives rise to a distinct interest in the land. In such circumstances it would seem that the fact that he is the registered proprietor of an estate or interest under the Act may not prevent him lodging a caveat.
I respectfully disagree with Judge Burley's decision that re Martin may no longer be good law and his conclusion that the right to prevent a mortgagee sale is a "mere equity" which does not disclose an equitable interest capable of supporting a caveat. In arriving at this conclusion I rely upon the comments of Underwood J which are set out above[24] and upon Richmond J in Haupiri. However I have reached the same result on the basis that the plaintiff has not identified or established a relevant equitable interest. The difference in approach may be no more than a matter of semantics.
[24] Patmore para 32.
The interest claimed by the caveator in the present case is described in the annexure to the caveat. As I have observed the plaintiff claims firstly an interest as registered proprietor and mortgagor pursuant to the mortgage. Such a claim is otiose because the plaintiff already enjoys an interest as registered proprietor and mortgagor which is shown on the certificate of title.
Secondly, the plaintiff claims that a power of sale has not yet arisen because (1) the caveator is not in default, (2) the mortgagee has failed to serve the notices required by ss 132 and 133 and (3) the mortgagee has failed to provide an accounting.[25]
[25] paras numbered 1, 2 and 3 in the annexure to the caveat.
Even if a power of sale has not yet arisen that does not mean that the plaintiff has a relevant equitable interest. The caveat does not refer to any interest other than the plaintiff's interest as registered proprietor and mortgagor. The plaintiff has not gone further and established some set of circumstances over and above its status as registered proprietor which affirmatively gives rise to a distinct interest in the land. The circumstances set out in paras (1), (2) and (3) in the annexure do not give rise to an interest in the land.
It is not for the court to make assumptions or to imply that the present plaintiff could claim any interest other than that referred to in the caveat. The identification of the interest claimed can only be determined by the wording of the caveat. The preliminary words of s 191 indicate need for precision in specifying the interest "at law or in equity" which is claimed in a caveat.
It is significant that the defendant has not yet exercised its power of sale. In Sinclair Needham J identified two requirements for the equitable right to prevent the completion of a voidable sale, the second of which was "the action of the mortgagee in entering into the voidable contract".[26] In Patmore Underwood J[27] assumed that the equitable right of the registered proprietor to prevent completion of a voidable sale would follow the exercise of the mortgagee's power of sale.
[26] at p 875.
[27] Patmore para 59.
In this case there is no voidable contract. There is no evidence of any lack of good faith or breach of duty on the part of the defendant. I find that no equitable interest has yet arisen. It would only be if the defendant entered into a contact of sale in breach of the statutory requirements or its duty to the plaintiff that a relevant equitable interest might be created.
I find that the plaintiff does not have an equitable interest in the land additional to its legal interest as registered proprietor of an estate in fee simple which satisfies the requirements of s 191 of the Real Property Act.
I find that the caveat does not identify a relevant caveatable interest.
Other Requirements of Section 191
The caveat states that it:
FORBIDS THE REGISTRATION OF ANY DEALING WITH THE ESTATE OR INTEREST OF THE ABOVENAMED CAVEATEE IN THE SAID MORTGAGE NO. 10357347 OVER the Whole of the Land in Certificate of Title Volume 5947 Folio 885, UNLESS SUCH DEALING IS MADE SUBJECT TO THE CLAIM OF THE CAVEATOR.
In my opinion that claim is inappropriate because it purports to forbid dealings with the interests of the caveatee. For example, in that form the caveat would preclude the defendant mortgagee from assigning its own interest as mortgagee.
In Sinclair Needham J observed[28] that the caveat would need to be drafted in such a way as to forbid only the registration of a transfer executed pursuant to the voidable transaction. The caveat under consideration does not do that.
[28] at p 875

I find that the caveat is bad in form because it is drawn too broadly in that it seeks to forbid dealings outside of any interest which the plaintiff could have in the land. Roclin Investments Pty Ltd v Makris (1974) 7 SASR 485; Caravan & General Finance Pty Ltd v Clearview Developments Pty Ltd (1976) 15 SASR 404. For that reason also no order should be made extending the time for the removal of the caveat.
