Rocky Point Holdings Pty Ltd v TEB Enterprises Pty Ltd

This case involved an application to lodge a second caveat, to protect an interest in land given by an option in a Call Option Deed, which the applicant had purported to exercise. The first caveat had lapsed as a result of a failure to notify the Registrar of Titles about proceedings in which the applicant sought specific performance. In the exercise of a discretion under s 129 Land Title Act 1994, the Court granted leave to lodge the second caveat.

Davis J

17 February 2023

Background

In 2020 the parties entered into a Call Option Deed, granting an option to Rocky Point Holdings Pty Ltd to purchase land owned by TEB Enterprises, which was being used for a business of recycling refuse. [4]–[5]. In early 2022 TEB purported to terminate the Call Option Deed. Subsequently, Rocky Point purported to exercise its option under the Deed to acquire the land. [10]. Consequently, the parties were in dispute. [10].

In July 2022, Rocky Point lodged a caveat (“the first caveat”) in relation to its asserted interest in the land. [13]. In September, Rocky Point counterclaimed in proceedings instituted by the other parties to the Deed, seeking specific performance in order to acquire title to the land. [13]. It was common ground that this counterclaim could support the first caveat. [14]. However, according to s 126 Land Title Act 1994, Rocky Point was required to “notify the registrar” of the proceedings within three months of lodgment of the caveat, or else the caveat would lapse. [19]. That was not done. Accordingly, “the first caveat lapsed”. [20].

By this application, Rocky Point sought leave to lodge a second caveat to protect the same interest as the first, pursuant to s 129 Land Title Act 1994. [15], [21]. In the result, Davis J granted leave. [88].

Leave to lodge a further caveat – s 129 Land Title Act 1994

Section 129 Land Title Act 1994 relevantly provides that a further caveat lodged on the same, or substantially the same, grounds as a first “can never be lodged … unless the leave of a court … has been granted”. [21]. Justice Davis observed that the provision “vests a discretion in the court”, and that there is “nothing expressed … which limits that discretion or identifies those considerations which are relevant to its exercise”. [23].

Nonetheless, the cases have identified that apart from an applicant being required to show a caveatable interest and a “serious question to be tried”, the discretionary considerations include:

1. any explanation for allowing the original caveat to lapse;

2. any explanation for delay in making the application for leave to lodge the second caveat; and

3. the balance of convenience.

It was clear that the option to purchase the land was “an interest … sufficient to support a caveat” (subject to proof, discussed below), and that there was a serious question to be tried as to the existence of the right to the land, given the purported exercise of the option in the Deed (following its purported termination by the other parties). [17]–[26]. Accordingly, the resolution of the application largely turned on the application of the above numbered considerations.

The Duties Act 2001 argument of the defendant

However, Davis J was also required to consider several arguments raised by the defendants, who opposed granting leave to lodge a second caveat. The most notable of these was that s 487 Duties Act 2001, which provides that certain documents are “not available for use in law or equity” unless they have been stamped, meant that the Call Option Deed was ineffective to found a cause of action to establish an interest in land – because it had not yet been stamped. [32], [34]. Rocky Point had given an undertaking to cause any duty assessed as owing to be paid, but the defendants argued that actual stamping was required. [33]–[34].

Justice Davis rejected this argument, finding that, having regard to the object and purpose of the provision (principally, to “ensure duty is paid”), the undertaking to stamp was sufficient (applying reasoning of McGill QC DCJ in Burnitt v Pacific Paradise Resort Pty Ltd [2004] QDC 218). [41]. The undertaking meant that, at trial, the Call Option Deed would be available to prove the caveatable interest. [44].

Application of the discretionary considerations

Rocky Point asserted that “administrative oversight” by a solicitor had resulted in a failure to notify the Registrar of proceedings, and thus caused the lapsing of the first caveat. [76]. However, the evidence in this regard was “very thin” and addressed only part of the relevant time period. [76]–[77]. Nonetheless, Davis J inferred that “some error has occurred” within the offices of the relevant lawyers, and that the “intention was always to maintain the first caveat”. [80]. The instructions to lodge a second caveat were given as soon as Rocky Point was aware of a risk that the land could be transferred to a third party. [80].

As to the balance of convenience, the defendants contended that registration of a second caveat would impact on their ability to deal with certain financial pressures. [63]. In particular, that it could make obtaining finance more difficult. [66]. However, Davis J said that there was “nothing to suggest that loans might be recalled, or further funding refused or that terms offered would be substantially less favourable” if a second caveat were lodged. [67]. In relation to Rocky Point, a denial of leave to lodge a second caveat was likely to result in the land being sold and “Rocky Point’s interest being lost”. [83].

In the circumstances, his Honour considered it “appropriate to maintain the status quo” by granting leave to lodge a second caveat claiming the same interest as claimed by the first. [86]. His Honour made orders accordingly. [88].

W Isdale