Wang v Fang

This judgment resolves an application for the extension of caveat AU 37XXXX by the plaintiff, Ms Xiabo Wang, for whom Mr M W Young of Senior Counsel appeared. The first defendant, Ms Yunxia Fang and her son, the third defendant, Mr Bei Le Shen were represented by Mr D Pritchard of Senior Counsel.

The contest between the parties was limited to arguments about the adequacy of the form of the caveat and the existence of a serious question to be tried. No submissions were put by Mr Pritchard SC against the proposition that the balance of convenience favoured the extension of the caveat.

For the reasons which follow, the Court has determined that the form of the caveat is irretrievably bad and that the application for its extension will be dismissed. Insofar as Mr Young SC foreshadowed an application for leave under s 74O of the Real Property Act 1900 (NSW) to file a new caveat, the Court has determined not to entertain such an application made from the bar table. If Ms Wang wishes to bring such an application, then it will have to be brought in the ordinary course by a new notice of motion supported by evidence, including the precise form of the proposed new caveat.

The caveat has been lodged over a property of which Mr Shen is the registered proprietor (Lot 4). The caveat is, perhaps unusually, in three parts. Before setting those parts out, it should be borne in mind (as I will develop below) that a caveat must set out the nature of the estate or interest in the land claimed by the caveator, together with the facts on which the claim is founded. Furthermore, the caveat is to be assessed from the point of view of a reader of the caveat who is not necessarily the registered proprietor, and who is not to be expected to undertake inquiries or research outside the four corners of the caveat.

As I have mentioned, the caveat may be considered in three parts. In what might be described as the standard form part of the caveat, the estate or interest claimed is:

While the caveat must be read as a whole, I interpose at this point that a reader of the caveat would, in my respectful opinion, be absolutely none the wiser for how the alleged interest in Lot 4 is said to arise after reading this first part of the caveat. That is for the simple reason that Mr Shen is not listed as a party to the agreement pursuant to which the interest is alleged to arise. That would be enough to raise a large question in the mind of a reader about the validity of the interest claimed.

The section of the caveat I have just quoted invites the reader then to refer to Annexure A. This is to what I refer as the second part of the caveat:

Annexure A is similarly of little or no assistance to the reader. It makes no reference to Mr Shen or how an interest may have arisen in Lot 4. It is especially confusing because its references to "the property" would presumably be read by the reader as referring to Lot 4. If that was right, then it would make little sense at all because any examination of the facts demonstrates that Mr Zhou, whose role I set out below, never had an equitable mortgage or charge over Lot 4 pursuant to the agreement between the persons there referred to (being the agreement identified in the first part of the caveat to which Mr Shen was not a party).

It is then necessary to turn to the third part of the caveat, which is a letter from Ms Wang's solicitors to Land Registry Services in answer to a requisition that was raised about the caveat. By reason of a process which is not explained in the evidence, the registered version of the caveat has come to include the letter, although it is not otherwise referred to or sought to be incorporated in the terms of the caveat. That letter includes (emphasis added):

I immediately point out that while the letter says that the statement of claim is enclosed, the statement of claim does not form part of what has been placed on the register as an attachment to, or otherwise a part of, the caveat.

Before turning to further analysis of what is set out in the letter, it is necessary to provide some context by setting out what Mr Young SC has explained is the case which his client seeks to raise to support the caveat.

That case may be expressed in the following propositions, which I accept are a considerable simplification from the somewhat complex facts that gave rise to the present dispute:

The relevant principles governing an application such as this were set out by Peden J in ATF Group Pty Ltd v Melek [2023] NSWSC 333 in a passage which I gratefully adopt and apply:

Bearing those principles in mind, the Court's conclusion may be expressed in four propositions.

First, I do not accept that the letter, which must be read with the other parts of the caveat, either sets out in an intelligible way to a reader the interest claimed in Lot 4 (as now expounded by Mr Young SC – see [12] above) or the facts relied on for that interest.

Second, reading all three parts of the caveat together would, in my respectful opinion, leave the reader confused as to what was the basis for the alleged interest. I accept Mr Pritchard SC’s submissions that having regard to the necessity to set out both the interest claimed and the facts relied on, the caveat is irredeemably inadequate.