To the extent that the caveat does not claim any interest other than the interest as registered proprietor and mortgagor, which is already noted on the title and is undisputed, I find that the caveat is bad on its face. Any allegation which is claimed to create an equitable interest should be expressed distinctly and positively and only on proper grounds. McCourt v National Australia Bank Ltd.[29] The caveat does not do that.
[29] at para 23.
Is there a Question to be Tried
The plaintiff's application relies upon the evidence contained in affidavits of Pantelis Charitopoulos sworn 17 June 2010 and 6 July 2010.
In the first affidavit Mr Charitopoulos:
·Stated "the purpose of the registering of the Caveat (Caveat No. 11313622) was to restrict and protect Jacem Pty Ltd from the dealings of RMBL Investments Ltd, The Mortgagor over the land, as there is a dispute on foot with this Loan and Mortgagor; hence the Caveat needs to remain on the Title of the Land for the purpose of not distinguishing Jacem’s position and entitlements".
·Referred to the loan from the defendant to Jacem Pty Ltd and states that "the Borrower is not in default for interest payments".
·Stated that "Jacem has never received a notice pursuant to Section 132 of the Real Property Act".
·Stated that "the Defendant has been collecting the rents from the Land as and from some time in 2009, which rentals are in excess of any interest that may have been payable by Jacem to the plaintiff (sic)".
·Stated "I say that the Defendant is illegally in possession of the Land in anycase and has no right to sell the Land or control the land in anyway so the Caveat needs to remain on the Property to protect Jacem’s interests with the Land".
In a later affidavit sworn 6 July 2010 in response to the affidavit of Colin Henry Madden, filed on behalf of the defendant, Mr Charitopoulos dealt with his entitlement to represent the plaintiff, referred to the decision of His Honour Judge Burley in Lorbay and then said:
11. The Plaintiff has lodged the Caveat over the land for various reasons, including but not limited to:
11a. There is a dispute between the Plaintiff and the Defendant as to the quantum of the debt
11b. There is a dispute between the Plaintiff and the Defendant as to Interest Payments which have been made but not offset to the Loan
11c There are conflicting valuations of the land hence there is dispute of the realisable value of the land
11d. There is a dispute as to what the Reserve Price should be set for the land once it is marketed for sale
11e. The Defendant has suggested selling the land for a lesser value than what the land has been valued for; hence there is a dispute as to this sale
11f.There is a dispute as to charges made against the Plaintiff's Loan account by the Defendant
12. For the reasons of paragraphs 11a, 11b, 11c, 11d., 11e and 11f., and other reasons, the Caveat needs to remain on the land for the purpose of securing the Plaintiff's position by security over the land.
Mr Charitopoulos also asserted that some of the material in Mr Madden's affidavit is "incorrect" but there are no details of the assertion. Mr Charitopoulos said that he required further time to respond to Mr Madden's affidavit and continued:
16. The Plaintiff respectfully requests this Honourable Court to grant Orders to allow the Caveat lodged against the land by the Plaintiff to remain whilst the disputes between the Plaintiff and the Defendant are reconciled.
17. The Plaintiff respectfully requests this Honourable Court to grant Orders to allow the Caveat lodged against the land by the Plaintiff to remain whilst the Plaintiff arranged finance to payout the Loan secured by the Defendant over the land.
18. The Plaintiff respectfully requests this Honourable Court to grant Orders to allow the Caveat lodged against the land by the Plaintiff to remain whilst the Plaintiff negotiates with various parties to enter into a joint venture with them which will pay out the Loan secured by the Defendant over land.
The plaintiff's entitlement to a caveat is dependent upon whether the affidavits of Mr Charitopoulos establish an equitable interest which could be recognized by s 191 of the Real Property Act. I find that the affidavits do not establish a relevant interest. At most the affidavits contain the bare assertions that the plaintiff disputes the amount claimed by the mortgagor and would like time to negotiate.
Mr Charitopoulos has suggested that the mortgagee may sell the property below its value. However there is no evidence of any proposed sale, there is no valuation evidence and there is no basis for finding any breach of the mortgagee's statutory obligations or duty of good faith which might give rise to some equitable interest. Vague assertions by a person with no standing such as Mr Charitopoulos are not evidence and take the matter nowhere. It appears that all that the plaintiff is trying to do by lodging the caveat is to buy time and prevent the defendant from exercising its rights as mortgagee.
In para 16 of his second affidavit Mr Charitopoulos requested a caveat so that the disputes between the plaintiff and the defendant can be reconciled. In para 17 he sought a caveat while the plaintiff arranges finance to pay out the loan and in para 18 he sought a caveat so that the plaintiff can negotiate to enter into a joint-venture. None of the reasons which Mr Charitopoulos put forward establish any equitable interest in the land and they can not support a caveat. The reasons advanced by Mr Charitopoulos illustrate that the plaintiff is using the caveat for a collateral purpose. See the comments of Ross J in Luther v Sayer [2009] VSC 595 at [30] referring to Dodds-Streeton J in Goldstraw v Goldstraw [2002] VSC 491 at [38]-[39] and [42] as to the use of caveats for collateral purposes.
The defendant relies upon the affidavit of Colin Henry Madden, its managing director. Mr Madden's affidavit, which I accept, is evidence of the fact that the plaintiff's dispute as to the amount of the defendant's claim is without merit. The affidavit refers to the advances made by the defendant and the fact that Mr Charitopoulos had not paid any amount in relation to interest or collection charges for the quarter ending 15 March 2009.[30] The affidavit refers to correspondence and discussions between the parties in which Mr Charitopoulos made admissions which are inconsistent with the plaintiff's present assertions.
[30] at para 28.
I find that there is no relevant question to be tried.
Undertaking as to Damages
The plaintiff has not offered any undertaking as to damages. A sufficient undertaking is a pre-requisite to the orders sought by the plaintiff. The absence of undertaking by the plaintiff or some other person on its behalf is a reason why an order should not be made.
The plaintiff could still offer an undertaking, but if it did the undertaking would need to be supported by some form of security. I have been advised by the District Court Registry that the cheque presented by the plaintiff for the lodgement of these proceedings was dishonoured. When Mr Charitopoulos was advised by myself of that fact in court he disputed what I said and claimed that the fee had been paid saying "… it should be paid by BPAY, we have sorted that out. So they said it had to be paid in seven days, and that has been sorted". I asked Mr Charitopoulos directly whether the money had been paid and he said that it had.
I left the bench to make an enquiry and was informed by the Registry that the money had still not been paid. I informed Mr Charitopoulos of what I discovered and he replied "I've looked in the notes while you're gone, and the day which we filed this affidavit, on the sixth of this month, $870 was paid again to the registry, so I have got that on the file". Later I asked him how he knew that the money had been paid and he said "…I instructed payment. It was confirmed that it was paid".
I am informed by the District Court Registry that the lodgement fee has still not been paid.
The court does not have a BPAY facility.
If an undertaking as to damages was offered its sufficiency would need to be considered.
Application for Adjournment
At the conclusion of oral submissions I gave the parties permission to lodge further written argument if they so desired. Mr Charitopoulos responded on 12 July 2010 with a document headed "Information to His Honour to Assist with Decision" which amongst other things seeks an adjournment of eight weeks to enable the plaintiff to obtain legal advice.
The plaintiff has the obligation to make out its entitlement to the order sought. If the plaintiff wished to engage counsel it should have done so on the three occasions when the matter was previously before the court.
On the first hearing of the summons Judge Lovell told Mr Charitopoulos that the plaintiff could only appear by director or a legal practitioner. He chose to ignore that advice and attempted to support his own standing by obtaining a power of attorney. The plaintiff has already had about four weeks in which to obtain legal advice if that is what it intended to do. Given the nature of the application an adjournment of a further eight weeks would be inappropriate.
It would be inappropriate to allow a caveat to remain on a title for approximately 3 months whilst a caveator sought legal advice.
The application for an adjournment is refused.
Conclusion
I find that the registered proprietor of an estate in fee simple can lodge a caveat on the title to its own land, but only in respect of an interest which is additional to the estate in fee simple. Re Martin, Re an Application by Haupiri Courts Ltd (No 2). Sinclair v Hope Investments Pty Ltd.
A mortgagor who has established an entitlement to prevent a voidable sale by a mortgagee can have an equitable interest which might support a caveat, but the evidence in this case does not establish any voidable sale and the plaintiff has no relevant equitable interest.
The caveat is bad in form. It does not clearly identify the interest which it seeks to protect, does not claim a relevant equitable interest and the ambit of the prohibition sought is too wide.
There is no undertaking as to damages.
The plaintiff's application is dismissed.