Various circumstances may require the registrar of titles to be restrained from taking action regarding a dealing in land.

For example, where a caveat is about to expire within the usual 30 days, and a mortgagee caveator seeks to have its mortgage registered prior to another mortgagee so its registered interest has priority.

This occurred in TL Rentals Pty Ltd v Youth on Call Pty Ltd & Ors [2018] VSC 105. In this case, As J Derham restrained registration of a competing equitable mortgage over the title of a property until the matter of priority could be determined at trial.

The parties had competing equitable mortgages. The plaintiff claimed its equitable (and unregistered) mortgage over the property had been created earlier in time and therefore had priority. It lodged a caveat on the title to the land claiming a ‘freehold estate’ and an absolute prohibition on any dealing with the land.

The urgency in the matter arose following receipt of an ‘Urgent Notice to Caveator pursuant to section 90(1) of the TLA’ informing the plaintiff that an inconsistent dealing had been lodged over the property and the plaintiff’s caveat would expire in 30 day’s time.

The inconsistent dealing was a mortgage in favour of a lender (Permanent Custodians Limited, the fourth defendant) securing a loan to the second defendants.

The core issue was the plaintiff’s earlier equitable interest. It sought interlocutory relief to protect its prior equitable mortgage against defeat by the registration of the mortgage to the fourth defendant. The matter could then be determined at trial as soon as possible.

In Tawafi v Weil [2017] VSC 643 the caveator (first defendant) failed to commence a proceeding before the caveat lapsed within 30 days pursuant to s 90(2). The registrar of titles had notified the first defendant that her caveat would lapse, but a proceeding was not issued by the caveator until after the caveat had lapsed. In the proceeding, the caveator sought a declaration that she has an interest in the property, the caveat be maintained, and the registrar of titles be prevented from dealing with the title.

The burden of proof for the maintenance of a caveat rests upon the caveator, and the court takes an analogous approach to that for an injunction. The caveator must establish an arguable (or prima facie) proprietary interest sufficient to support the caveat, and establish on the balance of convenience that the caveat should be maintained until trial of the contested interest.

However pursuant to to s 91(4) of the TLA a lapsed caveat cannot be renewed. Even if it hadn’t lapsed, Digby J was not persuaded of a sufficient prima facie case in relation to the caveator’s asserted proprietary interest. The caveator had put no sworn evidence before the court in support of their position.

Against this, the purchaser of the relevant property (opposing any caveat) required finance for a building project. The financier would not loan funds without a mortgage over the property. The balance of convenience was not in the caveator’s favour, but the purchaser’s.

The caveator was ordered to pay the purchaser’s indemnity costs because of:

the very weak case propounded by the caveator;
failure to explain the caveator’s proprietary interest in any correspondence and the proceeding;
the high-handed conduct of the caveator’s solicitors in rejecting requests for an explanation of the caveatable interest; and
the purchaser’s written warnings that it would seek indemnity costs

Competing equitable interests

The Court in TL Rentals affirmed the principles relating to competing equitable interests: the first equitable interest in time will prevail (qui prior tempore potior jure est), unless the prior equitable interest holder has acted in such a way that it would be unconscionable if his interest were to prevail over the subsequent interest holder (at [20]). The later interest holder must show a change of position and prove detriment as a necessary element of any claim for postponement of the earlier equitable interest.

It is not necessary that the prior interest holder’s claim be documented by an instrument in registrable form. The issue is “which party has the better equity?” The issue is not which document is easier to enforce or which creates the more effective security. This comes down to which equitable interest (usually a mortgage) was created earlier in time.

Allowing the plaintiff’s application for an interlocutory injunction, the court held there was a prima facie case that the plaintiff had an equitable mortgage which would prevail over the fourth defendant’s interest.

Regarding the balance of convenience, the court held at [46]:

“The stronger the case in establishing a serious question, the more readily the balance of convenience might be satisfied. It is sufficient that the plaintiff show a sufficient likelihood of success that in the circumstances justifies the practical effect which the injunction will have on the ability of the registered proprietors… to deal with their respective interests in the Land in accordance with their normal proprietory rights.”

The plaintiffs were ordered to give the usual undertaking as to damages: the party giving the undertaking agrees to pay compensation to any party adversely affected by the order. Failure to offer the usual undertaking will usually be fatal to an application for an interlocutory injunction.

The court ordered that the registrar was restrained for registering any dealing with the land until hearing or further other. An early trial was ordered.

Section 90(2) Transfer of Land Act

Section 90(2) gives the court power to direct the registrar to “…delay registering any dealing with the land for a further period specified in the order, or make such other order (and in either case such order as to costs) as is just.”

The fourth defendant argued that there is no authority to support the grant of an interlocutory injunction where an application was made pursuant to s 90(2). They submitted that it would constitute a ‘radical change’ from the way in which applications for the maintenance or removal of caveats were dealt with to permit such a proceeding to be turned into an application for an interlocutory injunction.

The Court side-stepped the issue about the ambit of s 90(2) and permitted the plaintiff’s amended application seeking interlocutory relief at [34] and [55].

Tips for filing an application

Correspond with the other side as early as possible. Set out the issues and your client’s position in writing.
Seek their consent to proposed orders. Ie, an order pursuant to s 90(2) and an order setting the matter down for early trial.
Put them on notice that if consent is not forthcoming, an application pursuant to s 90(2) will be filed.
Advise that you will rely on your letter/s to seek the costs of and associated with the application in the event that an application is filed.
If an application is required, contact the practice court co-ordinator as soon as possible (usually this may be in the Supreme or County Courts). They will advise of the requirements for filing.
The usual documents required are a Form 5C originating motion, Form 46A summons and affidavit in support, and the usual certifications (Form 4A and 4AB).
It is good advocacy to have an affidavit and submissions from counsel filed and sent through to the judge in advance of any hearing.
Draft orders prepared by counsel, presented at the outset show the judge the outcome you hope to achieve, and give him/her something to work around.