Geneville Constructions Pty Ltd v Odisho-Benjamin

Before the Court is an application for extension of a caveat.

The land which is the subject of the caveat is a residential property at Carlingford. It is owned as to 95% by Sarah Odisho‑Benjamin, the first defendant, and Edmund Benjamin, the second defendant, as joint tenants. It is convenient to refer to them as, "the Benjamins". The remaining 5% is owned by Matthew Edmund Benjamin (presumably a relative of Mr Benjamin's) as a tenant in common. He is the third defendant but has not been involved in the current application.

The property is subject to a mortgage in favour of the Australian and New Zealand Bank Group Limited ("ANZ"). ANZ is the fourth defendant but likewise has not been involved in the current application.

The plaintiff in the proceedings is Geneville Constructions Pty Limited ("Geneville"). Geneville carries on business as a builder. In 2016, the Benjamins contracted Geneville to undertake building work on the property. The contract was based on the Housing Industry Association’s NSW Residential Building Contract for New Dwellings (edition 7). The work involved demolition of the existing house and the construction of a dual occupancy dwelling.

The parties fell into dispute. This resulted in proceedings in the NSW Civil and Administrative Tribunal. A first instance decision was handed down in April 2020. This was followed by an appeal. On appeal to the Appeal Panel of the Tribunal, the Benjamins were ordered to pay Geneville a sum of $137,000 within 28 days. The decision was delivered in May 2021.

Relevantly for the purpose of this application, the building contract contained clause 31:

It is contended for Geneville (and this does not seem to be disputed) that clause 31 gives it an entitlement to a charge over the Carlingford property to secure payment of the amount ordered by the Tribunal. Strictly speaking, the contract defined the "site" as the whole of the Carlingford land. Geneville, however, only claims to be entitled to a charge over the Benjamins' 95% share. No point is taken about this on behalf of the Benjamins, or at least no point has been taken in the current application.

The caveat which is the subject of this application was lodged in August 2021. Following lodgement of the caveat, steps were taken on behalf of Geneville to enforce the Tribunal's judgment by way of writ of levy of property, but this proved unsuccessful. There were also examinations conducted of the Benjamins as judgment debtors. The evidence from the examinations indicated that there was a substantial amount of equity in the property (more than $2 million). Nevertheless, the Benjamins have not yet satisfied the judgment.

Since Geneville's caveat was lodged, another caveat has been lodged by a company named Boutique Capital Pty Limited (“BCPL”). It is the sixth defendant and, as its name suggests, is a financier. The interest claimed in its caveat is a charge pursuant to an agreement (I assume a loan agreement) with the "Registered Proprietor”.

On 27 February 2024, a lapsing notice relating to the caveat was served on Geneville. For some reason, the notice was issued on the application of Ms Odisho‑Benjamin alone.

The present proceedings were commenced ex parte last week, on 6 March. The summons sought, by way of interlocutory relief, an order for extension of the caveat pending the hearing of Geneville's claims for final relief. The application for interlocutory relief has been treated by the parties as an application between Geneville, as applicant, and Ms Odisho‑Benjamin, as respondent. The other parties have not participated in it.

The application came on for hearing in the Duty List before me today. Both Geneville and Ms Odisho‑Benjamin were represented by counsel.

The sole issue raised by counsel for Ms Odisho‑Benjamin in opposition to the application concerned the form of the caveat.

For some reason, the usual PEXA form for caveats, which contains space for the identification of the interest claimed on the first page, has not been used. Instead, the form simply refers to an attachment. The attachment consists of a completed paper caveat form of the old type.

Schedule 1 in the form describes the estate or interest claimed by the caveator as “fee simple”. The space to identify the instrument by virtue of which the estate or interest is claimed has been left blank. The facts by virtue of which the estate or interest is claimed are set out in an attachment. The attachment states:

Counsel for Ms Odisho-Benjamin observed that these facts do not support a claim for an estate in fee simple, which is what appears in schedule 1 as the estate or interest claimed. Counsel contended that the interest claimed was misstated and that Geneville had no arguable case for relief giving effect to that claimed interest.

In response, counsel for Geneville referred to the details set out in the attachment. Counsel submitted that when the caveat was read as a whole, it was clear that what Geneville was really claiming was a charge in accordance with cl 31 of the building contract, not ownership in fee simple. Counsel relied on s 74L of the Real Property Act 1900 (“RPA”), which makes strict compliance with formalities with respect to caveats unnecessary. The section provides:

At a later stage in the argument, counsel suggested that if I considered that, despite his submission, the caveat was bad, I ought to permit it to be amended to reflect the interest really claimed. No such application had been foreshadowed in the prayers for interlocutory relief in the summons. I was concerned that other parties' interests might be affected; in particular, those of BCPL. If the caveat is removed, BCPL will move up the pecking order of priority. I therefore declined to entertain any such application at today's hearing. Whether such an application could be made at a later point before the caveat expires is something I do not need to address in this judgment.

