So v Li - [2009] NSWSC 32

CITATION: So v Li [2009] NSWSC 32

HEARING DATE(S): 03/02/09

JURISDICTION: Equity Division

JUDGMENT OF: Young CJ in Eq

EX TEMPORE JUDGMENT DATE: 3 February 2009

DECISION: Order that caveat be extended until further order. Order the first defendant to pay the costs to date reserving further costs.

CATCHWORDS: REAL PROPERTY [19]- Application to extend caveat- Plaintiff lent money to first defendant and registered caveat over her equitable interest in fee simple- Fee simple held in joint tenancy between first and second defendants- Right of one joint tenant to encumber their interest in fee simple- Construction of caveat- Caveat, on its true construction, only affects the interests of the first defendant and not the interests of the second defendant- Law as to encumbering property: "ius accrescendi praefertur oneribus" and "alienatio rei praefertur iuri accrescendi"- Consent of co-owner required to encumber the other aliquot share but that does not make the charge over the first defendant's interest in the fee simple ineffective.

CASES CITED: Andrews v Wilcox [2008] NSWSC 280
Hedley v Roberts [1977] VR 282
Lyons v Lyons [1967] VR 169
Mason v Merett (Franklyn J, 12.6.1989 unreported)

PARTIES: Jung Sook So (P)
Meihua Li (D1)
Xingfan Jin (D2)

FILE NUMBER(S): SC 1268/09

COUNSEL: D Burwood (P)
J Sung (S) (D)

SOLICITORS: Logos Lawyers (P)
J S Legal (D)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

YOUNG CJ in EQ

Tueday 3 February 2009

1268/09 – SO v LI

JUDGMENT

1 HIS HONOUR: This is an application to extend a caveat. The plaintiff says that she lent money to the first defendant. She says that there was a deed bearing date 11 March 2008 which constituted and evidenced the transaction. She says that the first defendant, who is the only other party to the deed, is in default, but that is of little moment in the present proceedings.

2 Clause 7(h) of the deed provided that the first defendant:

"Hereby agrees to charge all her equitable interest in freehold or leasehold property both presently held and including future acquired freehold and leasehold property (if any). Property means all property owned by the borrower now or in the future, solely or jointly and including without limitation the property 3/84 Frederick Street, Campsie."

3 The plaintiff placed caveat AD833918S over 3/84 Frederick Street. However that property is held in joint tenancy by the second defendant Xingfan Jin and the first defendant.

4 Schedule 1 of the caveat provided that the estate claimed by the caveator was "Caveatable interest in the fee simple estate of Meihua Li in the property 3/84 Frederick Street, Campsie (Lot 3 Strata Plan 67714).” It then referred to the loan agreement.

5 Schedule 2 to the caveat, which is the schedule which prohibits action, prohibited in the first item, the only relevant one, “the recording in the Register of any dealing other than a plan affecting the estate or interest claimed by the caveator and set out in Schedule 1”. That interest was the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading So v Li

Details

AGLC: So v Li [2009] NSWSC 32
Case: [2009] NSWSC 32
Decision Date: 3 February 2009

CaseChat Overview and Summary

In the case of So v Li, the plaintiff sought to extend a caveat over the equitable interest of the first defendant in a fee simple. The fee simple was held in joint tenancy between the first and second defendants. The plaintiff had previously lent money to the first defendant and had registered a caveat over her equitable interest. The dispute centred on the extent to which the caveat affected the second defendant’s interest in the property, as well as the principles of joint tenancy and the encumbrance of property interests.

The court was required to determine whether the caveat could effectively encumber the first defendant's interest without affecting the second defendant's interest, as well as the broader legal principles governing joint tenancy and the encumbrance of property. This included understanding whether a charge over one joint tenant's interest in a fee simple could be valid without the consent of the other joint tenant, and whether the caveat, as constructed, only impacted the first defendant's interest.

The court found that the caveat, when properly construed, only encumbered the first defendant's equitable interest in the fee simple and did not extend to the second defendant’s interest. The court emphasised the principle that the right of accretion should be preferred to burdens ("ius accrescendi praefertur oneribus") and that the alienation of property should be preferred to the right of accretion ("alienatio rei praefertur iuri accrescendi"). It concluded that while the consent of the co-owner is necessary to encumber the other party’s share, the absence of such consent does not invalidate the charge over the first defendant's interest. Therefore, the plaintiff's application to extend the caveat was granted to the extent it related solely to the first defendant.

The court ordered that the caveat be extended to cover the first defendant’s equitable interest in the fee simple, but clarified that it did not affect the second defendant's interest in the property. This decision underscored the importance of careful drafting of caveats and the necessity of understanding the implications of encumbering property held in joint tenancy.

Orders