A caveat in time can prevent a crime
'A recent case conducted by our litigation department demonstrates the importance of keeping a certificate of title in a secure place, and the need to take prompt action when a title is lost or it is feared there may be fraudulent or unauthorised dealings taking place. The registration of a caveat over a certificate of title can be used to give notice to the Registrar of Titles and to innocent third parties not to accept any dealings, and urgent court proceedings can be taken seeking orders against the Registrar of Titles to freeze the title. Quick action is critical to prevent the registration of any dealing on title that could result in valid legal title passing to an innocent third party who has provided valuable consideration.'
Gino Potenza, Partner
Our client
Our client conducts business as a retail and wholesale food
supplier and engaged the services of several professional advisers
to assist it with the refinance of its banking facilities.
Following the completion of one of its transactions, the
certificate of title came into possession of one of its
professional advisers and we were instructed that the title may
have been used without permission for the purpose of raising
funding. The client ran a critical part of its business from the
premises to which the title related.
Their ambition
The client attended our office in the afternoon and after
providing preliminary instructions, it became apparent that urgent
action was required in order to protect the client.
A caveat giving notice to the Registrar of Titles was prepared
immediately by our office and we attended the Titles Office to
ensure registration before 4.00 pm that same day.
Detailed instructions were obtained from the client on the
following day and an urgent application prepared in the Supreme
Court in order to obtain an injunction/orders to freeze the
certificate of title so as to avoid registration of several
mortgage dealings, which had been lodged with the Titles Office but
had not yet been fully registered on title.
The Torrens system of land in Victoria provides for a register
of all titles for land upon which parties can seek to have their
ownership and any interests claimed over land registered. The
register is maintained by the Registrar of Titles.
The Transfer of Land Act 1958 (Vic), specifies that
upon proper registration of an interest in land, that interest is
indefeasible. Consequently, once a transfer of land or a mortgage
becomes registered on a title, the party claiming the interest
acquires immediate indefeasibility - which effectively means that
their interest in the land cannot be challenged, except in the case
of fraud.
The Act provides protection for example to registered mortgagees
so that a bona fide mortgagee is protected from the removal of its
interest unless it was on notice of the fraud at the time of
registration.
Through prompt action, affidavit material was prepared and an
urgent application seeking injunctive relief was brought within 48
hours with a hearing in the Supreme Court, which ordered a freeze
on the title that prevented subsequent mortgage dealings from being
registered over the land belonging to our client.
Enhancing their success
Our client in this case required urgent advice and action in
order to prevent the loss of what constituted one of the critical
assets to conduct its family business.
Without this asset, their business would effectively have
suffered serious consequences because they may not have been able
to payout all of the mortgages that had been improperly
obtained.
The ability to understand the legal issues and the urgency
involved resulted in appropriate orders being obtained from the
Supreme Court, effectively saving one of the client's key business
assets.
Subsequently payment was made by the professional advisor to
discharge the mortgages and our client's title was released
unencumbered.
Behind the headlines
This matter required swift action and the immediate
collaboration of resources from around the firm to ensure our
client's needs were met.