Tuesday, 6 October 2020

How far above ground level can an owner of land enforce their rights of ownership?

In Janney v Steller Works Pty Ltd [2017] VSC 363, (2017) 53 VR 677, Justice Riordan of the Supreme Court of Victoria was asked to consider the extent of a landowner's right to possession of the airspace over their land, and their ability to control entry onto their land. 

The circumstances of the case were that the neighbour was proposing to interfere with the landowner's right of possession by incursion into airspace over that land through the operation of a construction crane sailing over the land at times during a proposed 11 month construction period. The proposed construction was of a four-storey building comprising 27 dwellings above a basement car park on neighbouring properties at Foam Street and Ormond Road, Elwood ("the Construction Site"). 

The developer served a notice purporting to protect works on the Construction Site, which included the use of the crane during the construction. 

In fact, the relevant Building Regulations did not apply to the proposed crane; in any event, the landowners objected to the proposed notice, stating among other things that: "We are very concerned about the safety of our family if/when the crane boom is over our property."

The landowner and the developer engaged in extensive correspondence prior to the court proceedings. The landowner noted that they owned the airspace above their property and that the proposed crane use would be a trespass. They sought compensation to allow them to relocate to a similar property in Elwood for the duration of construction, or alternatively that construction proceed without a crane. The developer rejected this proposal. 

The landowner applied for an injunction to restrain the developer from engaging in the threatened incursion. 

At paragraph 28 of his judgment, Riordan J noted:
The fact that the plaintiffs’ rights as the owner of land extends into airspace is trite. On one view, the owner’s rights extend to protecting not only the land but the sky space above the land stretching the limits of the atmosphere and the soil beneath the surface down to the centre of the earth (The Latin maxim: cujus est solum, equs est usque ad coelom et ad inferos. See Bernstein v Skyviews & General Ltd [1978] 1 QB 479, 485). The issue of whether such rights are limited to the prevention of incursions that ‘[interfere] with that part of the airspace above [the] land which is requisite for the proper use and enjoyment of that land’ (Graham v K D Morris & Sons Pty Ltd [1974] Qd R 1, 4) (such that, for example, claims in trespass cannot prevent aircraft flying over property), has been said to await a definitive ruling from the High Court (Anthony P Moore, Scott Grattan, Lynden Griggs, Bradbrook, MacCallum and Moore’s Australian Real Property Law (Thomson Reuters, 6th ed, 2016) 812 [16.140]).

Despite noting the absence of High Court authority, Justice Riordan concluded that even applying the more restricted view, the incursions of the crane, while in weathervaning mode, constituted an actionable trespass. 

He set out his reasons at paragraph 30. 

He noted that the case of Graham v K D Morris & Sons Pty Ltd [1974] Qd R 1 was a similar fact situation. The judge concluded in that case that the invasion of the plaintiff’s airspace by the projection of the crane jib was a trespass and the overhanging crane interfered with that part of the airspace above the land which is requisite for the proper use and enjoyment of that land. The judge in that case also noted that any hardship which the defendant will suffer [as a result of the injunction] has been brought about by its own negligence and its cavalier and high-handed attitude.

In Anchor Brewhouse Developments Ltd v Berkley House (Docklands Developments) Pty Ltd [1987] 2 EGLR 173, Scott J granted a permanent injunction to restrain a tower crane from weathervaning over the plaintiffs' land. 

Scott J rejected the defendant’s argument that there was no trespass and said:

      What is complained of in the present case is infringement of air space by a structure positioned upon a neighbour’s land. The defendant has erected tower cranes on its land. Attached to each tower crane is a boom which swings over the plaintiffs’ land. The booms invade the air space over the plaintiffs’ land. Each boom is part of the structure on the defendant’s land. The tort of trespass represents an interference with possession or with the right to possession. A landowner is entitled, as an attribute of his ownership of the land, to place structures on his land and thereby to reduce into actual possession the air space above his land. If an adjoining owner places a structure on his (the adjoining owner’s) land that overhangs his neighbour’s land, he thereby takes into his possession air space to which his neighbour is entitled. That, in my judgment, is trespass. It does not depend upon any balancing of rights.

