Consequences of Lodging a Caveat Without Basis

Recently, I wrote an article on the purpose of a caveat. In
summary, a caveat acts as an injunction to the Registrar in
prohibiting the registering of any dealings with the land without
the caveator’s consent. However, there are consequences in
lodging a caveat without having a proper reason.

We learn from the case of Sovereign MF Ltd (in liq.) v EOS
Janus Holdings Pty Ltd [2013] VSC 347 that indemnity costs
(order to pay all reasonable costs incurred by the other party)
could be awarded against a Caveator who doesn’t lodge a
caveat with a proper basis.

It is important to note that a caveat can only be lodged over another’s
property if you have a legal or equitable interest in the property.
To determine whether any interests exist, one may ask the following questions:

• Does any legal instrument, for example a written agreement,
allow for the lodgement of a caveat over another’s property
after the satisfaction of particular circumstances?

• Do I have any equitable interest in the property or has the
registered proprietor granted me an interest in the property
(i.e. an equitable charge to secure debt)?

The Department of Environment, Land, Water and Planning
outlines a number of claim categories that are for a grounds of
claim, such as an agreement or contract, a certificate of title,
charge, court or tribunal order, lease and mortgage.

If you have lodged a caveat without a proper basis, you may
be able to withdraw the caveat. However, if the other party has
already commenced legal proceedings against you,
withdrawing the caveat may not save you from indemnity costs
being awarded against you. In consideration of the above, it is
prudent to seek legal advice before deciding to lodge a caveat.

Footnotes available upon request.
By Guner Hussein, Solicitor at RSG Lawyers