Wang v Fang
[2025] NSWSC 222
•14 March 2025
Supreme Court
New South Wales
Medium Neutral Citation: Wang v Fang [2025] NSWSC 222 Hearing dates: 14 March 2025 Date of orders: 14 March 2025 Decision date: 14 March 2025 Jurisdiction: Equity - Applications List Before: Kunc J Decision: Plaintiff’s application for extension of caveat dismissed with costs
Catchwords: LAND LAW — Caveats — Formal requirements — Requirement to specify particulars of estate or interest claimed
Legislation Cited: Real Property Act 1900 (NSW) s 74O
Cases Cited: ATF Group Pty Ltd v Souzan Melek [2023] NSWSC 333
Brose v Slade [2022] NSWSC 1785
Category: Procedural rulings Parties: Xiaobo Wang (Plaintiff)
Yunxia Fang (First Defendant)
National Australia Bank Ltd (Second Defendant)
Bei Le Shen (Third Defendant)Representation: Counsel:
Solicitors: Sunfield Chambers (Plaintiff)
MW Young SC (Plaintiff)
D Pritchard SC (First and Third Defendants)
Juris Cor Legal (First and Third Defendants)
File Number(s): 2024/00270452 Publication restriction: Nil
ex tempore JUDGMENT (REVISED)
Summary
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This judgment resolves an application for the extension of caveat AU 37XXXX by the plaintiff, Ms Xiabo Wang, for whom Mr M W Young of Senior Counsel appeared. The first defendant, Ms Yunxia Fang and her son, the third defendant, Mr Bei Le Shen were represented by Mr D Pritchard of Senior Counsel.
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The contest between the parties was limited to arguments about the adequacy of the form of the caveat and the existence of a serious question to be tried. No submissions were put by Mr Pritchard SC against the proposition that the balance of convenience favoured the extension of the caveat.
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For the reasons which follow, the Court has determined that the form of the caveat is irretrievably bad and that the application for its extension will be dismissed. Insofar as Mr Young SC foreshadowed an application for leave under s 74O of the Real Property Act 1900 (NSW) to file a new caveat, the Court has determined not to entertain such an application made from the bar table. If Ms Wang wishes to bring such an application, then it will have to be brought in the ordinary course by a new notice of motion supported by evidence, including the precise form of the proposed new caveat.
The caveat
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The caveat has been lodged over a property of which Mr Shen is the registered proprietor (Lot 4). The caveat is, perhaps unusually, in three parts. Before setting those parts out, it should be borne in mind (as I will develop below) that a caveat must set out the nature of the estate or interest in the land claimed by the caveator, together with the facts on which the claim is founded. Furthermore, the caveat is to be assessed from the point of view of a reader of the caveat who is not necessarily the registered proprietor, and who is not to be expected to undertake inquiries or research outside the four corners of the caveat.
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As I have mentioned, the caveat may be considered in three parts. In what might be described as the standard form part of the caveat, the estate or interest claimed is:
Charge
By virtue of: Agreement
Dated: 20/01/2019
Between XIAOBO WANG
And YUNXIA FANG
Beneficiary
JIANHUA ZHOU
Mortgagee
Details Supporting The Claim: Please refer to Annexure A.
ATTACHMENT
See attached Claim Details
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While the caveat must be read as a whole, I interpose at this point that a reader of the caveat would, in my respectful opinion, be absolutely none the wiser for how the alleged interest in Lot 4 is said to arise after reading this first part of the caveat. That is for the simple reason that Mr Shen is not listed as a party to the agreement pursuant to which the interest is alleged to arise. That would be enough to raise a large question in the mind of a reader about the validity of the interest claimed.
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The section of the caveat I have just quoted invites the reader then to refer to Annexure A. This is to what I refer as the second part of the caveat:
ANNEXURE A TO CAVEAT
Details Supporting the Claim:
Jianhua Zhou had an equitable mortgage or charge over the property pursuant to the agreement between Jianhua Zhou, Xiaobo Wang and Yunxia Fang dated 20 January 2019. The caveator is now subrogated to Jianhua Zhou's interest in the property, having paid-out the debt secured by that mortgage or charge. Such equitable interest in the property as is possessed by Yunxia Fang is now charged by the caveator.
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Annexure A is similarly of little or no assistance to the reader. It makes no reference to Mr Shen or how an interest may have arisen in Lot 4. It is especially confusing because its references to "the property" would presumably be read by the reader as referring to Lot 4. If that was right, then it would make little sense at all because any examination of the facts demonstrates that Mr Zhou, whose role I set out below, never had an equitable mortgage or charge over Lot 4 pursuant to the agreement between the persons there referred to (being the agreement identified in the first part of the caveat to which Mr Shen was not a party).