    • He also noted that:

    • It is not, in my view, accurate to say that no harm is being done to the plaintiffs by the trespassing cranes. 

In London & Manchester Assurance Co Ltd v O & H Construction Ltd (1989) 2 EGLR 185Harman J also considered a swinging crane, in that case over the Albion Wharf on the Thames. His Honour said:
      It is, in my view, beyond any possible question on the authorities and the law that a party is not entitled to swing his crane over neighbouring land without the consent of the neighbouring owner.

At paragraph 32, Riordan J noted that by legislative amendments, New South Wales, the Northern Territory, Queensland and Tasmania have provided for the statutory imposition of an easement by the courts to promote land development. That has not happened in Victoria.
The Honourable Justice Riordan concluded at paragraph 33 that:
Even without the authorities, I would conclude that the weathervaning was neither a trifling nor de minimus interruption of the plaintiffs’ rights. The evidence established that the plaintiffs live on the property with their two children. This is not a case ... where the property is used purely for commercial purposes. Collapses of cranes are not unknown. I accept the plaintiffs’ evidence that the plaintiffs and their children may be well justified on leaving their home if very strong winds were forecast ... Owners of property should not have to live with the fear that at any time the boom of a crane may be above their home and the risk (however small) that it may crash down on their family.
He also concluded (at paragraph 34) that:
Neither in money terms is the encroachment insignificant. As Lord Selbourne pointed out in Goodson v Richardson, an interest in land may have ‘precisely the value which that power of veto upon its use creates’.
At paragraph 35, he concluded that:
An encroachment into airspace raises a strong prima facie entitlement to an injunction. He referred to the decision of AL Smith LJ in Shelfer v City of London Electric Lighting Co, to the following effect: 
Many judges have stated, and I emphatically agree with them, that a person by committing a wrongful act … is not thereby entitled to ask the Court to sanction his doing so by purchasing his neighbour’s rights, by assessing damages in that behalf, leaving his neighbour with the nuisance, or his lights dimmed, as the case may be. 
In such cases the well-known rule is not to accede to the application, but to grant the injunction sought, for the plaintiff’s legal right has been invaded, and he is prima facie entitled to an injunction. 
In the result, Riordan J granted the injunction restraining the developer from allowing the tower crane to swing onto the plaintiff's land. 

As the recent construction boom in Victoria has continued despite the impact of COVID-19, it seems likely that cavalier builders who wish to use construction cranes without considering the effect on neighbours may have to face the possibility that they will be restrained from those actions. 
The take away from these decisions is that builders and developers who propose to construct with the assistance of a tower crane will need to ensure that they obtain their neighbours' permission for any intrusions over the neighbours' air space, prior to the commencement of construction.  

WG Stark 
Hayden Starke Chambers

Thursday, 24 September 2020

Can a gift of land during the donor's lifetime defeat a claim against his or her estate after death? - follow up

Further to my post of 22 September 2020 (see: https://melbournepropertylaw.blogspot.com/2016/01/can-gift-of-land-during-donors-lifetime.html), Teri Konstantinou has written an article about a recent NSW Court of Appeal decision (Mentink v Olsen - [2020] NSWCA 182) in which the trial judge set aside a gift by a dying mother to her daughter. See https://www.linkedin.com/pulse/mentink-v-olsen-2020-nswca-182-elefteria-teri-konstantinou/?trackingId=ZhuaYDE6QPOJRPO5pBsdNw%3D%3D

The background was that the mother was terminally ill, aged 75 years, and she was survived by her husband and daughter of a previous marriage. 

In the course of the deceased's life time, she gifted the sum of $2.2m to her daughter in. The widower sued his step daughter alleging that she procured this money from her mother by placing undue pressure and influence on the deceased and by contriving her mother's change of mind to gift that money to her. In so doing, the widower argued further that his step daughter had taken advantage of her mother's vulnerability in unconscionable circumstances.

The Trial judge agreed; so did the Court of Appeal. 

