Paringawood Nominees Pty Ltd v Baulderstone

PARINGAWOOD NOMINEES PTY LTD & ORS V BAULDERSTONE AND ANOR

[1999] SASC 380

JUDGE BURLEY. By application dated 14 April 1999 (Document 59), the first and second plaintiffs (the plaintiffs) seek the following order:-
“1..... An order that the time for the removal of Caveat No. 8640907 lodged in the Lands Titles Registration Office in respect of the land comprised and described in Crown Lease Register Book Volume 1575 Folio 42 be extended until further order.”

The application was supported by the affidavit of Mr Curtis sworn on 14 April 1999. A copy of the caveat is Exhibit MAC1 to that affidavit. The claim made in the caveat is as follows:-
“THE CAVEATOR claiming an equitable interest in the said land being the land marked ‘A’ and coloured yellow on the attached plan arising from an agreement between the caveator and the caveatee which the caveatee is estopped from denying.
The circumstances establishing that equitable interest are as follows:
1...... In or about February 1994 the caveator undertook a major redevelopment of the swamp irrigation and drainage system of Lots 742 and 743 (‘the swamp’) being land adjacent to the land which is the subject of the caveat.
2...... The swamp was formerly owned by the caveatee but is now:
2.1... owned by the caveator Paringawood Nominees Pty Ltd (‘Paringawood’) as to twenty (20) undivided one hundredth parts; and
2.2... the subject of a contract for purchase of the remaining interest of the caveatee from the caveator Anthera Pty Ltd (‘Anthera’) as to eighty (80) undivided one hundredth parts.
3...... The irrigation re-development referred to in paragraph 1 required the whole of the swamp to be laser levelled by earthmoving contractors engaged by the caveator who then installed a new system of flood irrigation. This comprised a pump being installed to the south of the swamp with a channel dug adjacent to the bank of the River Murray. New parallel drainage bays were constructed upon the laser levelled swamp which run perpendicular to the channel. New flood gates were installed at intervals along the channel and at the top of each drainage bay to enable water pumped from the River Murray to flow into the drainage bays on a controlled basis.
4...... In about 1990, during negotiations for the sale of the initial 20% interest to Paringawood and again during 1993 in the course of negotiations which led to the sale of the balance of the 80% interest to Anthera, the caveatee by Milton Baulderstone represented to the caveator by words and conduct that the north-south boundary between Lot 743 (the swamp) and Lot 904 (the land referred to in the caveat) lay in a straight line between a pepper tree (at the northern end) and a point approximately 10 metres south of an old flood gate which had been constructed in the levy bank (at the southern end).
5...... The flood gate identified by Milton Baulderstone on each occasion was an old flood gate constructed in the levy bank which was part of the then existing flood irrigation system. The caveator enquired of the caveatee about access to the flood gate as even according to the above representations it was not situate on Lot 743. The caveatee responded that access would be provided and that the issue could be easily sorted out.
6...... In reliance upon those representations, the caveator commenced the irrigation re-development work referred to in paragraphs 1 and 3 during February 1994. This work included the construction of drainage bays as indicated on the attached plan.
7...... The irrigation re-development required the following work to be undertaken:
7.1... A channel had to be dug adjacent to the River Murray levy bank with valves constructed at the eastern end of the perpendicular drainage bays, to enable the bays to be filled with water from the channel so that the number of bays to be used and the flow of drainage water into each bay could be regulated by these valves.
7.2... The channel had to have a fall in level from south to north of 1 to 1,000 metres.
7.3... A new pump had to be installed by the caveator at the southern end of the channel and a new flood gate installed at the northern end of the channel to replace the old flood gate on Lot 904.
8...... Installation of the new irrigation system had the following effect:
8.1... When the level of the River Murray was low, water could be pumped to the southern end of the channel, to flow north to fill the channel and the bays by force of gravity due to the level variation referred to in sub-paragraph 7.2.
8.2... The power costs of pumping could be saved when the level of the River Murray was higher than the northern end of the channel. In that event, the irrigation system was able to fill with water in the opposite direction when the flood gate to the northern end of the channel was opened and the water would flow south in the direction of the River Murray to fill the channel.
