Western Australian Real Estate Custodian Ltd v W J Green & Co (1984) Pty Ltd

The matter before the Court was an application by the plaintiffs, Western Australian Real Estate Custodian Ltd and Tace Pty Ltd, for an order pursuant to s 138 of the Transfer of Land Act 1893 (WA) requiring the first defendant, W J Green & Co (1984) Pty Ltd, to show cause why its caveat registered against certain land in which the plaintiffs have an interest should not be removed. The application was opposed by the first defendant. The plaintiffs sought the removal of the caveat on the basis that the first defendant did not have a caveatable interest in the land sufficient to support a subject to claim caveat and, in any event, the broad powers allowed to Tace by the Tace Trust Deed (and thus to the first plaintiff as its sub-trustee), including an express power of sale, had an overreaching effect upon any estate or interest claimed by the Green parties. This meant that the estate or interest asserted in the caveat could not be substantiated, and the caveat should be removed. The first defendant opposed the application on the basis that the plaintiffs had failed to properly notify the Green parties of any proposed dealing with any of the assets of the trust in compliance with a court order. It was also submitted that there was an ambiguity on the evidence before the Court as to whether a binding contract for the sale of the land was actually in existence. The Court held that the first defendant had a caveatable interest in the land sufficient to support a subject to claim caveat of the kind actually lodged. However, the crucial question in the present case was whether anything had occurred subsequently which had the effect of extinguishing or divesting the first defendant as caveator of its caveatable interest in the land. The Court found that the extinguishment of the caveator's equitable estate or interest in the land was effected not by the trustee entering into a contract for the sale of the land but by a conveyance of the legal title to the same which, in the case of the Torrens system, is effected by registration of a transfer of the subject land. As a conveyance had not yet taken place, the caveator, prima facie, at least for the time being, had retained its caveatable interest in the land. The Court also found that there was a degree of ambiguity upon the evidentiary materials before it as to whether a binding contract of sale had been made by the trustee in the purported exercise of its power of sale. Further, there was a failure by Tace as trustee to comply with the requirements of a court order whereby notice of any intended dealing was to be given to the Green parties. In these circumstances, the Court held that the ordinary course should be followed whereby the caveat is to remain so that the disputed questions can be left for trial in an action commenced by writ of summons with pleadings.