Woman lodges caveat, stopping current owner from selling property for $7.4m

On Feb 14, 2023, the former owner of a $4 million property lodged a caveat against a property to stop the current owner from selling the property for $7.4 million.

The current owner still owed her an unpaid balance of $626k.

Instead of paying the balance, the current owner applied to cancel the caveat, claiming it was filed with vexatious intent.

Caveat had 30 days before lapse

The cancellation of the caveat was crucial because she (the current owner) was selling the property for $7.4 million, and the completion date was March 3, 2023. Any successful caveat lodged against the property would block the sale until it lapses.

According to the former owner, she filed the caveat because she suspected the current owner had no intention to pay the balance sum.

There was also the 30-day window for the caveat to stay in effect before it lapsed, unless she succeeded in getting a court order to extend the caveat’s time of operation.

Furthermore, as the current owner and her family were overseas, the former owner feared that proceeds from the sale would move out of the country’s jurisdiction. This concern was made even more pertinent as the current owner’s father, who acted as trustee for the sale, had been declared bankrupt.

So, in essence, there was utmost urgency to both parties’ claims.

Woman transferred property to owner before being fully paid as they were close

If we go farther back, both women entered into an agreement on Oct 12, 2015 for one party to sell the house for $4 million (plus ABSD of $160k) to the other.

As both parties were in a good relationship then, the former owner allowed the property transfer to take place before being fully paid. The current owner was also a minor at the time of sale, so she got her father to act as her trustee.

Woman’s husband was given Power of Attorney to market and sell the property

On a separate (but odd) note, the former owner’s husband was appointed as the current owner’s attorney in 2019.

He was hired to manage all of the current owner’s affairs, including but not limited to the property. He was given the authority to deal with, lease, market and/or sell the property.

However, despite having his power of attorney revoked on Jan 20, 2023, he conducted an arms-length sale of the property, which saw an option-to-purchase being executed on July 8, 2022.

So when the former owner lodged the caveat, her husband also had a claim for interests and costs resulting from his duties for the sale, amounting to about $444k.

However, because of the time sensitivity of the caveat and the threat of it being cancelled by the Registrar of Titles, the former owner filed the claim under her name without her husband.

In her court application, she wanted the caveat to be maintained or her balance sum paid.

Judge ruled caveat to be maintained

In his ruling, the judge ordered that the caveat be maintained for these reasons:

• The caveat was not lodged vexatiously. In other words, the former owner provided satisfactory evidence to show a “caveatable” interest in the property, including proof that the purchase price of $4 million was not fully paid up.
• The current owner did not provide credible rebuttable evidence against the former owner’s caveatable interest. Despite claims that she (and her father) had fully paid the $4 million sum in 2016, the judge found this wasn’t the case as there were still partial payments made in 2018, 2021 and 2022.
• Finally, the current owner also argued that since the agreement was between her father (trustee) and the former owner, she was not entitled to be sued. Instead, she said that the former owner should lodge a proof of debt with the private trustees of her father’s bankruptcy estate. The judge disagreed with this argument, as the current owner was the one who filed for the cancellation of the caveat, and thus, is the right party to be sued, in the context of maintaining the caveat.

Courts decide if you have caveatable interest, not the Land Titles Act (LTA)

In providing his judgement, the judge also shared some very interesting findings:

“s 115(1) of the LTA states that any person who claims an interest in land may lodge a caveat with the Registrar. The reference to “any person” includes the owner of a piece of land. The LTA does not lay down any definition of what amounts to an “interest in land” for the purposes of lodging a caveat. Section 4 merely states that “interest”, in relation to land, “means any interest in land recognised as such by law and includes an estate in land”. Neither does the LTA set out a list of caveatable interests. Thus, the task of determining whether a certain interest is a caveatable one is left mainly to the courts.”

What this means is that the Land Titles Act does not define what “interest in land” mean when it comes to lodging a caveat. So the decision on whether any individual has a caveatable interest in an estate-related dispute lies with the courts.

Final outcome: Did the sale go through in the end?

Having said all that, the judge was also mindful of the pending Option-to-Purchase and the $7.4 million sale of the property.

In his judgement, he ruled that it would be in the interests of all parties for the current owner to complete the sale. Part of the sale proceeds will then be paid to the court and held, with the intention to be repaid as the balance sum to the former owner.

So yes, based on the ruling, the sale would go through.

ALSO READ: Selling your property? Here are 6 key details to check for a smooth sale

This article was first published in 99.co.