9...... The caveator caused Lots 743 and 904 to be surveyed during the course of undertaking the irrigation re-development works for the purpose of determining where to locate the northern-most bays. In the course of that survey, the caveator became aware of a survey peg located upon the northern area of the new drainage bays, which cast doubt upon the location of the boundary between Lots 743 and 904 as described by Milton Baulderstone.
10.... As a result of that survey, the caveator has discovered, and the fact is, that the boundary line between Lots 743 and 904 is not as was indicated by the caveatee to the caveator but that a portion of the irrigation re-development works had been constructed by the caveator, in reliance upon the representations of the caveatee by Milton Baulderstone upon Lot 904.
11.... Upon the caveator discovering that the caveatee had misrepresented the location of the boundary line, the caveator communicated that discovery to the caveatee in February 1994 or thereabouts. In response to this communication, the caveatee represented as follows:
11.1. That the caveatee had mis-described the location of the boundary to the caveator, but that there was no problem about the caveator’s irrigation re-development works having been constructed in part upon the caveatee’s land (Lot 904); because
11.2. the caveatee would agree to adjust the title to Lot 904 so as to enable the caveator to operate and maintain the irrigation re-development works on Lot 904; and
11.3. That the form of this adjustment would be given effect to at settlement of the contract by Anthera to purchase the remaining 80% interest from the caveator.
12.... In reliance upon those further representations, the caveator completed the irrigation re-development works in accordance with the original plan (as indicated on the attached plan) and thereafter conducted a dairy farm business upon the land using both the new flood gate which had been installed in the levy bank and that portion of the irrigation channel and drainage bays constructed on Lot 904.
13.... The caveator lodged caveat number 8572877 to give notice of its interest in the land but on 20 January 1999 the caveatee applied to remove that caveat. There was a further repudiation of the interest of the caveator in a letter dated 8 February 1999 from the caveatee’s solicitors to the caveator’s solicitors advising that the caveatee would oppose any extension of the time to remove caveat number 8572877.
14.... In reliance upon all those representations of the caveatee referred to in paragraph 11, the caveator has acted to its detriment, and it would now be unconscionable for the caveatee to deny:
14.1. That the Contract between Anthera and the caveatee has been varied so as to incorporate an agreement by the caveatee to grant to the caveator an easement over so much of Lot 904 as contains the irrigation re-development works for the purpose of permitting the caveator to operate and maintain the works; or alternatively, to convey to the caveator such further or other interest in and over that portion of Lot 904 as to give effect to those purposes.
14.2. That the variation of the Contract took effect as and from 20 January 1999 when the caveatee applied to remove caveat number 857288 or alternatively as and from 8 February 1999.
14.3. That the caveator had, as and from 20 January 1999 or alternatively as and from 8 February 1999 acquired an interest in and over Lot 904 sufficient to enable the caveator to operate and maintain the irrigation re-developments works.
15.... The detriment that the caveator will suffer which is referred to in paragraph 14 is as follows:
15.1. Unless the caveatee honours the representations the caveator will be precluded from irrigating the swamp by means of the irrigation re-development works; and
15.2. The caveator cannot now reconstruct the irrigation re-development works wholly upon Lot 743 because the caveator will be precluded from constructing a new flood gate in the levy bank in place of the existing flood gate to which the caveatee granted access.
16.... In the circumstances, the caveatee is estopped from denying the variations of the Contract, or the acquisition of an interest, as sought in this caveat.
17.... The caveator is entitled as against the caveatee to:
17.1. A declaration that subject to any necessary Ministerial consents the caveator is entitled to the grant of an easement over so much of Lot 904 as contains the irrigation re-development works, for the purpose of operating and maintaining those works.
17.2. An order for specific performance of the Contract entered into by Anthera to effect to the declared rights of the caveator in and over Lot 904.
17.3. Alternatively, a declaration that subject to any necessary Ministerial consents the caveator is entitled to such other interest in and over Lot 904 as would enable the caveator to operate and maintain the irrigation re-development works.”
The caveat raises but one aspect of the disputes between the parties relating to the acquisition by the various plaintiffs of dairy farming land at Mannum from the defendants. The action was commenced in 1997 by the plaintiffs and is well advanced. The caveat was not lodged until March of this year and the defendants subsequently applied to the Registrar-General for the removal of the caveat. This application has been made to prevent removal of the caveat. The plaintiffs sought and obtained leave to amend the statement of claim in these proceedings so that the necessary relief could be sought from this Court to give effect to the interest claimed by the first and second plaintiffs.
