A registered proprietor may be faced with a situation where someone lodges a caveat over their property and without proper grounds for doing so. Pursuant to section 90(3) of the Transfer of Land Act 1958 (Vic) (the TLA), the registered proprietor can issue an application in the Supreme Court of Victoria seeking that the caveat be removed. Alternatively, the registered party can issue a section 89A application under the TLA, supported by a certificate by a solicitor, requesting the Registrar of Titles to issue a notice requiring the caveator to issue proceedings to substantiate its caveat within 30 days or it will lapse. Lodgement of a caveat over a property without a sufficient basis which gives rise to a caveatable interest in the property (such as an equitable charge, a constructive trust, a resulting trust or some other basis), there can be significant ramifications, including costs orders or even an application for compensation under section 118 of the TLA, for the caveator who lodges the caveat.

There is a volume of case law in this area and Justice Vickery and Associate Justice Derham of the Supreme Court of Victoria feature prominently in a number of them. Generally, the relevant considerations for parties in these applications include the following:

• Affidavit material must be put before the Court in respect of the parties’ position – the caveator must be able to provide sufficient documentary evidence which supports the lodgement of the caveat.
• The two stage process to be undertaken in these applications are as follows:
  1. First, the caveator must establish that there is a prima facie case — that there is a probability, on the evidence before the Court, that the caveator will be able to demonstrate that it has the relevant legal or equitable rights or interest in the land; and
  2. Second, upon demonstrating a prima facie case, the caveator must establish that the balance of convenience favours the caveat remaining on the title until a trial.
• Consideration will be given as to any prejudice which will be suffered by the removal of the caveat and the onus is on the caveator to substantiate any prejudice – which outweighs any prejudice to the registered proprietor who is faced with a caveat constraining his or her entitlement to deal with the property.

A case which considered an application for removal of a caveat lodged by a bankrupt is a bit of light hearted humour (perhaps not for the Trustee in bankruptcy) concerning the basis for the lodgement of the caveat. Although the Judge must have tried to contain her reactions to some of the matters raised in the application. The recent case of Nelson v Greenman & Anor [2024] VSC 704 (15 November 2024) required Associate Justice Gobbo to determine whether a caveat should be removed. The facts were as follows:

• Stephen Douglas was the registered proprietor of land at Koo Wee Rup. He was made bankrupt in 2019. On the making of the sequestration order his interest in the land vested in his Trustee in bankruptcy under the Bankruptcy Act 1966 (Cth) and in 2021, the Trustee in bankruptcy became registered proprietor of the property. Between 2021 and March 2024, there were many legal twists and turns involving the Federal Court, the Sheriff, VCAT, the Supreme Court, and the police executing a warrant of possession on the third attempt;
• In the course of the various proceedings, the bankrupt lodged a caveat on the ground of an implied, resulting or constructive trust. The Trustee in bankruptcy made an application for removal of the caveat under section 90(3) of the TLA;
• At the hearing, the bankrupt refused to give his appearance but instead repeating loudly “permission to come aboard as though those words carried with them some unique legal meaning, which they do not”.
• Associate Justice Gobbo had to deal with documents and concepts relied on by the bankrupt including:
  • the argument that the property was Christian ministry headquarters involving the DOUGLAS Stephen Ross Estate Trust of which the bankrupt was the Special Trustee; accordingly the property was exempt property held in a trust by the bankrupt for someone else, being the Koo Wee Rup Ministry, as described in section 116 of the Bankruptcy Act; and certain public figures described as the “Living Man” or “Living Woman”;
  • Her Honour stated that at its highest, the bankrupt’s case appeared to be that the Trustee in bankruptcy had no entitlement to possession as legal owner because the land was legally transferred to a trust. However, in Douglas v Nelson [2024] VSC 116, Justice Quigley held it was not established that the bankrupt had made a valid transfer of the legal ownership of the title to the land to any trust entity;
  • Her Honour described the bankrupt’s affidavit as “34 pages of nonsensical quasi‑legal concepts and phrases, Bible quotes and references to organisations and entities with unconventional titles or descriptions”;
  • She rejected an application by the bankrupt to remove the case to “the People’s Court of Terra Australis”. She listed varieties of pseudo-law, which are collections of legal arguments and others, which are false and do not form part of the law yet relied upon by the bankrupt. She also stated that the bankrupt’s arguments were “nothing more than carnival of absurdity drawn from a mishmash of delusional arguments. Whilst it may be tempting to simply dismiss these claims as nonsense, gibberish, gobbledegook or like, in doing so that should not diminish from the serious impact these delusional arguments can have on the authority of the Court;”
• Accordingly, she ordered that the caveat be removed with indemnity costs.

Catherine Pulverman of FCW Lawyers has considerable experience in this area where she acts for registered proprietors, caveators or other parties, including Liquidators and Trustees in bankruptcy, concerning a party’s entitlement to lodge a caveat, applications for removal of caveats, provision of advice concerning the legitimacy of a caveat and whether a caveatable interest in the property can be substantiated. If you require advice in relation to caveats, Catherine and her team would be happy to provide assistance.