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It is then necessary to turn to the third part of the caveat, which is a letter from Ms Wang's solicitors to Land Registry Services in answer to a requisition that was raised about the caveat. By reason of a process which is not explained in the evidence, the registered version of the caveat has come to include the letter, although it is not otherwise referred to or sought to be incorporated in the terms of the caveat. That letter includes (emphasis added):
The caveator seeks to lodge a caveat over the land situated at Lot 4 in Strata Plan XXXXX (the Land) which is registered in the name of Bei Le Shen. The context of the caveator's charge claimed over an interest in the Land are as follows:
(a) pursuant to an agreement between Jianhua Zhou, Xiaobo Wang and Yunxia Fang (the Agreement) dated 20 January 2019, Yunxia Fang provided security for a debt in the form of a mortgage or charge over a property in Burwood (Burwood Property) to Jianhua Zhou. The caveator has paid-out the debt secured by that mortgage or charge pursuant to the Agreement and thus is now subrogated to Jianhua Zhou's interest in the Burwood Property;
(b) through Supreme Court of New South Wales Proceedings No. 2020/143926 between Yunxia Fang and the caveator, the caveator learned from Yunxia Fang that she sold the Burwood Property and lent the net proceeds of sale to Bei Le Shen for the purpose of acquiring the Land. Bei Le Shen is the son of Yunxia Fang. Please see enclosed judgment of Wang & Anor v Cai & Ors [2022] NSWSC 1054 at 32;
(c) the caveator has commenced proceedings in the Supreme Court of New South Wales No. 20024/270452 against Yunxia Fang seeking, amongst other things, a declaration that the caveator has an equitable mortgage, or in the alternative an equitable charge, over the interest possessed by Yunxia Fang in Lot 4 in Strata Plan XXXXX (i.e. the net proceeds of sale of the Burwood property lent to Bei Le Shen).
Enclosed to this letter is a copy of the Statement of Claim filed with the Supreme Court of New South Wales on 22 August 2024, with the relevant reliefs giving rise to the caveatable interest of the caveator over Lot 4 in Strata Plan XXXXX , in prayers 3(b) and 4.
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I immediately point out that while the letter says that the statement of claim is enclosed, the statement of claim does not form part of what has been placed on the register as an attachment to, or otherwise a part of, the caveat.
Ms Wang’s claim
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Before turning to further analysis of what is set out in the letter, it is necessary to provide some context by setting out what Mr Young SC has explained is the case which his client seeks to raise to support the caveat.
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That case may be expressed in the following propositions, which I accept are a considerable simplification from the somewhat complex facts that gave rise to the present dispute:
Ms Fang owed a debt to a Mr Zhou.
Ms Fang gave Mr Zhou a mortgage or charge over a Burwood property to secure her debt to Mr Zhou.
Ms Wang agreed with Ms Fang to pay out Mr Zhou. Ms Wang did so.
Ms Wang, it is submitted, is to be understood in equity to be in the position of a guarantor of Ms Fang's debt to Mr Zhou, and as such is alleged to be subrogated to Mr Zhou's security rights over the Burwood property.
Ms Fang sold the Burwood property without the knowledge of Ms Wang.
Ms Fang paid part of the proceeds of sale from the Burwood property to her son, Mr Shen, which he then used with other funds to purchase Lot 4.
Ms Fang is therefore said to have an interest in Lot 4 by way of resulting trust as having contributed to the purchase price without intention to make Mr Shen a gift.
Ms Wang, by subrogation to Mr Zhou, is said to have an equitable mortgage or charge over Ms Fang's interest in Lot 4, which interest itself arises pursuant to the alleged resulting trust referred to in the preceding sub-paragraph.
Consideration
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The relevant principles governing an application such as this were set out by Peden J in ATF Group Pty Ltd v Melek [2023] NSWSC 333 in a passage which I gratefully adopt and apply:
19 Schedule 2 and r 7 of the Real Property Regulation 2019 (NSW) require a caveat lodged under s 74F to specify particulars of:
(1) the nature of the estate or interest in land claimed by the caveator; and
(2) the facts on which the claim is founded, including (if appropriate) a statement as to the manner in which the estate or interest claimed is derived from the registered proprietor of the estate or interest against which the caveat is to operate.
20 Schedule 2 provides that it is not necessary to specify whether the estate or interest claimed is legal or equitable, the quantum of the estate or interest claimed for certain interests, or how the estate or interest claimed ranks in priority with other estates and interests in the land.