To some degree the application has proceeded in accordance with the principles enunciated in Whallin v Bailbart Investments Pty Ltd (1987) 47 SASR 198. In that case Cox J, in broad terms, equated an application for an extension of a caveat to trial with an application for an interlocutory injunction having the same effect. However, Mr Wells QC, counsel for the plaintiffs, contended that there were only broad similarities between an application for an extension of caveat pursuant to Section 191VII of the Real Property Act 1886 (the Act) and an application for an interlocutory injunction. In particular, he submitted that a consideration of the balance of convenience might be different when the statutory discretion was exercised and he also argued that it was not necessary for the plaintiffs to give an undertaking as to damages because the defendants were sufficiently protected by the compensation provisions in Section 191X of the Act. In light of these submissions, it is necessary to discuss the cases relating to Section 191VII.
Over the last 25 years a number of cases have dealt with the nature of the application. The first of these is Galvasteel Pty Ltd v Monterey Building Pty Ltd (1974) 10 SASR 176.
During the course of his judgment Walters J reviewed the cases on s 191 VII of the Act extensively. He said (at 182):
“However, I do not think that s. 191 of the Act was intended to provide machinery for determining a conflict between a caveator and a caveatee as to whether the caveator is entitled to specific performance of a contract for the sale and purchase of land, or whether the contract was properly rescinded. It seems to me that on an application for extension of time for removal of a caveat, it is inappropriate for the rights of the parties to be litigated in the way in which they would be tried in a suit for specific performance.”
His Honour then referred to a number of cases which supported that proposition. His Honour went on to say (at 183):
“... It is my view, therefore, that for the time being, each caveat should remain on the title, and that it is more proper and convenient for the questions and issues between the parties to be determined in the proceedings separately instituted.
Whilst I take this view, I recognize that the purpose of the caveat is merely to preserve the status quo while the rights, at law or equity, to which the parties conceive they are entitled, are being investigated. The scheme of the caveat is to enable ‘such rights to be temporarily protected in anticipation of legal proceedings’ (Butler v. Fairclough (1917) 23 C.L.R. 78, per Griffith C.J. at p. 91). (Italics added.) Though a caveat has the effect of a statutory injunction restraining dealings with the land and preserving the property in status quo pending litigation...., yet I think that until its removal from the title, a caveat ought not to be treated as having greater effect than an ‘interim injunction’ (In re Martin [1900] S.A.L.R. 69, per Bundey J., at pp. 83-84). It is my opinion that as a matter of common practice, a caveat ought not to be permitted to remain on the title until the claim for substantive relief is finally determined in proceedings already begun or to be begun. I concede, however, that the position would be different if during the pendency of those proceedings, the caveator were able to demonstrate the existence of sufficient grounds for justifying an assertion of a fair prima facie case for relief; if there were independent circumstances tending to support the case, and the inconvenience or injury which the caveator would be likely to suffer if the caveat were removed were to outweigh the injury which the caveatee would suffer if the caveat were not removed. In this connexion, I would apply, by analogy, the principles relating to an application for an interlocutory injunction...
The lodging of the caveat does not exclude the remedy of an injunction (Walsh v. Alexander (1913) 16 C.L.R. 293, per Barton A.C.J. at pp. 303-304). The ordinary processes of the Court remain available to the plaintiff. And as Cockle C.J. pointed out in In Re Caveat No. 775; Ex parte Davenport (1873) 3 Q.S.C.R. 117, at p. 119, ‘the object of the caveat is not to supersede the regular proceedings of the court, but to give time for the application of the procedure of the court’.”
In the circumstances of the case before him, Walters J thought it appropriate to allow the plaintiff sufficient time to establish its right to an interlocutory injunction in the proceedings which had been independently taken.
Towards the end of his judgment His Honour said (at 185):
“... I do not suggest that every order for extension of time for removal of a caveat should be made on the footing that the caveator proceed to apply for, or be granted, an interlocutory injunction in substantive proceedings between the parties, either already begun or to be begun.”
In Whallin, Cox J dealt with an application for an extension of time for removal of a caveat brought under the 1987 Supreme Court Rules. His Honour reviewed Galvasteel and cases subsequent to it, including Ovenden v Palyaris Construction Pty Ltd (1974) 11 SASR 41 at first instance and (1975) 11 SASR 65 on appeal to the Full Court, Taddeo v Catalano (1975) 11 SASR 492 and Van Reesema v Giameos (No 2) (1978) 17 SASR 390.
