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The Value of a Signature – Can You Protect it By a Caveat?

Property Law

As our readers no doubt are aware, caveats can be lodged on certificates of title as a way of preventing property from being dealt with until a claim on which the caveat is based has been resolved.

Caveats are quite often used (on a short or long term basis) to protect lenders, or where certain rights have been granted over a property, perhaps on a temporary basis, requiring the property owner to deal with the caveator before dealing with the property.  They can also be lodged by government bodies, such as for unpaid rates or land tax.

But in a recent case in the Supreme Court of NSW a party lodged a caveat claiming that his purported copyright in his signature on a mortgage to a bank should be protected by way of a caveat over the property subject to the mortgage. He had defaulted on that mortgage and after numerous litigious manoeuvres and quite some mischief on the part of the mortgagor, he and his camels (!) had been forced from the property which had then been sold by the bank to recover the debt.  As a last ditch measure he then claimed copyright in his signature and that the bank had misused that copyright by ‘securitising’ and on selling that mortgage.

One of his claims was in fact that the Commonwealth, being the owner of all the banks, should be able to set off the debt he owed as he had a right to own his own home as part of being a citizen of the Commonwealth. He thought the value of that right of ownership of his home had a higher value than the right that the bank asserted as mortgagee.

This was an interesting and novel argument, but not one that stood up.  The Court found that the alleged caveatable interest claimed had no merit – it was based on misreadings and misapplications of other unrelated rights conferred by various Commonwealth Statutes.  Although the Court did not say so, it had all the elements of ‘The Castle’.  So, what may be claimed as a caveatable interest entitling someone to put an effective stop on the land owner dealing with land?  Here are some examples:

  • an easement,
  • an agreement for valuable consideration to grant an easement,
  • the interest of a purchaser under an agreement for the sale of the land,
  • the right to the benefit of a restrictive covenant running with the land,
  • an undertaking to execute a mortgage, or an agreement to give a mortgage,
  • the interest of a lessor in a lessee’s covenant not to assign,
  • the interest of a second mortgagee,
  • a claim to an interest in the proceeds of sale of land held by a trustee on a trust for sale,
  • a claim that land was purchased by the land owner from money advanced by the caveator for that purpose,
  • the interest of a beneficiary under a trust, including under a resulting or constructive trust,
  • the interest arising by reason of financial contribution towards the cost of erecting a granny flat or other form of accommodation,
  • a charge created by a building agreement, giving security for payment due under the agreement,
  • the interest of a proprietor of a strata title property in the common property where the caveat is lodged to prevent registration of a change of by-laws, and
  • The interest under a call option to purchase land (depending on the drafting of such option).

There are many more, but the essence of a caveatable interest is that it must be an interest in the underlying land.

If you require any further advice on whether you have a caveatable interest, or the best way to protect a particular interest that you may hold in a property, please contact any member of our property team.