The Court of Appeal found that the real issue was that the daughter could not be satisfied that her mother was capable of making the decision to gift this money to her without any accounting or legal advice. That advice was critical to ensure that the deceased understood whether or not it was her money to gift at all. It followed that the daughter could not be satisfied that her mother gave due and proper consideration to the question whether it was in her best interests to make the gift to her daughter.


As I noted in the previous post, it will most likely be necessary, for a gift to be effective, to have a medical report confirming that the gift maker is of sound mind, as well as to document the reasons for the gift. 

It would also be useful to have the gift receiver not involved in the transaction. Instead, the gift should be documented by an independent lawyer, who is acquainted with the gift giver, or who at least meets with the giver and satisfies themselves about the circumstances of the gift, and the fact that the gift giver is not being unduly influenced by the donee, and provides the giver with legal advice about the legal effect of the gift. 

Finally, it now appears that it would also be useful to have the gift giver obtain independent financial and accounting advice, as well as legal advice, prior to entering into the transaction, if it is to be saved from attack after the gift giver dies. 

WG Stark 

Hayden Starke Chambers

Tuesday, 22 September 2020

Can a gift of land during the donor's lifetime defeat a claim against his or her estate after death?

In the case of Daunt v Daunt [2013] VSC 706, the plaintiff and the defendant were twin brothers and sons of the deceased.

While he was alive, the deceased and his wife (the twins' mother) gifted real property to one son as a joint tenant with the deceased, by executing a transfer in the appropriate form. The consideration for the transfer was described as “I desire to make a gift”. 

Upon the death of the father, the title vested solely in that son by survivorship.  This meant that the property did not form part of the deceased’s estate, and could not be subject to a Part IV claim.  The surviving proprietor lived at the Wandong property at the time of the proceeding. 

The plaintiff made a claim against the estate in the Supreme Court of Victoria alleging (amongst other things) that the defendant had unduly influenced their father.

Associate Justice Daly found that the brother lacked standing to make a claim.  This was due to the fact that the plaintiff was merely a disappointed beneficiary under his living mother’s estate.  Consequently, the only person who could make such a claim was their mother. 

The Court of Appeal (Redlich, Santamaria and Kyrou JJA) dismissed the disappointed brother's appeal (see Daunt v Daunt [2015] VSCA 58). 

Daly As J went on further, however, to make comments as to how she would have decided the case had the plaintiff in fact had standing. 

Her Honour concluded that there was no undue influence in this case as the transfer had been a voluntary gift where the transferor had fully understood the consequences of the transfer.

The case came about because the plaintiff lodged a caveat over the title to a property at Junction Road, Heathcote Junction (“Wandong property”). 

The defendant (as surviving registered proprietor) applied to remove the caveat on the basis that the plaintiff did not have the interest in the Wandong property that he claimed. The plaintiff issued the proceedings to justify the caveat.  

At paragraph 40, Her Honour noted that the question of the standing of an actual or potential claimant under Part IV of the Administration and Probate Act 1958 (Vic) has been the matter of some debate, and that debate had yet to be resolved. 

 In Mataska v Browne [2013] VSC 62, McMillan J approved of the view adopted by the Full Court of the Supreme Court of Queensland in Hogarth v Johnson (1987) 2 Qd R 383. While McMillan J stated [at paragraph 53] that: 
A contingent Part IV interest, without more, is insufficient to support standing. 
she found in an application by a child of the deceased to remove the executor of the deceased’s estate in circumstances where the executor was the sole beneficiary of the deceased’s estate, but also the recipient of a gift of the bulk of the assets of the deceased shortly prior to her death, a potential claimant under Part IV of the Act had sufficient standing to make the application for the removal of the executor, and the appointment of another executor for the purpose of investigating the circumstances in which the gift was made.

Daly As J also noted at paragraph 45 that:
... regardless of the standing of the plaintiff, now is the opportune time to determine, on the basis of the evidence before the Court, whether the Transfer of Land ought to be set aside on the basis that the Transfer of Land was procured by the defendant’s breach of fiduciary duty, exertion of undue influence, or unconscionable conduct. The plaintiff and the defendant have filed and served extensive written evidence ...
Continuing on with that analysis, she found at paragraph 47  that there was no factual basis for alleging that the defendant breached his fiduciary duty as power of attorney for his parents by procuring the Transfer of Land: the Transfer of Land predated the defendant’s appointment as an attorney for each of his parents. She also noted that there is no overarching doctrine at law that an adult child otherwise owes a fiduciary duty to his or her parents. 

