So v Li

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.