Third, I accept Mr Pritchard SC’s submission that read in its terms, there is no serious question to be tried disclosed by the caveat because paragraph (b) of the letter asserts that Ms Fang lent the net proceeds of sale of the Burwood property to her son for the purposes of acquiring lot 4. Mr Young SC candidly, and entirely properly in my respectful opinion, accepted that if the nature of the arrangement between Ms Fang and her son was a loan, then no resulting trust could arise which could give Ms Fang an interest in Lot 4.

Fourth, I accept Mr Pritchard SC's submission that the Court should express its disapproval of a practice, if it be such, of discursive or argumentative solicitor's letters being included as part of the particulars attached to a caveat. That is not to say that a solicitor's letter could not, in a neutral way, set out clearly both the interest claimed and the facts upon which the caveator relies and be described as an attachment in a caveat.

I should also record, as a deficiency of form in relation to the caveat, that it is quite inappropriate to include a pleading as part of a caveat because pleadings are combinations of assertions of material fact and conclusions of law. In this case, the deficiency is further aggravated by the fact that there is reference to an attached pleading in the letter that has not found its way into the caveat in any event.

Reference was made in the course of argument to my decision in Brose v Slade [2022] NSWSC 1785. However, as will be apparent from [35] in that decision, the explanation of the facts upon which the caveat was based in that case was of the nature that I have described: a precise identification of the interest claimed and the facts relied upon. The far better course is to provide an annexure to the caveat of the kind as has been attempted to be done in this case in Annexure A, but properly setting out the nature of the interest claimed and the facts relied on in a precise and neutral way.

No question of the application of s 74L of the Act arises in this case. This is because the fundamental difficulty with the caveat, quite apart from issues of form, is that it does not disclose a seriously arguable case (see [17] above). This difficulty goes well beyond difficulties with the form of the caveat that can be the subject of the saving provision in s 74L.

Mr Young SC foreshadowed, in the course of his address, that, if the Court was against him in relation to the form of the caveat, it would be possible for his client now to apply under s 74O of the Act for leave to file a new caveat (emphasis added):

The Court will not entertain an application under s 74O at this time for the simple reason that no form of new caveat that is sought to be the subject of such an application was provided to the Court before I reserved, an hour or so ago, to prepare these reasons. Any application under s 74O would require the Court and the opposing party to be apprised of the precise terms of the new caveat which is to be the subject of leave.

Mr Young SC put during the course of argument that his client may not need leave because the interest that would be claimed under the new caveat may not be characterised as the same interest as that asserted in the caveat. However, whether it is or is not the same interest could only be tested by having the precise terms of the new caveat before the Court. For that reason, I had resolved not to entertain any further application under s 74O in the course of this hearing.

However, I should record that when I returned to the bench to deliver these reasons, Mr Young SC informed the Court that he had prepared a form of new caveat which he wished to make the subject of an immediate application under s 74O. That course was opposed by Mr Pritchard SC for reasons which I accept. In short, first, the motion upon which Mr Young SC moved this afternoon did not seek as an alternative leave under s 74O. Second, earlier directions of the Court had given Ms Wang ample opportunity to provide the terms of a new caveat if she had wished to make an alternative application under s 74O that was then to be the subject of submissions exchanged between the parties. The relevant directions were not complied with by Ms Wang. I accept Mr Pritchard SC's submission that he would have taken potentially quite a different forensic course (including filing evidence, which he had elected not to do) had he been on notice that the argument today would extend to an application under s 74O in relation to a fully formulated new caveat.

I am satisfied that it would be procedurally quite unfair to Mr Pritchard SC’s clients to have permitted Mr Young SC to make an application from the bar table in relation to the new caveat which he had prepared during the adjournment. I indicated to Mr Young SC that if Ms Wang wishes to make that application by a fresh notice of motion, Ms Wang was perfectly entitled to do so, and that it would be the subject of case management and hearing in the usual course. If that is done, there may be a question as to whether or not it is in fact the same interest being claimed in any new caveat as that set out in the caveat, but that is not a matter for today.

Today’s hearing only concerned prayer 4 of Ms Wang’s notice of motion, the balance of the motion having been dealt with on earlier occasions.

The orders of the Court are:

The Court will make any procedural directions necessary to progress the substantive proceedings.