A client granted a mortgage to her barrister to secure all monies now or at any time owing to the barrister in respect of legal work carried out by the barrister. The barrister lodged a caveat claiming interest as an unregistered mortgagee. The caveat lapsed and the barrister then lodged a further caveat in identical terms without leave of the court and now seeks leave.
Section 74O of the Real Property Act 1901 (NSW) provides that a further caveat in respect of the same interest and based on the same facts cannot be lodged without the leave of the Court, and has no effect without leave having been granted.
The considerations relevant to interlocutory injunctions also apply to the grant of leave to lodge a further caveat in substantially the same form as the lapsed caveat:
- whether the further caveat has substance? The court held there was an arguable case that a substantial debt was secured by the mortgage given the mortgage prima facie created a security interest in the land in favour of the barrister and there was evidence as to unpaid invoices;
- balance of convenience considerations, including the circumstances in which the earlier caveat lapsed and whether permitting a new caveat would cause detriment. The court noted that there was a dispute as to whether the barrister received the lapsing notice and the client had not taken any action in reliance on the caveat not being in place and would not be frustrated by the grant of leave to lodge a fresh caveat.
The court said that the balance of convenience involves a comparison of the position between the potential detriment to the caveatee if the order is incorrectly not made, and the potential harm to the caveator if the order is incorrectly made. The court found that if leave to lodge a further caveat was not granted, then – while it is not yet clear what if any transactions adverse to the barrister’s priority may have already taken place while no caveat was in place – it was possible that further transactions adverse to the priority of his claim to an interest in the land would be registered. There was no evidence at all of any detriment that would be occasioned to the client by the caveat remaining in place. Indeed, if the client wished to refinance, it would be open to her first to seek consent for that purpose, and if consent was not forthcoming, to make application to the Court. The balance of convenience was all one way in favour of the barrister.
The court granted leave upon the barrister giving the usual undertaking as to damages.