Miller & Anor v Loel & Anor

This was the trial of a matter in which a previous unsuccessful summary judgment application had been made, albeit with her Honour, Justice Mullins, ordering that specified paragraphs of the amended statement of claim be struck out.

The plaintiffs sought damages pursuant to s 130 of the Land Title Act 1994 as a result of the lodging and continuation of an improper caveat. [5]. The issues for consideration were:

1. Did the defendants lodge or continue the caveat with reasonable cause?
2. If so, had the plaintiffs established that they suffered loss or damage as a result? [6].

Relevant preceding events/ background

The first and second plaintiffs were the directors and primary shareholders of Old Coach Developments Pty Ltd. The first defendant was the solicitor for Devren Pty Ltd and the second defendant was a director of Devren Pty Ltd. Old Coach Developments Pty Ltd held the corporate assets of a joint venture between Devren Pty Ltd and other entities wholly owned by the plaintiffs, established to develop and sell subdivisional land. [8]. Clause 6.14 of the shareholders agreement between the joint venture parties provided that if two lots of land, lots 22 and 23, were not sold to third parties, lot 22 would be transferred to the first plaintiff and lot 23 would be transferred to Devren Pty Ltd. [16]. Lot 22 was eventually sold, and the first defendant thereafter lodged a caveat over lot 23 on behalf of Devren Pty Ltd. [28].

The evidence indicated that until his Honour Justice Boddice delivered judgment in SC No 5638/2012, dismissing Devren’s claim, the first defendant held the belief that Devren was entitled to a transfer of lot 23 and, as the equitable transferee, it possessed a caveatable interest. [30], [57].

Section 130 of the Land Title Act 1994

Liability under s 130, “Compensation for improper caveat”, is imposed on “a person who lodges or continues a caveat without reasonable cause”. The foundation for reasonable cause must be not the actual possession of a caveatable interest, but an honest belief based on reasonable grounds that the caveator has such an interest: see Bedford Properties Pty Ltd v Surgo Pty Ltd [1981] 1 NSWLR 106 at 108 and Re Brooks’ Caveat [2014] QSC 76. In addressing whether the first defendant lodged or continued the caveat with reasonable cause, his Honour importantly observed that the fact that Devren was not ultimately successful at trial “did not detract from the genuineness of [his] honest belief” as to the status of its caveatable interest. [59]. Also of relevance was the fact that his firm paid some $100,000 in outlays in respect of the Devren proceedings. [62]. His Honour continued:

“… it is evident that Mr Loel brought his own independent legal mind to the lodging of the caveat.  In spite of Mr Hobson’s sense of urgency … Mr Loel took more than six weeks before he lodged the caveat over lot 23.  Mr Loel did not seek to caveat lot 22 or any other property held by the plaintiffs nor did he proceed with a freezing order in relation to the bank accounts of Old Coach Developments.”  [71].

Notwithstanding the above, the fact remained that on his own evidence, the first defendant ceased to have an honest belief that Devren had a caveatable interest after Boddice J delivered judgment (on 19 March 2015).  As such it was necessary for his Honour to address whether he thereafter “continued” the caveat from that date to the date of the removal of the caveat (almost four months later) with reasonable cause. [79]. Relevantly, on 16 April 2015 Boddice J had ordered the removal of the caveat. [80].

In RDN Developments Pty Ltd v Shtrambrandt [2011] VSC 130, it was clarified that the duty to mitigate, whilst not requiring the caveatee to do anything other than in the ordinary course of business, requires that the caveatee avail itself of all means available to remove a caveat. [81]. In that regard, his Honour noted that, subsequent to the order made on 16 April 2015, the plaintiffs were obligated to avail themselves of procedures available to remove a caveat.  That course of action was made clear to them in correspondence.  Accordingly in his Honour’s view, “an order having been made for the removal of the caveat by Boddice J on 16 April 2015, Mr Loel should not be considered as a person who continued a caveat after that date”. [82].

Given the above, his Honour concluded that the first defendant had discharged his onus of establishing that he lodged and continued the caveat in respect of lot 23 with reasonable cause. [83].

Further noting that the plaintiffs’ claim that they had sustained loss or damage as a result of the caveat effectively amounted to a loss of opportunity claim (see Principal Properties Pty Ltd v Brisbane Broncos Leagues Club Limited (No 2) [2016] QSC 252), [97] which was problematic in that there was no evidence before the court as to whether any future contemplated land development project would have been profitable, [109], his Honour held that even if they were entitled to compensation under s 130(1), they failed to establish any loss or damage as a result of the lodging or continuation of the caveat. [112]. In the result the claim was dismissed. [113].