His Honour next turned to the submissions of counsel for the plaintiff. He said (at 201):
“First, it was submitted that a caveator in these circumstances, on an application under par VII of s 191, need establish merely that there is a serious question to be tried as to whether he has an estate or interest in the land as claimed and in respect of which his caveat is lodged. The headwords of s 191 (‘...any person claiming to be interested’) entitles a person to lodge a caveat if he satisfies the test of being a person with a relevant claim. There is, therefore, no justification for requiring the caveator to prove the sort of case that would be needed to support the granting of an interlocutory injunction. In my opinion, common sense and authority combine to oppose this submission if, as I understand it, it is intended to relate to a caveat maintained until judgment in the principal action. It virtually ignores the interests of the defendant, and would often result in some very lopsided justice indeed. It is not to be supposed that the restricted entitlement to compensation provided by par X of s 191 would always be an adequate safeguard against an unmeritorious caveat.”
His Honour next referred to the procedures followed under the Galvasteel case. He said (at 202):
“The procedure that I have described treats the caveat extension as an interim measure in all cases. Whatever the fate of the caveator’s application for an interlocutory injunction, the caveat will ordinarily be permitted to lapse well before trial. This, as it seems to me, indicates a misreading of Walters J’s judgment. I think his Honour was contrasting the position of a caveator, who could demonstrate no more than a bare caveatable interest, with a caveator who was able to demonstrate the kind of substantial grounds that would justify the grant of an interlocutory injunction. In the former case his caveat, after an interim extension, would lapse. In the latter case, he would get his interlocutory injunction and his caveat would be further extended, presumably until judgment: see at 183-184 of the Galvasteel report ...
If the caveator had a good enough case to warrant an interlocutory injunction, he was entitled to have it supported by the added protection of the caveat. Jacobs J reached much the same practical result in Taddeo v Catalano (supra). I do not think that the Full Court in Van Reesema v Giameos (No 2) (supra) was intending to discountenance an extension of time until judgment in those circumstances ....
As long as the effective maintenance of the caveat, pending judgment, is secured upon adequate grounds, and with a proper regard for the competing claims of the caveatee, it would seem better simply to extend the time under par VII until judgment, or until further order, and - unless the caveator particularly wants it - dispense with the supplementary step of an interlocutory injunction altogether. It would be appropriate to apply the test for the grant of an interlocutory injunction to any such application by a caveator who preferred to have the removal time thus extended instead of - conceivably, I suppose, in addition to - seeking an actual interlocutory injunction. Such a caveator would, therefore, have to satisfy the established test for the grant of an interlocutory injunction - namely, whether there is a serious question to be tried and, if there is, whether the order should be made on the balance of convenience (Australian Coarse Grain Pool Pty Ltd v Barley Marketing Board of Queensland (1982) 57 ALJR 425), and to give the usual undertaking as to damages. I do not stay to consider whether, having regard to the compensation provisions of par IX [sic] of s 191, the caveator could be required to give such an undertaking, because there can be no doubt that he would be entitled to offer the undertaking voluntarily, and one may expect that he would ordinarily be willing to do that. If for some reason he were not, he would have to seek a different remedy.
...Under the 1987 rules, of course, he may join his various claims in the one proceeding. Even so, there is no point, in my view, in retaining a procedure that will be, in many cases, unnecessarily complicated. The policy of the rules is to combine different proceedings, where possible, and, I apprehend, to promote the elimination of unnecessary ones.”

The caveat procedures were considered by the Full Court in Nexus Mortgage Securities v Mawson KLM Holdings & Anor (1997) 193 LSJS 474. Three issues were raised on the appeal. They are referred to in the judgment of Doyle CJ as follows (at 474):
“The outcome of the appeal turns on three issues.
First, is Nexus able to show that there is a serious question to be tried as to the existence of the interest in the land that Nexus relies upon to support its caveat?
Secondly, on an application such as that made by Nexus, is it appropriate to consider whether the balance of convenience favours the extension of the time for removal of the caveat, once a serious question in the above sense has been demonstrated?