In her analysis of whether the defendant procured the Transfer of Land by exerting undue influence, Daly As J adopted the principles articulated in Christodoulou v Christodoulou [2009] VSC 583 at [70], where Kaye J stated as follows:
The basic principles relating to the concept of undue influence are uncontroversial. In equity, a transaction, whereby a donor transfers property to a donee (or recipient), is voidable, if it is shown to be the result of undue influence exercised by the recipient over the mind of the donor. There are two categories of cases of undue influence. The first category of cases arises where it has been positively proven that the transaction in question was produced by actual influence exercised by the recipient over the donor. ... The second category of case is where there has been shown to be an antecedent relationship between the donor and the donee, which is such as to raise a presumption that the donee has relevant influence over the donor. In such a case, the court will set aside a voluntary gift, unless it is proven by the donee that the gift was a spontaneous act of the donor in exercise of an independent and informed will. In this category of case, the law has recognised particular relationships which automatically raise a presumption of influence, including the relationship of doctor and patient, solicitor and client, guardian and ward, and parent and child (where the gift is by the child to the parent). However, the classes of relationships, in which the presumption arises, are not fixed and inflexible. In essence, where there is found to be an antecedent relationship between the parties, which gives the recipient of the gift “authority or influence over the donor from the absence of which it is proper that he [or she] should be protected”, the law will presume that any gift by the donor to the donee was the result of undue influence exercised by the latter.
In this case, the plaintiff alleged that the Transfer of Land was procured by the reason of actual undue influence on the part of the defendant. However, Her Honour concluded that the case fell squarely in the second category of cases: that is, by reason of the facts and circumstances of the relationship between the defendant and his parents, there was an antecedent relationship between the defendant and his parents such as to raise a presumption of undue influence which must be rebutted by the defendant in order to avoid the gift to him effected by the Transfer of Land being set aside.

The antecedent relationship did not arise merely by the defendant being the adult child of Mrs Daunt and Mr Daunt senior. However, it was apparent to Her Honour that, at least in the period after the Black Saturday fires and his parents’ movement into institutional care, his parents had become increasingly dependent upon the defendant’s day to day assistance.

At the time that the Transfer of Land was executed, the parents were becoming increasingly anxious about the potential impact of their ongoing ownership of the Wandong property upon their financial security. It had become clear to them that neither the plaintiff nor the parties' sister were either willing or able to provide them with material and/or practical assistance, despite the defendant’s entreaties in his letters to them, and indeed, their lack of assistance was a major source of disgruntlement to Mrs Daunt in particular. 

Her Honour then noted (at paragraph 55) that the finding that there was sufficient evidence to raise the presumption of undue inference was not intended as a criticism of the defendant or his conduct and motivations in assisting his parents. It was simply a recognition of their potential vulnerability to manipulation of them by him, such that it was necessary for him to demonstrate that the Transfer of Land was executed by his parents freely and willingly. 

Daly As J concluded that the onus rested with the defendant to establish that the execution of the Transfer of Land was “a spontaneous act in exercise of an independent and informed will” on the part of Mrs Daunt. 

At paragraph 57 Her Honour concluded that the defendant had discharged that onus. It was apparent from the evidence of Mrs Daunt that she voluntarily gifted her share of the Wandong property to the defendant, with a full understanding of the consequences of the transaction, and a rational basis for embarking upon the transaction. There was, accordingly, no basis for setting aside the transaction on the basis of any undue influence exercised by the defendant. 

Similarly, Her Honour was unable to find any basis for setting aside the Transfer of Land on the grounds of unconscionable conduct on the part of the defendant. 

Her Honour then noted that in order to establish unconscionable conduct on the part of the defendant, the onus was on the plaintiff who had to establish that:
(a) his parents, and in particular, Mrs Daunt, were under a relevant special disability or disadvantage, which seriously affected their (her) ability to make a judgment as to their (her) own best interests; and
(b) the defendant knew, or ought to have known of that special disability and/or disadvantage, and that special disability or disadvantage affected his parents’, and in particular, his mother’s ability to make an appropriate judgment as to whether the transaction was in their (her) best interests.
At paragraph 61, Daly As J found that the plaintiff’s claim with respect to unconscionable conduct fell at the first hurdle: that is, Mrs Daunt was under no special disadvantage when she made the gift of her share of the Wandong property to the defendant. 

Her Honour went on to conclude that the question of whether Mr Daunt senior was under a special disadvantage or disability was peripheral to the real issue in the proceeding, as Mr Daunt senior suffered no material financial disadvantage by reason of the execution of the Transfer of Land. 

In determining the question as to whether the transaction was fair and reasonable in all of the circumstances, Daly As J concluded, having regard to all of the circumstances, the transfer by Mrs Daunt of her interest in the Wandong property to the defendant was fair and reasonable. 

It was apparent from the evidence that Mr Daunt senior and Mrs Daunt were keen to find some mechanism for maintaining Mrs Daunt’s access to the Wandong property while maximising their ability to receive financial assistance from the Commonwealth Government, and it appeared that objective had been achieved by reason of the Transfer of Land. 

These findings support the use of lifetime (inter vivos) gifts as an effective estate planning tool in some circumstances. 

It will most likely be necessary, for it to be effective, to have a medical report confirming that the gift maker is of sound mind, as well as to document the reasons for the gift. 

It would also be useful to have the gift receiver not involved in the transaction. Instead, the gift should be documented by an independent lawyer, who is acquainted with the gift giver, or who at least meets with the giver and satisfies themselves about the circumstances of the gift, and the fact that the gift giver is not being unduly influenced by the donee. 

WG Stark 
Hayden Starke Chambers

Monday, 7 September 2020

How does the Supreme Court determine whether modification of a restrictive covenant would substantially injure those entitled to the benefit of the covenant?

1.     In Foudoulis v O’Donnell [2020] VSC 248, the Supreme Court (Mukhtar As J) considered the approach to be taken by the Court in assessing whether a proposal to modify a restrictive covenant would substantially injure the persons entitled to the benefit of the covenant.


2.     The plaintiff was the registered proprietor of a block of land in Wilson Boulevard, Reservoir, Victoria. The land in question (along with many others subdivided at the same time, in the early 1920’s) was burdened with a single dwelling covenant, meaning that each property in the neighbourhood could only have one dwelling on it. Eventually around 3000 lots had the benefit of that covenant.


3.     As property lawyers will understand, the burden and the benefit of the covenant runs with the land so that the covenant remains equally enforceable in property law by and against successors in title. The plaintiff was bound by the covenant.


4.     The plaintiff proposed to retain the existing dwelling on his property and to construct two new semi-detached, 2-storey dwellings behind the existing house in the current back yard, and 3 new garages.


5.     The proposal would not be the first instance in the area of multi dwellings on a single Lot. But it would be the first instance of its kind: two double storey dwellings constructed behind a single dwelling on an ‘ordinary’ house block.


6.     The proposed development would obviously contravene the covenant. To overcome the restriction, the plaintiff applied to the Supreme Court under s 84(1) of the Property Law Act to have the covenant modified so that it reads ‘not more than three dwelling houses shall be erected’.


7.     Associate Justice Mukhtar noted (at paragraph 12 of the judgment):

An application for covenant modification is a lawsuit. The onus of proof is on an applicant to make out on the evidence a statutory ground for modification of a covenant.


8.     The plaintiff’s case was that the proposed of the Covenant would not

substantially injure the persons entitled to its benefit, having regard to the

expert evidence of the benefits originally intended to be conferred and in fact conferred by the Covenant and the benefits that will remain if the Court grants this application.


9.     In effect, the plaintiff’s case was that modifying the covenant to allow three dwellings on the plaintiff’s land would not substantially injure the beneficiaries of the covenant because the modification would be just another example of multi dwellings on land or an alteration of housing density that has already occurred in the neighbourhood, and therefore there would be no harm in allowing the modification as sought here.


10.  The main objectors prepared an extensive, meticulous and dispassionate research paper all based on proper sources in support of their objection which responded directly to the facts and the opinion in the expert’s expert report. They methodically engaged with his report on the facts concerning the re-subdivisions and developments within the neighbourhood ― street by street and Lot by Lot ― to contend that on a refined analysis the changes that have occurred have not been of a degree to make for a conclusion that the predominant single dwelling character of the neighbourhood had been eroded.


11.  The central contention is that whatever the changes to date, the Court should uphold the utility and purpose of a single dwelling covenant and not let the changes in the neighbourhood go any further lest the predominantly single dwelling character of their neighbourhood does become spoiled or ruined by more of these applications, which they apprehend is bound to happen. This is known as the ‘thin end of the wedge’ or precedential effect of a modification, a phenomenon which legal authorities accept as being ‘substantial injury’ for the purposes of s 84(1)(c) especially in neighbourhoods with a cohesive network of single dwelling covenants.


12.  The plaintiff contended that there have been many instances (involving at least 40 lots) of resubdivisions of a single Lot into 2 or more Lots, and instances of multi-unit developments (some two storey) on single Lots in Wilson Boulevard. That meant, he contended, that the benefit of lower density living had been eroded to the degree that the presence of two dwellings at the back of the plaintiff’s land did not truly inflict substantial injury.


13.  At paragraph 45 of the judgment, Mukhtar AS J found:

I do not accept that the neighbourhood has experienced change since 1922 to an extent that has eroded the benefits of a single dwelling covenant. The plaintiff has not discharged his onus of showing that the proposed modification will not cause substantial injury to the beneficiaries. Therefore the application will be refused.


14.  His honour summarised his findings in the nine paragraphs that followed.


15.  One of the objectors’ main contentions was that a re-subdivision of a large piece of land into two or more housing Lots of at least 500m2 and each of which is restricted to a single dwelling, does not therefore make for a change to the character of the neighbourhood or an erosion of the benefits of the covenant burdening the plaintiff’s land.


16.  His Honour noted that in Stanhill (2005) 12 VR 224, Morris J had concluded in an application to vary (at paragraph 17):


… it is sufficient [in an application under section 84(1)(c)] to show that the proposed discharge or modification will not cause harm to the persons entitled to the benefit of the restriction which could be regarded as being of real significance or importance. This will require a judgment call in the particular circumstances being considered; it does not admit of some universal answer based upon the attitude of the beneficiary, the original purpose of the covenant or any other similar factor.


17.  His Honour then noted that more recent authorities in the Supreme Court had not adopted or endorsed the approach of Stanhill and prefer to apply the ‘longstanding principles’ about s 84 that preceded it.


18.  Mukhtar AS J chose not to enter into debate about that point of law. Instead, he found at paragraph 92:

In this case, I think the submission is academic because I take the view that the plans and elevations as put forward by the plaintiff in evidence from which to judge the application show substantial change to the build form and density of the plaintiff’s land, and, there will be no relief to the mass of the proposed build form when seen from the gardens of beneficiaries. In my view that will constitute substantial injury.



19.  The objectors did a substantial amount of work to analyse the expert evidence and show that, in fact, the character of the neighbourhood in the area of the application was still vastly a single dwelling neighbourhood, and that any variation to the single dwelling covenant as proposed would cause substantial injury.


WG Stark

Hayden Starke Chambers 

Monday, 31 August 2020

When will I be able to appeal successfully from the dismissal of application to remove caveat under section 90(3) of the Transfer of Land Act?

1.     The Court of Appeal (Beach, Kyrou and Kaye JJA), considered whether the Trial Judge erred in dismissing an application to remove a caveat under section 90(3) of the TL Act (see Chan and anor v Liu and anor [2020] VSCA 28).


2.     The appeal did not of itself make any alteration to the existing law relating to the removal of caveats. In particular, the Court of Appeal approved of and followed the decision in Piroshenko v Grojsman (2010) 27 VR 489.


3.     In Chan, the substance of the dispute related to whether the respondent purchaser had failed to settle the purchase on time, or whether an extension of time to settle had been granted.


4.     Interestingly, the purchaser had actually withdrawn its original caveat, in response to a demand by the vendor. It then lodged a subsequent to caveat (ostensibly in breach of section 91(4) of the TL Act). For reasons that are not clear from the Court of Appeal’s judgement, the trial judge did not consider that s 91(4) of the TL Act had the effect of prohibiting the respondent from lodging the [subsequent] caveat.


5.     The trial judge found that on the facts, there was a serious issue to be tried as to whether the purchaser had a caveatable interest in the property, and that the balance of convenience favoured the retention of the caveat.


6.     The power of the court, under section 90(3) of the TL Act, to remove a caveat is discretionary. Accordingly, in order to succeed on the application for leave to appeal, the applicants had to establish material error by the judge in the exercise of that discretion.


7.     Counsel for the applicant raised grounds that were not relied on at the hearing before the trial judge.


8.     The Court of Appeal noted (at paragraph 47) that:

Ordinarily, a party may not be permitted to raise a point, or rely on an argument on appeal, that was not put before the court that determined the matter at first instance.


9.     However, at paragraph 49, they noted:

That principle has been applied with less stringency in cases in which the decision, that is the subject of appeal, was by way of summary or interlocutory judgment.


10.  The Justices of Appeal then noted (at paragraph 50):

In the present case, the decision, concerning the removal of the caveat, had the potential effect of substantially affecting the rights of the respective parties. If the judge had ordered that the caveat be removed, such a decision would, in a practical sense, have rendered nugatory any right of the respondent to insist on specific performance of the contract of sale. Alternatively, the decision by the judge, not to order removal of the caveat, has had the practical effect that the applicants are, and will remain, in default of the contract to re-sell the property until the trial of this proceeding. In that way, the decision of the primary judge had the potential to substantially adversely affect the rights of the applicants under that contract.


11.  In determining whether to allow further arguments to be put to the Court of Appeal, which were not put to the trial judge, they decided:

… bearing in mind the substantive effect of the decision made by the judge on the rights of the applicants, and the circumstance that, if the points made … had been contended before the judge no further evidence would have been adduced, we consider that it is appropriate to permit counsel for the applicants to rely on those propositions.


12.  The Court of Appeal agreed that the primary submission, made by the applicants, was that, by his conduct the respondent elected not to rely on his rights to specific performance of the contract of sale, but, rather, to confine those rights to a claim for damages for the alleged repudiation of the contract by the applicants.


13.  In reply, Counsel for the respondent submitted that the Court of Appeal should not determine whether the respondent's conduct constituted an election by him between inconsistent competing rights under the contract. Counsel contended that the Court should do no more than acknowledge that the question, whether there was an election (or estoppel) affecting the rights of the respondent, under the contract of sale, is an arguable issue, but that proposition did not preclude or affect the conclusion that the respondent had established that there was a serious issue to be tried that he had a caveatable interest in the property.


14.  In the circumstances, the Court of Appeal did not consider it appropriate or necessary to determine conclusively whether, on the evidence, there was a binding election by the respondent which would preclude him from seeking specific performance of the contract of sale. However, they noted that they were well satisfied that there were strong grounds for concluding that such an election was made by the respondent as contended for on behalf of the applicants.


15.  The Court of Appeal agreed that there was a serious issue to be tried as to whether he had a caveatable interest in the property. However, based upon the assessment referred to in the previous paragraph, the Court of Appeal concluded that the balance of convenience in the case clearly favoured the removal of the caveat. They noted that the applicants had entered into a contract to sell the property to a third party after purporting to rescind the contract with the respondent, and after the respondent had previously withdrawn his caveat.  


16.  It was the matters that were not argued before the trial judge, but were argued before the Court of Appeal, that tipped the balance of convenience in favour of the removal of the caveat.



17.  The appeal in this proceeding succeeded on the basis of arguments that were not raised before the trial judge. That in itself makes this appeal, and its success, unusual.


18.  Apart from that, the appeal itself does not raise any new issues of law.  

WG Stark 

Hayden Starke Chambers