Removal of Caveats: Application Dismissed

In a recent ruling, the Supreme Court of Queensland dismissed an application for the removal of caveats over a number of properties.

In DT & MF Holdings v Ascendia Accountants [2017], the Applicants needed to establish that there existed no serious question to be tried. All attempts to do this failed.


Ascendia Accountants (the Respondents) acted as financial planners and accountants for DT & MF Holdings (the Applicants). Between August 2011 and September 2016 the Respondents sent 38 Letters of Engagement to Mr Griffiths, the Applicants’ representative. Mr Griffiths signed each letter thereby accepting the legal, financial and accounting services provided by the Respondents.

Letters of Engagement

Each of the Letters of Engagement contained identical Terms and Conditions.

Of importance to the present case is Clause 11.1 which deals with non-payment of services provided by the Respondents.

“The Client and/or the Guarantor acknowledge and agree that the Financial Planner/Accountant (or the Financial Planner/Accountant’s nominee) shall be entitled to lodge where appropriate a caveat or take a lien or take possession of any such property mentioned in this section.”

An amount of almost $90,000 remained unpaid for services provided under a Letter of Engagement signed on 12 September 2016. Therefore in April 2017 the Respondents registered 18 caveats over the six properties owned by the Applicants. Each caveat represented an equitable charge or mortgage against the land for outstanding monies.

Removal of caveats application

The Applicants argued for the removal of all caveats. They alleged the Respondents could not make out the grounds of claim which formed the basis of the caveats.

The difference between an equitable mortgage and an equitable charge was the focus of the Applicants’ appeal. They claimed there is a clear distinction between the two.

Further, the Applicants argued that the interest claimed in the caveats was an equitable mortgage and not an equitable charge. This gave the Respondents a contractual right to request a mortgage (as allegedly Clause 11.1 did not of itself constitute an equitable mortgage). However, the Applicants claimed the Respondents did not make a proper request in line with Clause 11.1. So no equitable mortgage arose.  Therefore, the Applicants concluded that they could not make out the grounds of claim cited in the caveats.

The Court findings

However, the Court found that the Property Law Act of Queensland did not clearly define the differences between an equitable charge and an equitable mortgage. Therefore it concluded that there existed a serious question to be tried.

The Applicants had two further reasons showing there were no serious questions to be tried. Firstly, they did not receive independent legal advice before signing the 12 September 2016 agreement. And secondly the Respondents breached its fiduciary duties owed to the Applicants as legal advisors.

The Court found that the need for independent legal advice relates to cases involving guarantees and therefore not applicable in this instance. Further, it concluded that the Respondents, as accountants, owed no fiduciary duty to their clients.


Related articles

Equitable Mortgage: Certificate of Title as Security Without Signing Agreement?

Statutory Demand & Offsetting Claims

Caveat Dispute: Mortgagee Unable to Transfer Land

Competing Interests in Security Property


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