Thirdly, if the last question is answered in the affirmative, did the judge err in his approach to that issue? In particular, was there delay on the part of Nexus such that it entitled the judge to conclude, as he did, that its delay had ‘... the inevitable consequence that it is not entitled to the order extending the operation of its caveat.’?”

The Chief Justice referred to the caveat procedures as follows (at 476):
“It was common ground that Nexus must justify the maintenance of the caveat. There is no real doubt about that proposition. I put to one side the position when removal of the caveat is sought by order of the Court by some person claiming an estate or interest in the land, under subparagraph IV: see Eng Mee Yong v Letchumanan [1980] AC 331 at 336.
As is well-known, it is usually neither convenient nor appropriate on an application, such as that made to the court, to determine finally the entitlement of the caveator to the interest in the subject land upon the basis of which it lodged its caveat: see Galvasteel Pty Ltd v Monterey Building Pty Ltd (1974) 10 SASR 176 and Whallin v Bailbart Investments Pty Ltd (1987) 47 SASR 198. The reasons for this are obvious. An application under subparagraph VII has been treated as, in substance, an application to preserve the status quo, and thus the caveat, while the rights of the parties are finally determined. Applications under subparagraph VII are usually dealt with relatively expeditiously. As a matter of practice in this court, and I believe other courts, they are dealt with in a manner which is not appropriate for the resolution of disputed facts or difficult questions of law. Such applications are usually dealt with expeditiously, and upon the basis that there will follow later a full trial of the issues upon which the claim to a caveat depends.
It is in that context that various expressions have been used to describe the extent to which the caveator must go to establish its right to maintain the caveat either until the caveator obtains an injunction to protect its position or until the issue of the caveator’s entitlement has been finally determined. In Whallin v Bailbart Investments Pty Ltd (supra) Cox J held that, in appropriate cases and on appropriate terms, the court may extend the time for removal of the caveat pending trial of the issues between the parties. I see no reason to doubt the correctness of his decision in that respect.
The various expressions used to describe the onus that lies upon the caveator have been collected in Lindsay, Caveats Against Dealings in Australia and New Zealand (The Federation Press, 1995) pp181-182. All of the terms will be familiar to lawyers. I am content to adopt the expression used by Cox J in Whallin v Bailbart Investments Pty Ltd (supra) at 204 - that there is a serious question to be tried. I consider that there is no significant difference between that expression and the other expressions used in other cases in this context.”
Later in his reasons the Chief Justice referred to balance of convenience. He said (at 478):
“It was argued for Nexus that the question of the balance of convenience, in the sense in which that expression is used in relation to the grant of interlocutory injunctions, is rarely if ever a relevant consideration on an application made under subparagraph VII. It was submitted that if it were shown that there was a serious question to be tried in relation to the existence of the interest that would support the caveat, the time for the removal of the caveat should be extended, more or less as of course, until proceedings to establish that interest were finalised. It was submitted that the very purpose of a caveat was to protect interests that, when challenged, often could be established only by litigation. Accordingly, the only real issue was whether there was a serious question to be tried as to the existence of the relevant interest. It was further submitted that if delay was relevant, it was relevant as an independent matter and not as an aspect of the balance of convenience. It was submitted that the only delay that was relevant was delay in lodging the caveat. The submission was that once the caveat had been lodged the caveator had, in a sense, done all the caveator need do unless and until the caveat was challenged using one of the procedures under the Act.
I do not consider that it is necessary to deal with the submission that the questions of the balance of convenience are not relevant, in this case. I say that because, in my opinion, the balance of convenience in any event favours the making of the order that Nexus sought. That being so, there is no point in undertaking a review of the numerous authorities in this State and elsewhere that proceed on the basis that the balance of convenience is a relevant consideration in deciding whether to extend the time for the removal of a caveat. I would take some persuading that that practice should be departed from.
That was the approach taken by Cox J, after a careful review of decisions in this State, in Whallin v Bailbart Investments Pty Ltd ... It may be that the particular submission now made was not made to Cox J, but the basis upon which an order extending the time for the removal of a caveat should be made was certainly a matter considered by him with some care. Moreover, decisions in New South Wales, Victoria and Queensland have proceeded on a similar basis.”
