Syahpoosh v Permeh - [2024] SADC 60

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Application)
SYAHPOOSH v PERMEH & ANOR
[2024] SADC 60
Reasons for Ruling of his Honour Judge Durrant
1 May 2024
REAL PROPERTY - TORRENS TITLE - CAVEATS AGAINST DEALINGS - FORM AND CONTENT OF CAVEAT - NATURE OF ESTATE OR INTEREST CLAIMED
Joint venture between family members to develop land - caveat claiming an equitable estate or interest as mortgagee erroneous and removed - further caveat lodged claiming charge by agreement in writing and constructive trust arising from joint venture agreement - caveat warned - application for extension - whether further caveat relates to same matter as first- whether permission to lodge required - further caveat does not relate to same matter - meaning of same matter - caveat extended.
Held: Caveat extended until further order.
Real Property Act 1886 (SA) s 191, referred to.
McInnes v Davies [2014] SASC 184, considered.

SYAHPOOSH v PERMEH & ANOR
[2024] SADC 60

The parties to this action are family members. They entered into a written joint venture agreement in August 2022 to purchase land at Hope Valley, subdivide that land into four lots, build dwellings on each allotment and then divide the profit obtained from sale of the lots between them.
In about November 2023, the relationship between the family member joint venturers started to sour. By that time though, the land had been purchased for $700,000, respective contributions had been made and estimates of construction cost had been obtained. More serious disputation developed thereafter, and lawyers were engaged. In the meantime, the project stalled, and pressure began to mount. While some discussion towards a settlement has taken place, the parties have found no common ground as to the best and least costly way to extricate themselves from these expensive arrangements.
That is no doubt complicated by the funding arrangements agreed in the joint venture agreement being in different proportions and the development land being registered only in the name of the respondents, and that the respondents are borrowers from a bank. In order to protect their position, therefore, it is unsurprising that a caveat was lodged by the applicants over the land in 2023. I will, as the parties have, refer to that caveat as the 'first caveat'.
The interest claimed in the first caveat is recorded as: 'An equitable estate or interest as mortgagee over the whole land described pursuant to an agreement (or mortgage) made by the caveator and the caveatee dated 1 January 2022’. It was common ground at the hearing of this application that no such interest could or does exist, and nor is it claimed any longer.
Why such an interest was claimed in the first caveat has not, beyond an acknowledgement by counsel for the applicant that it was erroneous, been explained. That lack of explanation and the timing of its ultimate removal by the Registrar-General was said by the respondents to be significant. Nonetheless, the first caveat was warned by the respondents by the giving of notice to the Registrar-General for its removal. The caveat was removed on 4 January 2024, given the applicants took no steps to extend it.
On 12 March 2024, a further caveat was lodged by the applicants. It claimed two interests in equity. I will call that the 'further caveat'.
First, it claimed: 'An estate or interest as equitable chargee, pursuant to an agreement in writing made between the parties in 2022, whereby the respondents charged all of their interest in the subject land in favour of the applicant in the event of disagreement between the parties’.
Second, the applicants claimed in the further caveat to be beneficially entitled to: 'An equitable estate or interest in fee simple in the subject land, pursuant to a constructive trust in a share currently unable to be quantified and as to be determined in court proceedings to be brought’.
That constructive trust and equitable charge is said to exist by reason of, (1) the cessation of the aforementioned joint venture relationship and the contribution by the applicant of money, and work and services to the acquisition, maintenance and improvement of the subject land; and (2) a contractual entitlement of the applicant to receive a share of the development in an amount presently unknown.
It is further not in dispute that, for the purpose of this application only, such equitable charge and beneficial entitlement pursuant to a constructive trust are interests in equity sufficient to found lodgement of a caveat under s.191(1)(a)(i) of the Real Property Act 1886 (SA), such as to prohibit absolutely the registration or recording of any instrument dealing with the land.
The day before the further caveat was lodged, the respondents entered into a contract for the sale and purchase of lot 1. By registration of the further caveat the day after, on 13 March 2024, the sale and purchase contract agreed in respect for lot 1 - absent removal of the caveat – could not settle. The respondents, seeking to achieve settlement, warned the caveat and, on 25 March 2024, the applicants received a removal of caveat notice dated 20 March 2024.
This action seeks an extension of the further caveat or, alternatively, permission to lodge another caveat claiming the interest and estate articulated in the further caveat.
Counsel for the parties at the hearing of the application agreed that I should first determine whether the lodgement of the further caveat was unlawful under s.191(1)(k) of the Real Property Act1886 (SA). That section enacts that it shall be unlawful for any caveator other than the Registrar-General, or for someone acting on behalf of such caveator, to lodge a further caveat relating to the ‘same matter’ without permission of the court.
The respondents contend the further caveat relates to the same matter as the first caveat. The respondent contends the words 'same matter' should be construed to mean 'Any legal or equitable interest arising out of the same course of dealing'. The course of dealing, which the claimed interest in equity relates to in the first and further caveat, is submitted by the respondents to be the same - that course of dealing being the joint venture to develop the land.
Section 191 must be construed in context as a whole, in accordance with its objects and purpose, and applying the ordinary and common meaning of its words.
The objects of the Real Property Act 1886 (SA) are to simplify the title to land to facilitate land dealings and to secure indefeasibility of title. Relevant to this case, the purpose of a caveat is to prohibit absolutely the registration or recording of any instrument dealing with the land.
In s.191, the Parliament has enacted a mechanism to remove a caveat and has granted to the court a discretion in that respect. The law and principles concerned with the exercise of the discretion to extend a caveat are well settled.[1]
