What Principles Apply to the Extension of Caveats?

extension of caveats

In the recent Supreme Court of Western Australia decision in Conroys Smallgoods Pty Ltd v Tomlinson [2018] WASC 21 the application for the extension of caveats came under the spotlight.


By a chamber summons Conroys Smallgoods Pty Ltd (‘Conroys’) sought to extend the operation of two caveats lodged by them over two parcels of land belonging to the first defendant, Tomlinson, until further order of the court. The application by chamber summons was required as Tomlinson would not agree to the extension of the two caveats pending a substantive determination of the proceedings.

Conroys said:

  • Tomlinson granted Conroys an equitable charge over two parcels of land pursuant to a Guarantee & Indemnity dated 9 June 2016;
  • Tomlinson entered into the Guarantee & Indemnity at the same time as Conroys and Royal Park Quality Foods Pty Ltd (‘Royal Park’) entered into the Credit Agreement. Under the Credit Agreement, Conroys agreed to provide smallgoods to Royal Park on credit. Tomlinson was a director of Royal Park at the time;
  • Conroys provided smallgoods to Royal Park and rendered invoices to Royal Park which totalled $112,565.85 (the ‘Debt’). Royal Park failed to pay the Debt to Conroys;
  • Conroys lodged caveats over two parcels of land owned by Tomlinson. In the caveat, the estate or interest claimed is described as being pursuant to cl 6 of the Guarantee & Indemnity.
  • Conroys received two notices issued under s 138B of the Transfer of Land Act 1893 (WA) (‘the Act’) in relation to the two caveats. This required Conroys to seek a court order to extend its caveats.

Tomlinson opposed the extension of the two caveats.

Legal principles applicable to the extension of caveats

There are well established principles relating to the extension of caveats under s138C of the Act. When the Supreme Court assesses whether to grant the extension of a caveat, there are two general issues:

  • Whether the caveator’s claim in respect of the estate or interest in the land ‘has or may have substance’
  • Whether the balance of convenience favours the retaining of the caveat and the appropriate orders to be made

The Court’s decision

In these applications the onus is on the plaintiff to demonstrate that the caveatable interest it claims has or may have substance. Conroys referred to clause 6 of the Guarantee & Indemnity, which provided as follows:

“The Guarantor(s) hereby charge in favour of the Creditor any estate and interest in any land and in any other asset(s), whether tangible or intangible, in which they now have any legal or beneficial interest or in which they will later acquire any such interest, with payment of all monies owed to the Creditor.”

Conroys argued:
  • Tomlinson entered into the Guarantee & Indemnity at the same time as Royal Park entered into the Credit Agreement with Conroys
  • The Credit Agreement and the Guarantee & Indemnity were contained within one document. Tomlinson placed his signature on the second page and the signature was witnessed by his accountant
  • The language of clause 6 made it clear that the guarantor was intending to grant a charge over land.
Tomlinson argued:
  • The estate or interest was not adequately specified in the caveats. Counsel noted that the caveat did not disclose the quantum of Conroy’s claim to a third party inspecting the register
  • The conditions for the guarantee obligation were not fulfilled
  • The land was not charged in favour of the plaintiff. That is, there was no formal charging by the plaintiff of an interest in the two properties. And therefore no foundation for the caveats).
Does the claim have substance?

The Court examined the caveats and found that they met the requirements as to form. The case authorities state that the description of the estate being claimed can be supported in certain cases by reference to the deed or instrument mentioned in the caveat from which the estate or interest is said to arise. The Court also found that default had been established and the guarantee was enforceable. Also, the fact that the Guarantee & Indemnity did not give Conroys the express right to lodge caveats over certain property did not prevent the caveats from being effectively lodged.

Tomlinson suggested that the deletion of the words ‘and consent to the lodging by the creditor of a caveat or caveats which note the creditor’s interest in the real property’ from clause 6 precluded the lodgement of the caveats. The Court found that there is no requirement in the Act for the caveator to have secured permission to lodge a caveat. Also, Conroys was also not bound to a promise not to lodge caveats in the Guarantee & Indemnity.

The Court was satisfied that Conroys had discharged its onus to demonstrate that the caveatable interest it claimed had substance. Also, Conroys showed the Court that there was a sufficient likelihood of success in its claim of an equitable charge to justify the continuation of the caveat.

Balance of Convenience

The Court then turned to the question of the balance of convenience. When considering the balance of convenience, the apparent strength or weakness of the plaintiff’s case can be taken into account. As outlined above, the Court found that the plaintiff’s case was arguable. In circumstances such as these, the interlocutory removal of a caveat where an arguable case as to the existence of the caveat had been demonstrated would be unusual.

The Court ordered that the caveats be extended until further order of the court.

Related articles

Removal of Caveats: Application Dismissed

Competing Interests in Security Property

Caveat Dispute: Mortgagee Unable to Transfer Land

This publication is for your general information and interest only. It is therefore not intended to be comprehensive, and does not constitute and must not be relied on as legal advice. You must seek advice tailored to your specific circumstances. 

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