The Chief Justice later said (at 480):
“For those reasons I am content for present purposes to adopt the approach taken by Cox J in Whallin v Bailbart Investments Pty Ltd ... and to consider the balance of convenience. In so doing I consider the competing interests of Nexus and of Starmaker. In doing so it is necessary to remember that the court is exercising a statutory discretion under s191VII, and not its equitable jurisdiction. This may, in some cases, have some practical significance: see Kingstone Constructions v Crispel (1991) 5 BPR 11,987.”
In Kingstone Constructions, Young J said, when dealing with the balance of convenience (at 11,991):
“It must be remembered that when dealing with extensions of caveats the court is not exercising its equitable jurisdiction but a statutory jurisdiction. As Powell J said in Bethian Pty Ltd v Green [(1977) 3 Fam LR 11,579] at 11,582, discretionary bars to relief in equity are not necessarily relevant to the statutory discretion contained in what is now s 74K of the Real Property Act 1900: see also World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181 at 185 and Town & Country Sport Resorts (Holdings) Pty Ltd v Partnership Pacific Ltd (1988) 97 ALR 315 at 319.”
Whilst I accept that the exercise of the statutory discretion may not be subject to restrictions which are applicable to the exercise of the discretion to grant or withhold an interlocutory injunction, it does not necessarily follow that the Court does not, in the exercise of its statutory discretion, have regard to notions of bad faith, unconscionable conduct, delay and such like. On the contrary, when dealing with applications under Section 191VII the Court has borrowed equity’s approach when exercising the powers conferred by Section 191VII to “make such order in the premises, either ex parte or otherwise, as shall seem just”.
At the initial hearing before the Full Court in Nexus, submissions were not put as to whether or not an undertaking as to damages should be required. At a later stage further argument was heard on that question. On completion of submissions the Court, in an ex tempore judgment, said:
“Having considered the matter, the court is of the view, as it intimated, that in the usual case an undertaking as to damages should be required as a condition for the making of an order extending time for removal of the caveat, although the court expresses that view without indicating any definite view on whether the usual practice is in fact the right practice or not. As the court indicated when hearing submissions on the matter, the court is of the view that as there appears to be a settled practice in that direction, it is not appropriate, without hearing full argument on the matter, to depart from the settled practice and so we adhere to it without expressing any definite view on whether it is right or wrong.”
It is apparent from the cases, in particular Galvasteel and Whallin, that the approach taken by the Court to the exercise of the discretion conferred by Section 191VII of the Act has been to some degree affected by procedural rules. Galvasteel was decided when the 1947 Supreme Court Rules were in force. Under those Rules an application for an extension of a caveat was commenced by originating summons. An originating summons was the initiating process specified in the 1947 Rules for actions which did not lead to a trial on oral evidence, eg a construction summons.
Section 191VII provides for an application to the Court “by motion or summons”. Although “summons” could be interpreted to mean a writ of summons, the invariable practice under the 1947 Rules was that applications for an extension of time for the removal of a caveat were made by originating summons. Because of this practice, if there were factual disputes, there could be no final determination on the originating summons of the rights and liabilities of the parties. An action commenced by writ of summons had to be brought.
In that context, Section 191VII was regarded as an interim procedure which preserved the status quo until an interlocutory injunction could be applied for, although it is clear from the decision of Walters J in Galvasteel, that the caveat might be dealt with without requiring the applicant to obtain an interlocutory injunction.
Further guidance was given by Cox J in Whallin with the result that the procedures became more flexible and less complicated. Whallin was decided under the 1987 Supreme Court Rules. The originating summons had been abolished. All actions are commenced by summons. Depending on the nature of the action, there could be a hearing on affidavits or by way of trial on oral evidence. In relation to the 1987 Rules, Cox J was of the view that they allowed a plaintiff to achieve the same result without the need to commence a separate action, if the principles applicable to applications for interlocutory injunctions are applied. There may be an exception to that approach. It sometimes occurs that an interest is claimed by way of caveat, but the proceedings taken to enforce the claims are brought in the District Court. If it is assumed that the District Court has no jurisdiction to extend a caveat (an assumption which is not necessarily correct), it would be necessary to apply for an extension of the caveat in this Court while maintaining the District Court proceedings. In those circumstances, the approach in Galvasteel would be appropriate.
The above analysis reveals that the extent to which the powers under Section 191VII could be exercised depended, to some degree, upon the available Court processes. This is not to say that the extent of the power is determined by reference to the Court’s procedural Rules; rather, the power remains the same, but the extent of its exercise is affected by the means by which plaintiffs may advance their cases.
