Trustees for the sale of the Land v James [2013] NSWSC 1602

Trustees were appointed for the sale of land owned by a bankrupt and her husband. Caveats were lodged by various creditors, hindering settlement. The caveats all claimed equitable interests based on invoices for works done to the property at the alleged behest of the bankrupt’s husband. The works were not authorised by the trustees. The trustees sued for the interest that would have accrued on the settlement funds had settlement not been delayed by the caveats.

Section 74P of the Real Property Act makes liable any person who “without reasonable cause…lodges a caveat” or “being a caveator refuses or fails to withdraw such caveat after being requested to do so”. The essential task for the court was to ascertain what loss was occasioned to the trustees by the lodging of the caveats.

The court found that the failure of the various caveators, as alleged suppliers of services, to deal with the registered proprietors and the lack of any explanation as to how an “equitable interest” arose out of the invoices relied upon, were all bases to conclude that the caveators had no caveatable interests. Further, the trustees had taken steps to negotiate withdrawals of the caveats or to cause them to lapse.

The court gave the trustees interest for the delay in settlement resulting from the caveats and their legal costs. The court noted that all caveators were jointly and severally liable because it was not possible to separate out their conduct.

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