In Thompson DK Properties Pty Ltd as trustee for the Thompson DK Discretionary Trust No 7 v Brown, the Supreme Court of Queensland considered a removal of caveat application from a property developer. The builder had lodged the Caveat over the development property.
Thompson DK Properties Pty Ltd as trustee (Thompson) is the owner and developer of a property in Daisy Hill, Queensland. Mr Brown was engaged to construct a number of duplexes and a triplex on the property. On 29 August 2017 Brown lodged a caveat (the Caveat) claiming a charge over the property pursuant to a charging clause in the construction contract.
Thompson applied to the Supreme Court to remove the caveat on the following basis, that:
- pursuant to s 126(5) of the Land Title Act 1994 (the Act), the Caveat had lapsed;
- due to licensing issues, there were no monies payable under the contract to support the charge;
- there were no monies that are payable or may become payable to Brown by virtue of the contract;
- the balance of convenience favoured the removal of the Caveat.
When does a caveat lapse?
Section 126(4) of the Act dictates that if a caveator does not want its caveat to lapse, it must start proceedings in a Court of competent jurisdiction to establish the interest claimed under the caveat within three months after the lodgement of the caveat (in these circumstances, 29 November 2017). The Act places the onus on the caveator to start those proceedings.
Brown delivered a draft statement of claim to Thompson on 13 October 2017, but it was not filed. On 24 November 2017, Brown lodged a General Request form to the Registrar of Titles stating that proceedings had been started to establish the interest claimed under the Caveat. However, attached to the General Request was a copy of the originating application filed by Thompson seeking the removal of the Caveat.
Justice Brown stated:
“[W]ithout a statement of claim being filed, or the originating application being amended, there would have been a real question as to whether [Brown] had started a proceeding “to establish the interest claimed under the caveat”. Given that neither occurred, the originating application of itself could not be treated as a proceeding for the purposes of s 126(4) since it sought to set the Caveat aside. The fact is that there was no proceeding started to establish the interest claimed in the Caveat as contemplated by s 126(4) of the Act.”
Brown as caveator took no steps to make good the interest he claimed by starting proceedings by which his interest may have been defined. In circumstances such as these, s 126(5) of the Act operates automatically to cause the caveat to lapse and there is no occasion for the exercise of any discretion.
Balance of convenience favoured the removal of caveat
Because the Caveat had automatically lapsed the Court was not required to consider the other grounds of Thompson’s application. Nevertheless, Justice Brown found that even on the assumption that monies were owing which could be the subject of a charge, the balance of convenience favoured the removal of the Caveat. Her Honour pointed to the following reasons:
- Thompson had a number of contracts of sale with third parties which would have been jeopardised without the registration of the survey plan;
- Thompson would suffer a significant cost if the contracts did not settle, or were terminated;
- Thompson was incurring interest at approximately $650 per day.
The Court ordered the removal of the Caveat. Further, the Court ordered Brown to cover Thompson’s costs for the removal of caveat application incurred after 29 November 2017.
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.