A sole registered proprietor had two caveats lodged against his property, which had been sold and was due to settle. The registered proprietor sought the removal of the caveats under section 90(3) of the Transfer of Land Act 1958. The caveators claimed that they had a caveatable interest on the basis of an implied, resulting or constructive trust over the property on the basis of a joint venture agreement.
The court said that the joint venture agreement did not appear to be binding because it was an agreement subject to contract. But even if it were binding, it contained no provision conferring any interest in the property and no basis for a caveatable interest.
The court awarded indemnity costs because the caveators should have known that they had no chance of success if they had been properly advised and the improperly lodged caveat was used as a bargaining chip.
The court went further and made the solicitors for the caveators personally liable for the these costs because the solicitors failed to properly investigate whether the caveators had adequate grounds to lodge the caveat, which they did not, had the underlying documents been reviewed by a competent solicitor.
Further, it should have become apparent when affidavits were prepared that there was no basis for defending the caveats. The court found that the conduct of the solicitors in lodging the caveats and defending the caveats without any consideration of the underlying documents to be serious misconduct and a serious dereliction of duty and referred the solicitors to the Legal Services Commissioner.