In Victoria, there are two main ways that the owner of a property can seek to remove a caveat from title. Below, we address the pros and cons of each of these methods.
Application to the Registrar of Titles
The first way to get a caveat removed is to apply to the Registrar of Titles in writing (in the approved form). You will also require a supporting certificate signed by an Australian Legal Practitioner practising in Victoria referring to the caveat and stating his/her opinion that, as regards the land, the caveator does not have the estate or interest claimed by him/her.
Upon receiving any such application and certificate, and being satisfied that the applicant has an interest in the land, the Registrar must give notice to the caveator that the caveat will lapse on a day specified in the notice (not less than 30 days), unless in the meantime either:
- The applicant abandons his or her application by providing the Registrar with written notice; or
- The applicant gives the Registrar written notice that court proceedings are on foot to substantiate the caveator’s claim.
If the caveator does not commence a proceeding to substantiate its claim, the caveat lapses and the Registrar will make all necessary amendments in the register.
If the caveator does commence a proceeding but the court does not accept its claim or the proceeding is otherwise discontinued, withdrawn or struck out — the caveat will also lapse.
Application to the Supreme Court of Victoria for Removal of Caveat
Any person who is adversely affected by a caveat may bring proceedings in the Victorian Supreme Court against the caveator for the removal of the caveat. In such a proceeding, it is the caveator who bears the burden of proof as to the caveat’s validity, and who must satisfy the Court that the balance of convenience justifies the continuation of the caveat.
The Victorian Court of Appeal has defined ‘the balance of convenience’ as being the course which appears to carry the lower risk of injustice if it should turn out to be ‘wrong’. The court will only permit a caveat to remain on the title on the basis that a proceeding is being (or will shortly be) brought to prove the caveator’s claim. That case may be determined either in favour of or against the caveator.
If a caveat is left on the title, it can potentially delay property settlement for the sale of land. The court may then require the caveator to provide an undertaking to pay compensation to any affected person (whether or not a party to the settlement) by the operation of the order to maintain the caveat.
What are the Pros and Cons of Either Option?
An application to the Registrar of Titles is more cost-effective than a court application. However, an application to the court has the potential to be quicker, as urgent applications can be listed and heard within a short time period. Additionally, even if unsuccessful, a court application can result in orders being made for the caveator to commence a substantive proceeding within a period of time and for expedited timetabling orders to follow. This may end up being more efficient than allowing a caveator to commence its own proceeding which is unlikely to follow an accelerated timetable without a further application to the court.
It goes without saying that each matter requires consideration of its own facts and circumstances prior to determining which path is best. If you have any questions, let our commercial lawyers know on 1300 544 755.