The ability to lodge a caveat is a valuable form of security for a lender to possess to protect their interests. However, what is often overlooked is that in order to lodge an effective caveat, a party must have a ‘caveatable interest’.

In Ta Lee Investment Pty Ltd v Antonios [2019] NSWCA 24 (22 February 2019), the NSW Court of Appeal recently confirmed that whilst granting a party a caveatable interest in a contract is a relatively simple thing to do with the right wording, it can also be very easy to get wrong if not careful.

Background facts

In 2011, MV Developments (Lane Cove) Pty Ltd borrowed $1.5 million from Ta Lee Investment Pty Ltd to develop certain land (the Site) into an apartment block. The loan was recorded in a Deed of Loan and Guarantee. An event of default occurred when MV Developments failed to make an interest payment required under the Deed. Clause 7.2 specified the consequences of an event of default to include:

“Lodge and maintain a caveat on the titles to (the Site) or the consolidated title for (the Site) until such time the Lender receives full payment of all moneys payable to the Lender under or pursuant to this Agreement”

In 15 December 2014, the four lots that constituted the site were consolidated into a single title. On 16 April 2015, the single title was subdivided into 56 lots in a strata plan. Ta Lee subsequently lodged a caveat in respect of Lot 34. The interest claimed in caveat was an “[e]quitable charge” by virtue of the following:

“Implied right to charge the land, derived from an express contractual right under clause 7.2 of [the Deed], to lodge and maintain a caveat on title …”

A dispute arose when another party, Mr Antonios, contended that he entered into a contract with MV Developments to purchase Lot 34 on 15 April 2015.

One of the issues on appeal was whether Ta Lee was able to lodge an effective caveat over Lot 34. This question had been decided in the negative by the trial judge, who ordered Ta Lee to withdraw its caveat and the transfer of Lot 34 to Mr Antonios.


Section 74F(1) of the Real Property Act 1900 (NSW) entitles any person who claims to have “a legal or equitable estate or interest in land” to lodge a caveat against the title with the Registrar-General. This is what is meant by a ‘caveatable interest’ (also sometimes referred to as a proprietary interest).

Ta Lee contended that the existing case law established a principle that a contractual right to lodge a caveat carried with it, by implication, the grant of an equitable charge which would support a caveat, unless a contrary intention exists.

This argument was rejected by the Court of Appeal, which held that no such implication should be drawn. Rather, whether a clause in a contract creates a caveatable interest depends upon the proper construction of, or meaning conveyed by, the document taken as a whole (that is, ordinary principles of contractual interpretation apply).

The Court of Appeal went on to uphold the trial judge’s finding that the Deed, on its proper construction, did not give create a caveatable interest in favour of Ta Lee. The primary reason was that there was no reference in the deed to Ta Lee having a secured interest over the property or a charge. As the Court of Appeal stated at [104]:

“there is no reference to “security”, “secured interest”, “charge”, “caveatable interest”, or any other language which would point to Ta Lee having an equitable interest. The Deed was a professionally drafted business document. Had the parties intended for Ta Lee to have a secured interest, the Deed could have said so and it is to be expected that it would have made express provision to that effect.”

Other relevant considerations included that whereas the parties used the language of “secure moneys” when specifying the obligations of the two named guarantors in the Deed, the recitals characterised the relationship between Ta Lee and MV Developments as “simply that of a lender (creditor) and borrower (debtor)”. Further, clause 7.2 conferred a contractual right to lodge a caveat on the Site or the consolidated title for the Site. There was no express contractual right to lodge a caveat over any individual lot in the strata plan following the subdivision, and the strict rules for the implication of a term into a contract were not satisfied (i.e. the implication of a right to lodge a caveat over individual lots was not necessary to give business efficacy to the Deed).

Accordingly, Ta Lee’s appeal was dismissed with costs.


A contractual right to lodge a caveat will not necessarily give rise to a caveatable interest, or right to lodge an effective caveat that will be upheld by a court.

The language of the contract must point to the caveator having “a legal or equitable estate or interest in land”, for example, by giving that party an express right to an equitable charge.

When considering whether a party has a caveatable interest, the proper approach is to consider the terms of the contract as a whole. Thus the drafter(s) need to be careful to ensure that the existence of a caveatable interest is not contradicted by any language or express term found elsewhere in the document.