The facts of the present case are similar to the facts of a case decided by Peden J in March last year: ATF Group Pty Ltd v Melek [2023] NSWSC 333. The caveator in that case had the benefit of a security provision contained in a sublease which gave it an entitlement to a mortgage over the relevant interest as security for certain obligations. The caveat described the estate or interest claimed as "estate in fee simple". The claim was said to have arisen by virtue of "agreement dated 01/12/2020", and the details supporting the claim were "mortgage granted pursuant to commercial sublease": see [13].

As in the present case, the argument against the caveator was that the interest claimed was not correctly described. The argument for the caveator was that if the caveat was read as a whole, it was possible to discern that the interest really being claimed was an interest as mortgagee, not an estate in fee simple.

In dealing with these competing contentions, her Honour referred to a number of authorities on the operation of ss 74K and s 74L of the RPA. In particular, she quoted from the judgment of Brereton J in Sutherland v Vale [2008] NSWSC 759 at [12], including the following passage:

Her Honour also referred to two recent decisions concerning misdescriptions in caveats. One was the judgment of Williams J in Comserv (No 210) Pty Ltd v Ristevski [2022] NSWSC 821. The other was the judgment of Kunc J in Brose v Slade [2022] NSWSC 1785. In each case, the interest claimed in the caveat was an estate in fee simple which was said to arise by virtue of a "beneficial interest in trust". In Comserv, the alleged trust was a constructive trust arising by virtue of contributions to the development of the relevant property under a joint venture agreement. In Brose, the alleged trust interest was an entitlement to certain rural properties said to be held under a common intention constructive trust arising out of a deed of family arrangement.

Peden J considered that the facts of the case before her were closer to those in Comserv than those in Brose. She gave three reasons for this (at [42]-[44]):

Her Honour's conclusion (at [45]-[46]) was:

Counsel for Geneville did not invite me to reconsider the reasoning in ATF. He limited himself to a submission that the decision had been correct on the facts but was distinguishable from the present case. In summary, the suggested ground of distinction was that the statement of facts supporting the caveat in the present case contained detail about the security interest claimed and the amount secured which the ATF caveat lacked.

In presenting his submissions, counsel referred me to the Real Property Regulation 2019 which, at Schedule 2, prescribes the particulars to be specified in caveats of the present type. Regulations 1‑3 specify the familiar matters found in schedule 1 of the caveat form. These are:

Regulations 4‑9 specify further information required for caveats claiming different types of interest. Regulation 4 is the relevant one for present purposes:

Regulation 10 provides:

The question in the present case concerns the nature of the interest claimed. The need to specify that interest is clearly stated as a discrete matter in regulation 1, the very first regulation. As Brereton J stated in Sutherland, the proper identification of the estate or interest claimed by the caveator is fundamental in this area of the law. There can be no real dispute that the part of the caveat which sets out Geneville’s claimed interest identifies a completely different interest from that which Geneville actually has.

It is true that the supporting facts stated in Geneville’s caveat contain more detail about the security interest than the ATF caveat did. But, in my view, that is not a relevant difference. The essential features of each caveat were relevantly the same. In each case the supporting facts alleged a security interest but the interest claimed was a completely different interest, namely an estate in fee simple.

I think this underlies Peden J’s reasoning in [42] of her judgment, quoted above. Her Honour was saying that in Brose, there might ultimately have been an entitlement for the transfer of the whole of the estate in fee simple to the caveator, but that on no view could that have been the case in the circumstances before her (or those in Comserv).

In my view, this conclusion is reinforced by the structure of schedule 2, which provides for the identification firstly, of the interest claimed, and then, separately and consequentially, the circumstances or instruments by virtue of which it is claimed. It is somewhat ironical that counsel for Geneville relied upon the supporting facts containing all of the details required by regulation 4 for a caveat lodged by a chargee. The claimed interest of an estate in fee simple does not require the particulars identified in regulation 4 at all.

I consider that the ATF decision is not truly distinguishable. I would therefore be obliged as a matter of comity (and this was effectively accepted by counsel) to follow it, even if I did not think (as I respectfully do) that it is clearly correct.

For these reasons, the application for extension of the caveat fails and must be dismissed. I will hear counsel on costs.

The orders of the Court on the application for interlocutory relief are: