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     Interestingly, the purchaser had actually withdrawn its original caveat, in response to a demand by the vendor.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.

 

Conclusion

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

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