Lee v Ross (No 2)

In the matter of Lee v Ross, the dispute involved the validity of a caveat lodged by the purchasers against the vendors' property. The case was heard in the Supreme Court of New South Wales. The purchasers had lodged a caveat after their solicitors insisted on an untenable construction of the contract, likely due to an incomplete copy of the contract being retained in their file. The vendors rescinded the contract, leading the purchasers to seek specific performance and lodge a caveat. The central legal issues before the court were whether the caveat was lodged without reasonable cause and whether the inability of the vendors to discharge their loan out of the proceeds of the resale of the land during the currency of the caveat was a loss attributable to the wrongful lodgement of the caveat.

The court examined whether the purchasers and their solicitor could have had reasonable grounds to believe that the contract was not validly rescinded. It was noted that the solicitor's insistence on an untenable construction of the contract was probably due to not having a complete copy of the contract in their file. The court determined that the purchasers had indeed lodged the caveat without reasonable cause. The court also found that the payments of interest that would have been avoided but for the existence of the caveat were a loss attributable to the wrongful lodgement of the caveat. The inability of the vendors to discharge their loan out of the proceeds of the resale of the land during the currency of the caveat was considered a compensable loss.

Ultimately, the court held that the purchasers had lodged the caveat without reasonable cause, and the payments of interest that would have been avoided but for the existence of the caveat were a loss attributable to the wrongful lodgement of the caveat. The court awarded compensation for this loss. The final orders of the court included the removal of the caveat and the awarding of compensation to the vendors for the interest payments incurred due to the wrongful lodgement of the caveat.