Supreme Court allows lodgement of second caveat on same grounds

In a recent decision of the Queensland Supreme Court (Rocky Point Holdings Pty Ltd v TEB Enterprises Pty Ltd [2023] QSC 20), the Court considered a number of issues arising out of a transaction involving call options in respect of land. 

Relevantly, the landowner had given a call option right to an interested party (“the Buyer”).  The parties came into dispute whereupon the Buyer lodged a caveat.

In Queensland, except in very limited circumstances, caveats lapse three months after lodgement.  In order to preserve the continuation of the caveat, proceedings must be commenced within three months of lodgement and the Land Title Office given notice of those proceedings.  In this particular case, proceedings were commenced, however notice was not given to the Registrar of Titles as a result of which, the caveat lapsed on 20 October 2022. 

The first observation (at paragraph 17 of the judgment) was that the Buyer “at least from the time it purported to exercise the option, had an interest in land sufficient to support the caveat”.  This comment relates to the question of whether a call option itself gives rise to an equitable interest in the land which is sufficient to support a caveat, or a “mere equity” in the land which may not be.

In any event, being satisfied that given that the Buyer had given notice of the exercise of the option, it would have an interest capable of supporting a caveat, the Court went onto consider whether it should allow the lodgement of a second caveat.  In that regard, section 129 of the Land Title Act provides that “a further caveat with the same caveator can never be lodged in relation to the interest on the same or substantially the same, grounds as the grounds stated in the original caveat unless the leave of the Court of competent jurisdiction to lodge the further caveat has been granted.

In this matter, ultimately it was the position of the caveator that the failure to notify the Registrar of Titles that proceedings had been commenced was an oversight on the part of their lawyers.  While the Court criticised the evidence in that regard, the Court accepted that there was an error on the part of the lawyers which led to the notification not being given, and that it was satisfied that it had been the intention to maintain the caveat and press for the claim for specific performance of the agreement which arose by the exercise of the option.  As a result, the Court considered it appropriate to give leave for the Buyer to lodge a second caveat claiming the same interest as claimed in the first caveat. 

A further issue was considered by the Court in the course of its assessment of the application and that was the question of whether an unstamped document (ie a document which has not been assessed for the payment of stamp duty) can support a cause of action.  This is something that does arise quite frequently in commercial litigation, but is still surprisingly unclear.  In this case, the Court found that the giving of an undertaking by the Buyer to stamp the call option document (that undertaking being to submit the call option deed to the Commissioner of State Revenue for assessment, and to cause any duty assessed on it to be paid) was sufficient, and in that regard, the Court declined to follow previous comments of the Supreme Court to the effect that giving the undertaking might make the document admissible in the court proceedings, but until it was stamped, it would not be effective to found a cause of action.

The judgment provides very useful guidance in relation to these issues.

For matters concerning caveats, please contact Jessica Murray at jessicam@qbmlaw.com.au Megan Hanneman at meganh@qbmlaw.com.au, or Peter Muller at peterm@qbmlaw.com.au