It is clear from the cases that, on an application for the extension of time for removal of a caveat, at least in the case where the extension is sought until trial, the court will consider whether or not there is a serious question to be tried and also the balance of convenience. In Nexus, the Full Court did not give a final opinion as to whether or not the balance of convenience is a matter which must be taken into account, but Doyle CJ was of the view that he “would take some persuading that the practice should be departed from” (at 479).
The triable issue contended for by the plaintiffs on this application is set out in the claim contained in the caveat, the details of which have been reproduced earlier in these reasons. Factually, the claim is supported by the affidavit of Mr Curtis sworn on 14 April 1999. There has been no answering affidavit by Mr Milton Baulderstone, the first defendant. The interest claimed by the plaintiffs is said to arise by way of estoppel. Reliance has been placed upon The Commonwealth of Australia v Verwayen (1990) 170 CLR 394 and Giumelli v Giumelli (1999) 73 ALJR 547.
The defendants conceded for the purposes of the application that a serious question to be tried had arisen (T848-19). In the absence of submissions to the contrary, I have formed the view that the plaintiffs have demonstrated that a serious question to be tried has arisen, namely whether or not the plaintiffs have the interest in the subject land claimed in the caveat.
As I understand the submissions of Ms Maharaj, counsel for the defendants, the opposition to the extension of the caveat is based on three contentions:
(1)... that damages would adequately compensate the plaintiffs if it was subsequently held that the plaintiffs were entitled to the interest claimed;
(2)... that the balance of convenience required the caveat to be removed;
(3)... that if the price of the extension of the caveat was the giving by the plaintiffs of the usual undertaking as to damages, such undertaking was worthless.
To some degree these three grounds of opposition overlap in the sense that it may be said that they are all aspects of the balance of convenience. It is clear from the cases referred to earlier in these reasons that the balance of convenience is a matter which is taken into account by the Court (at least at first instance) on an application such as this. In considering the balance of convenience I propose to take into account cumulatively all of the matters advanced by the defendants by way of the three grounds of opposition set out above.
On the question of whether or not damages may be adequate, this ground of opposition would have substance but for two matters. First, part of the plaintiffs’ case is that the flood irrigation scheme is dependent upon the plaintiffs having access to a sluice gate which is located on the subject property, access to which might only be gained by the plaintiffs by way of an equitable easement. If the defendants dispose of the property to a third party who takes free of that easement, the proposed irrigation system would be adversely affected because the plaintiffs may not be able to get the relevant authority’s permission to construct a further sluice gate within the boundaries of the plaintiffs’ land and, in any event, such an additional sluice gate may not be as effective. These are matters potentially adverse to the plaintiffs and need to be taken into account on the question of the balance of convenience in general.
Second, Mr Wells’ response to the defendants’ contention that damages would be an adequate remedy was that, for the purposes of this application, the defendants have conceded that the plaintiffs have the interest in the land contended for. On that he developed an argument that an order for damages was not an adequate remedy. I do not accept that the defendants conceded, for the purposes of this application or at all, that the plaintiffs actually had the equitable interest in the land contended for by the plaintiffs. On the contrary, I understand Ms Maharaj’s concession on behalf of her clients to have been that the defendants concede that the plaintiffs have an arguable case in that regard, such that a triable issue has arisen. Accordingly, Mr Wells’ submission must be viewed in that light.
It was contended by Mr Wells that the argument that an award of damages was an adequate remedy misconceived the nature of the claim made by the plaintiffs. Their claim was based on an estoppel giving rise to an equity. If that equity could be made out then an actual interest in the land was held by the plaintiffs and equity would give effect to that interest. Mr Wells submitted that it was not a question of damages being substituted for the equity. Rather, it was a question of whether or not the claim to the equitable interest could be made out and if it were made out, given effect to. He accepted that in Giumelli the High Court came to the conclusion that it was not possible to give effect to the interest held by the plaintiff in that case because it would affect the right of a third party who had not been joined in the proceedings. For that reason a monetary sum was awarded in lieu of giving effect to the equitable interest which the plaintiff had. I think Mr Wells’ analysis of what the High Court did in Giumelli is correct. The Court will give effect to the equity if it is at all possible. It is similar to, if not derived from, the equitable concept that damages cannot be said to be an adequate remedy where an interest in land is concerned.
