+61 2 8355 4309  fb new linkedin logo copy




11 November 2020

Caveats may be used to secure an individual’s rights over property where they have a caveatable interest over land. See our other article on Caveats for more information. However, if a caveator wrongfully lodges a caveat they can be held liable for any damage that follows.     

Section 74P of the Real Property Act 1900 provides that where a person:

  1. lodges a caveat,
  2. procures the lapsing of a caveat, or
  3. after being requested to do fails to withdraw a caveat,

without reasonable cause, such a person may be liable for damages.

What is ‘without reasonable cause’?

The Court of Appeal1 has held that to sustain a claim under this provision it must be shown that:

  1. The caveator did not have a caveatable interest,
  2. The caveator did not have an honest belief based on reasonable grounds that a caveatable interest existed,
  3. The caveator lodged the caveat deliberately to infringe the interest of the registered proprietor.

The caveator must have an honest belief that they do have a caveatable interest in the property in order to lodge a valid caveat. Case law demonstrates that in order to hold an honest belief as to their interest over property, caveators are expected to obtain proper advice and be reasonably sure of their grounds for lodging.

In most instances where a caveat has been lodged wrongfully, the removal of the offending caveat is an adequate remedy.However, a caveat lodged in deliberate infringement of the rights of the registered proprietor or interested person may render the caveator liable for the damage caused to the registered proprietor.3

Damages incurred from lodging a wrongful caveat are primarily the financial losses that result. These include legal costs, as well as the costs incurred due to delayed transactions, failed settlements, or interest accrued due to delay.

In Gilles v Salem4the applicant filed a defective caveat which was then lapsed by the respondent. The applicant was ordered to pay the respondent’s costs on an indemnity basis.

The case of Deutsch v Rodkin5   is another good example, in which the Victorian Supreme Court held the caveators were liable to pay damages of $385,000 to the plaintiff. These losses were incurred by the plaintiff due to the maintenance of the caveat, the consequences of which included; the cancellation of an auction, the sale being delayed, causing the owner to default on their mortgages, and the forced sale of the property for $300,000 less than market value.
Simply receiving legal advice will not necessarily preclude a caveator from personal liability. A caveator and the caveator’s legal representation can both be held liable for damage that results from the lodging of a wrongful caveat.6
On the other hand, if a caveat has been wrongfully lodged but the caveator did hold an honest belief based on reasonable grounds as to their interest over the land, their solicitor may instead be liable to compensate the property owners.7

Mersal & Associates specialises in caveats. If you think you may have an interest in land that you wish to protect call us today to arrange an appointment. 

1 Beca Developments Pty Ltd v Idameneo (No 92) (1990) 21 NSWLR 459. 

2 Piroshenko v Grojsman & Ors [2010] VSC 240 (2 June 2010).  

3 Dykstra v Dykstra (1991) 22 NSWLR 556.

4 [2018] NSWSC 506.

5 [2012] VSC 450

6 Pearl Lingerie Australia Pty Ltd v TGY Pty Ltd; Pearl Lingerie Australia Pty Ltd v Giarratana [2012] VSC 451.

7Bedford Properties Pty Ltd v Surgo Pty Ltd [1981] 1 NSWLR 106.