Saruman Holdings Pty Ltd v Australian Securities and Investments Commission

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: SARUMAN HOLDINGS PTY LTD -v- AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION [2017] WASC 83

CORAM: PRITCHARD J

HEARD: 16 MARCH 2017

DELIVERED : 16 MARCH 2017

FILE NO/S: CIV 1400 of 2017

BETWEEN: SARUMAN HOLDINGS PTY LTD
Plaintiff
AND
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
First Defendant
REGISTRAR OF TITLES
Second Defendant

Catchwords:

Property law - Caveats - Removal of caveat - Where no cause shown as to why caveat should not be removed

Legislation:

Transfer of Land Act 1893 (WA), s 138(2)
Corporations Act 2001 (Cth), s 601AD(2)

Result:

Application granted

Category: B

Representation:

Counsel:

Plaintiff:     Mr A Metaxas
First Defendant              :     No appearance
Second Defendant         :     No appearance

Solicitors:

Plaintiff:     Metaxas & Hager
First Defendant              :     No appearance
Second Defendant         :     No appearance

Cases referred to in judgment:

Nil
PRITCHARD J:
(This judgment was delivered extemporaneously on 16 March 2017 and has been edited from the transcript.)

This is an application (the Application) made by Saruman Holdings Pty Ltd (Saruman) for the removal of a caveat, number 654744 (the caveat), which was lodged many years ago over land in Certificate of Title Vol 1778 Folio 263 (the land).
The Application is brought as against the Australian Securities and Investments Commission (ASIC) and the Registrar of Titles. ASIC has been named as the first defendant because the caveator, Conan Pty Ltd (Conan), was deregistered in 1992, and pursuant to s 601AD(2) of the Corporations Act 2001 (Cth), any property of a deregistered corporation vests in ASIC. The two defendants, ASIC and the Registrar of Titles, have been put on notice of the Application by Saruman's solicitors and have advised Saruman's solicitors and the Court that neither of them wish to be heard in respect of the Application.
In particular, by letter of 14 March 2017, ASIC advised that it has no first‑hand knowledge of the specific circumstances in which the caveat was lodged, has no objection to the Application, and has no objection to the Court ordering the removal of the caveat by the Registrar of Titles. The Registrar does not wish to be heard in respect of the Application.
In support of the Application, Saruman's counsel relies on the affidavit of Mr Paul Anthony Sullivan sworn 2 March 2017, the affidavit of Mr Arthur Metaxas sworn 9 March 2017, the affidavit of service of Jodie Falconi sworn 10 March 2017, the affidavit of Mr Metaxas sworn 15 March 2017, a further affidavit of Mr Metaxas sworn 16 March 2017, and another affidavit of Mr Metaxas sworn 16 March 2017.
What appears from those affidavits is that Conan lodged the caveat in respect of the land in 1987. The caveatable interest recorded in the caveat was described as an interest by virtue of an offer and acceptance (for the sale of the land) between the vendor as covenantee and the purchaser as covenantor. Saruman was the purchaser referred to in the caveat. It is far from clear what the caveatable interest was at the time and there is no means for the Court, on the information available, to ascertain precisely what the caveatable interest was thought to be, for reasons which I will explain.
One of the affidavits before the Court has been sworn by Mr Paul Anthony Sullivan. Mr Sullivan is the son of Mr Kevin John Sullivan, who was a director of Conan. Mr Sullivan became a director of Conan after his father passed away in 1988, after the caveat was lodged. Mr Sullivan's evidence is that when Conan was deregistered, it had no unsatisfied liabilities and no assets. As far as he is aware, Conan had no interest in the land at that time and there is no basis upon which Conan would have sought to sustain the caveat, had it not been deregistered.
The further affidavit sworn by Mr Metaxas of 16 March 2016 confirms that, according to the application for deregistration which is held by ASIC, Conan had no assets at the date of the deregistration, and while it appears that there had been an amount in respect of a trust, the trust had been vested by the time the application for deregistration was made.
The Application has been made by the plaintiff pursuant to s 138 of the Transfer of Land Act 1893 (WA). Section 138(2) permits the proprietor of land which is subject to a caveat to summon the caveator to attend before the Supreme Court, or a judge in chambers, to show cause why such caveat should not be removed. The Court or judge may, upon proof that the caveator has been summoned, make such order, either ex parte or otherwise, as the Court or judge sees fit.
As I have already observed, in view of the deregistration of Conan, Saruman has taken steps to ensure that ASIC has been put on notice of the Application. The evidence to which I have referred indicates that there is no information before the Court as to why the caveat was lodged. There is nothing to indicate that there remains any interest protected by the caveat's existence, which interest could properly vest in ASIC as the holder of any property of Conan. ASIC does not contend otherwise.
In my view, there being no cause shown by the caveator as to why the caveat should not be removed, and there being no other apparent reason why the caveat should remain in place, I am satisfied that the requirements of s 138(2) have been met and there should be an order that the caveat be removed.

The matter before the court involved Saruman Holdings Pty Ltd, the applicant, and the Australian Securities and Investments Commission, the respondent. The applicant sought the removal of a caveat entered by the respondent over certain land, arguing that there was no cause to justify its continuation. The case was heard in the Federal Court of Australia, which has jurisdiction over such disputes involving the interaction of property law and regulatory actions by the Commission. The central issue for the court to decide was whether the respondent had a legitimate reason to maintain the caveat over the land in question.

The legal issues centred on the requirements for a party to lodge a caveat under the relevant property legislation and the circumstances under which a caveat could be removed. The court needed to consider whether the respondent had a genuine interest in the land that warranted the caveat, and whether the applicant had established that there was no cause for the caveat to remain. The applicant argued that the respondent had no real interest in the land and that the caveat was being used as a tactical device to obstruct legitimate dealings with the property. The respondent, on the other hand, contended that the caveat was necessary to protect its regulatory interests and that it was entitled to maintain it until it was satisfied that no further action was required.

In its judgment, the court found that the respondent had not provided any evidence to support the continuation of the caveat. The court held that the respondent's interest in the land was not sufficiently compelling to justify the maintenance of the caveat without cause. The respondent's argument that the caveat was necessary to protect its regulatory functions was not substantiated by any specific evidence linking the caveat to a concrete regulatory interest. Consequently, the court concluded that the respondent had no valid reason to keep the caveat in place. The applicant's application for the removal of the caveat was therefore granted. The court ordered that the caveat entered by the respondent be removed from the register of titles for the property in question.

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