21 Whether a caveat adequately describes the estate or interest claimed is to be decided from the point of view of a person examining the caveat, noting that this person will not necessarily be the registered proprietor: Hanson Construction Materials v Vimwise Civil Engineering [2005] NSWSC 880 at [28] (Campbell J) citing Leros Pty Ltd v Terara Pty Ltd (1992) 174 CLR 407, 422-423 (Mason CJ, Dawson and McHugh J).
22 As McDougall J stated in Schibaia v Elias [2013] NSWSC 1485 at [25]:
The whole purpose of the Real Property Act is to try and prevent the need for people to go behind the Register, in particular to go behind the documents that have been recorded or lodged, to see what estates or interest there are in land that is subject to the provision of the Real Property Act.
23 Section 74K(1) of the Real Property Act 1900 (NSW) relevantly provides:
(1) Where a caveator is served with a notice prepared under section 74I (1) or (2), 74J (1) or 74JA (3), the caveator may prepare, in the manner prescribed by rules of Court, an application to the Supreme Court for an order extending the operation of the caveat. (2) Subject to subsection (3), on the hearing of an application made under subsection (1), the Supreme Court may, if satisfied that the caveator’s claim has or may have substance, make an order extending the operation of the caveat concerned for such period as is specified in the order or until the further order of that Court, or may make such other orders as it thinks fit, but, if that Court is not so satisfied, it shall dismiss the application.
24 In Sutherland v Vale [2008] NSWSC 759 at [10]-[12], Brereton J (as his Honour then was) stated:
10. … it is an essential ground of even an interlocutory order extending the operation of a caveat that the Court be satisfied that the caveator's claim in the caveat ‘has or may have substance’. If the Court is not so satisfied, s 74K(2) commands the Court to dismiss the application.
11. It is well established that on an application for an order extending the operation of a caveat, a test substantially the same as that for an interlocutory injunction applies. First, the applicant must demonstrate that the caveat has or may have substance, the phrase ‘may have substance’ encompassing the concept of a seriously arguable case; secondly, the Court will have regard to considerations of the balance of convenience and prejudice; and finally, to other discretionary considerations.
12. The starting point, however, is to consider whether or not this caveat has or may have substance. In order to judge that, it is necessary to turn first to the caveat itself and the claim stated in it… Real Property Regulation provides, by clause 7, that a caveat must specify the particulars as set out in Schedule 3 in relation to the estate or interest to which a caveator claims to be entitled. A central concept in the Act and the Regulation is that of "the nature of the estate or interest claimed" by the caveator: it is that claim that the Court must be satisfied has or may have substance before making an order. The characterisation and description of the nature of the estate, interest or right claimed by a caveator is more than a mere formal requirement of the provisions of the Act, but goes to the heart and substance of their operation, because without a description of the estate, interest or right claimed, neither the Registrar-General nor a person reading the caveat can know whether a dealing would adversely affect the estate claimed, nor can the Court tell whether the caveator's claim has or may have substance...”
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Bearing those principles in mind, the Court's conclusion may be expressed in four propositions.
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First, I do not accept that the letter, which must be read with the other parts of the caveat, either sets out in an intelligible way to a reader the interest claimed in Lot 4 (as now expounded by Mr Young SC – see [12] above) or the facts relied on for that interest.
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Second, reading all three parts of the caveat together would, in my respectful opinion, leave the reader confused as to what was the basis for the alleged interest. I accept Mr Pritchard SC’s submissions that having regard to the necessity to set out both the interest claimed and the facts relied on, the caveat is irredeemably inadequate.
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Third, I accept Mr Pritchard SC’s submission that read in its terms, there is no serious question to be tried disclosed by the caveat because paragraph (b) of the letter asserts that Ms Fang lent the net proceeds of sale of the Burwood property to her son for the purposes of acquiring lot 4. Mr Young SC candidly, and entirely properly in my respectful opinion, accepted that if the nature of the arrangement between Ms Fang and her son was a loan, then no resulting trust could arise which could give Ms Fang an interest in Lot 4.
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Fourth, I accept Mr Pritchard SC's submission that the Court should express its disapproval of a practice, if it be such, of discursive or argumentative solicitor's letters being included as part of the particulars attached to a caveat. That is not to say that a solicitor's letter could not, in a neutral way, set out clearly both the interest claimed and the facts upon which the caveator relies and be described as an attachment in a caveat.
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I should also record, as a deficiency of form in relation to the caveat, that it is quite inappropriate to include a pleading as part of a caveat because pleadings are combinations of assertions of material fact and conclusions of law. In this case, the deficiency is further aggravated by the fact that there is reference to an attached pleading in the letter that has not found its way into the caveat in any event.