[1] For example, McInnes v Davies [2014] SASC 184.
In s.191(1)(k), the Parliament has empowered the court to permit lodgement of a further caveat relating to the same matter. That section envisages a scenario in which a caveator has lodged a caveat which has been removed, and then lodges another caveat relating to the same matter. In such case, permission of the court is required, otherwise the second caveat is unlawful.
The crucial words are 'relating to the same matter'. The word 'relating' means, in context, belonging to the same type or connected. The word 'same' means, in context, exactly alike, not different or changed. The word 'matter' in that section can be construed in this case in several ways. It could mean the situation under consideration; it could mean a topic; or the thing to be tried or proved.
The respondent contends for a wide interpretation of 'matter' to mean the joint venture arrangement or situation between these parties. In that sense the respondents submit that any estate or interest claimed under the joint venture is the ‘matter’ the subject of the caveat.
The first caveat, however, does not mention the joint venture agreement. It refers rather to an equitable estate or interest as mortgagee pursuant to an agreement or mortgage dated 1 January 2022.
The joint venture agreement before me is undated. I am satisfied though it is the transaction the subject of the further caveat in the sense that it is the entitlement to profit under that agreement which is said to be the reason why the equitable estate or interest and constructive trust exists.
The joint venture agreement cannot be said to be in the nature of an agreement or mortgage capable of creating an equitable or estate or interest as mortgagee as the first caveat described the claimed interest.
An equitable mortgage may be created when a landowner acts with an intention to create a security in favour of a mortgagee though the act is insufficient to confer a legal mortgage on the mortgagee.
Given that an agreement creating an equitable mortgage and the joint venture agreement are not the same, if the respondent’s construction of ‘matter’ is adopted, the further caveat does not relate to the same matter. It cannot be said, on a plain reading of the first caveat and the further caveat, that the claimed legal or equitable interest arises out of the same course of dealing; that is, the joint venture agreement.
Irrespective, I do not consider that 'matter' in this case means the course of dealing or situation under consideration. I prefer a construction of 'matter' to mean the interest at law or in equity claimed in the caveat. It is that claimed interest which is protected. It is that claimed interest upon which the action to establish its validity must be based. It is that claimed interest at law or in equity which founds the caveat. It is that claimed interest which founds the right to lodge a caveat.
While the words 'relating to' are of broad import, I consider the further caveat is unlawful only if it relates to the same interest at law or in equity claimed in the first or previous caveat. In this case it is acknowledged the claimed interest at law or in equity in the first and further caveat are not the same.
The purpose of the caveat is to protect the claimed interest at law or in equity and I find the further caveat does not relate to the same matter as the first caveat.
It follows that permission to lodge the further caveat in 2024 was not required and consideration must be given to whether that further caveat should be extended.
The applicant caveator has made out a prima facie case in the sense that if the evidence remains as it is, there is a probability at trial they will be entitled to relief. In that respect it is accepted by the respondent that the applicant has contributed to the development at least to the extent of $74,000, being about 10% of the purchase price of the subject land.
As for the balance of convenience- being whether the inconvenience or injury that the applicant would likely suffer if the caveat is not extended outweighs the convenience or injury the respondent would suffer- the applicant claims a proprietary interest in the land. That will usually mean the balance of convenience favours extension.
The respondents though, have entered contracts to sell the land. The contract in respect of lot 1 was agreed the day after lodgement of the further caveat, but before notification. They have also entered into an agreement in respect of lot 2. The respondents cannot settle these contracts while the caveat remains. That, however, is exactly the type of scenario that the Parliament contemplated in enacting s.191 and considered merited the prohibit s.191 provides.
Further, the interest of the applicant arose from its contribution of $74,000, which on the banking material provided to me, was made on 11 and 12 October 2022. In those circumstances, the balance of convenience favours the extension of the caveat. In other words, it favours the retention of the status quo.
I have considered, though, whether the circumstances of the lodgement of the first caveat, its removal, and the lodgement of the further caveat, tilts the balance of convenience in favour of the settlement of lot 1.
The argument was put that the lack of explanation as to why an erroneous caveat was filed, and the delay in filing of the further caveat, would go against the grant of permission to lodge a further caveat if permission was required. I do not consider any failure to explain why an erroneous caveat was filed, or the delay in filing the further caveat, tilts the balance of convenience against extension. As already noted, the equitable interest by way of constructive trust arose in 2022.
Further, this is exactly the unfortunate scenario contemplated by an extension. The applicant's interest must be protected until determined.
As for damages being an adequate remedy, if sales are allowed of lot 1 and lot 2, the subject matter of the claimed interest will disappear. For that reason, damages are not an adequate remedy.
The respondent did suggest payment of the balance of the proceeds of sale of lot 2 into Court would be adequate to meet any claimed interest of the applicants. I am not able to calculate the quantum of the interest claimed. As the caveat explains, it includes an entitlement to receive a share of profit. What that is would only be a guess on my part, given the trial court might have to ultimately find what the profit would have been if the joint venture had completed.
For these reasons, I grant an extension until further order. While the applicant - in the event I found that the further caveat related to the same subject matter of the first caveat - contended I should permit the further caveat, it is unnecessary for me to determine that question.
I will hear the parties as to further directions.