For these reasons I do not consider that the defendants have established the likelihood that the plaintiffs would be adequately protected by an award of damages.
The defendants have sold the subject land and it was contended that because of the sale, the balance of convenience favoured a refusal of the application. A copy of the contract of sale is Exhibit A to the affidavit of Mr Fox sworn on 22 July 1999. The contract was entered into on 9 June 1999 whereas the caveat was lodged on 9 March 1999. The purchase price is $250,000.
Item S at page 10 of the contract is as follows:-
“The Vendor can give no warrantee [sic] that further caveats will not be lodged on the property in the action currently before the Courts and that settlement is dependant [sic] upon withdrawall [sic] of all caveats, charges, liens and encumbrances at or before settlement.”
It is not clear what this terms means, but it is capable of the construction that settlement is dependent upon the withdrawal of this caveat. It is to be noted in Item K at page 8 of the contract that the settlement date is to be “within 7 days after the date on which the last of the conditions set out in the Schedule has been satisfied”.
If the mere fact of the sale is relied upon as tipping the balance of convenience in favour of the defendants, that cannot be correct. It would mean that a registered proprietor could avoid the consequences of a caveat merely by disposing of the property in question on terms that, if the caveat is removed, the sale will go ahead. This seems to beg the question of whether or not the plaintiffs are entitled to the interest in the land which they claim.
The third ground of opposition raises the question of an undertaking as to damages. It was contended by Mr Wells that the provision for compensation in Section 191X of the Act was a sufficient protection to the defendants if it should subsequently be held that the plaintiffs have no caveatable interest. I do not agree with this submission. Where, as in this case, the extension of the caveat is sought until trial, the provisions of Section 191X may not be sufficient because compensation under that provision is limited to situations where there is a lodgement or refusal to withdraw the caveat “wrongfully and without reasonable cause”. This is much more restrictive than the damages recoverable pursuant to an undertaking as to damages.

It seems to be implicit from the cases referred to earlier in these reasons, that Section 191X may be sufficient where there is a short-term extension of the caveat, but it may not be sufficient where an extension until trial is sought. This is clear from the approach taken by Cox J in Whallin which was approved by the Full Court in Nexus. It seems that the Court in the exercise of the statutory discretion conferred by Section 191VII, is not precluded from requiring the applicant to give an undertaking as to damages as the price for granting the extension of time until trial. I see no reason to depart from that approach in the circumstances of this case.
I must next consider the sufficiency of the undertaking as to damages. I mention that Mr Wells informed me at the hearing on 5 August 1999 that if I came to the conclusion that an undertaking as to damages was necessary, it would be proffered. What follows is based on the assumption that an undertaking as to damages will be proffered by the first and second plaintiffs, who are the applicants, when I publish these reasons.
The defendants’ contention that the proffered undertaking as to damages by the plaintiffs is without value reflects a concern on the part of the defendants that if the plaintiffs are unsuccessful in these proceedings, they will not be able to recover damages from the plaintiffs because they have no assets. This overlooks the fact that there are many aspects to these proceedings and the question of the caveat is only one of those aspects. Even if it is assumed that the plaintiffs will not succeed in establishing the interest claimed in the caveat, that does not mean that the plaintiffs will necessarily fail on other aspects of the claim. Consequently, the impecuniosity of the plaintiffs and therefore their inability to satisfy any damages that they may be ordered to pay, is only contingent upon a complete failure on their part in respect of these proceedings. Even then, the first plaintiff holds a 20 per cent interest in the land the subject of the rectification proceedings pursued by the plaintiffs. In my view the adequacy or inadequacy of the proffered undertaking as to damages must be looked at in that light. As such, it is sufficient.
Taking into account that there is a serious question to be tried, that damages are not an adequate remedy and that the only prejudice to the defendants by extending the caveat will be the possible loss of the contract entered into on 9 June 1999, and bearing in mind that there is some substance, and potentially considerable substance, behind the plaintiffs’ undertaking as to damages, I think that the balance of convenience requires an exercise of the statutory discretion in favour of the first and second plaintiffs so that the time for the removal of the caveat be extended until further order.
I will hear counsel as to costs.

[1999] SASC 380

15 September 1999