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Reference was made in the course of argument to my decision in Brose v Slade [2022] NSWSC 1785. However, as will be apparent from [35] in that decision, the explanation of the facts upon which the caveat was based in that case was of the nature that I have described: a precise identification of the interest claimed and the facts relied upon. The far better course is to provide an annexure to the caveat of the kind as has been attempted to be done in this case in Annexure A, but properly setting out the nature of the interest claimed and the facts relied on in a precise and neutral way.
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No question of the application of s 74L of the Act arises in this case. This is because the fundamental difficulty with the caveat, quite apart from issues of form, is that it does not disclose a seriously arguable case (see [17] above). This difficulty goes well beyond difficulties with the form of the caveat that can be the subject of the saving provision in s 74L.
A new caveat?
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Mr Young SC foreshadowed, in the course of his address, that, if the Court was against him in relation to the form of the caveat, it would be possible for his client now to apply under s 74O of the Act for leave to file a new caveat (emphasis added):
74O Restrictions on lodgment of further caveats if earlier caveat lapses or is withdrawn
(1) This section applies if a caveat lodged under a provision of this Part in respect of any particular estate or interest in land or any particular right arising out of a restrictive covenant—
(a) subsequently lapses, or
(b) is, after an application is lodged with the Registrar-General for the preparation of a notice under section 74C (3), 74I (1) or (2), 74J (1) or 74JA (3), withdrawn under another provision of this Part, or
(c) is withdrawn or lapses under section 74MA,
and the same caveator lodges a further caveat with the Registrar-General in respect of the same estate, interest or right and purporting to be based on the same facts as the first caveat.
(2) A further caveat to which this section refers has no effect unless—
(a) the Supreme Court has made an order giving leave for the lodgment of the further caveat and the order or an office copy of the order accompanies the further caveat when it is lodged with the Registrar-General, or
(b) the further caveat is endorsed with the consent of the primary applicant or possessory applicant for, or the registered proprietor of, the estate or interest affected by the further caveat.
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The Court will not entertain an application under s 74O at this time for the simple reason that no form of new caveat that is sought to be the subject of such an application was provided to the Court before I reserved, an hour or so ago, to prepare these reasons. Any application under s 74O would require the Court and the opposing party to be apprised of the precise terms of the new caveat which is to be the subject of leave.
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Mr Young SC put during the course of argument that his client may not need leave because the interest that would be claimed under the new caveat may not be characterised as the same interest as that asserted in the caveat. However, whether it is or is not the same interest could only be tested by having the precise terms of the new caveat before the Court. For that reason, I had resolved not to entertain any further application under s 74O in the course of this hearing.
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However, I should record that when I returned to the bench to deliver these reasons, Mr Young SC informed the Court that he had prepared a form of new caveat which he wished to make the subject of an immediate application under s 74O. That course was opposed by Mr Pritchard SC for reasons which I accept. In short, first, the motion upon which Mr Young SC moved this afternoon did not seek as an alternative leave under s 74O. Second, earlier directions of the Court had given Ms Wang ample opportunity to provide the terms of a new caveat if she had wished to make an alternative application under s 74O that was then to be the subject of submissions exchanged between the parties. The relevant directions were not complied with by Ms Wang. I accept Mr Pritchard SC's submission that he would have taken potentially quite a different forensic course (including filing evidence, which he had elected not to do) had he been on notice that the argument today would extend to an application under s 74O in relation to a fully formulated new caveat.
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I am satisfied that it would be procedurally quite unfair to Mr Pritchard SC’s clients to have permitted Mr Young SC to make an application from the bar table in relation to the new caveat which he had prepared during the adjournment. I indicated to Mr Young SC that if Ms Wang wishes to make that application by a fresh notice of motion, Ms Wang was perfectly entitled to do so, and that it would be the subject of case management and hearing in the usual course. If that is done, there may be a question as to whether or not it is in fact the same interest being claimed in any new caveat as that set out in the caveat, but that is not a matter for today.
Conclusion
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Today’s hearing only concerned prayer 4 of Ms Wang’s notice of motion, the balance of the motion having been dealt with on earlier occasions.
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The orders of the Court are:
Prayer 4 of the plaintiff's notice of motion dated 5 December 2024 is dismissed.
The plaintiff is to pay the defendants’ costs of prayer 4 of that motion including, for the avoidance of doubt, the costs of today.
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The Court will make any procedural directions necessary to progress the substantive proceedings.
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Decision last updated: 18 March 2025
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