Written by The recent case of Garawin Pty Ltd v 1A Eden Pty Ltd [2022] NSWSC 333 considered whether caveats could be removed from properties under s 74MA(2) of the Real Property Act 1900 (NSW).
The parties to the proceedings were three co-ventures in a property development which re-purposed a commercial building in North Sydney into strata residential apartments. 1A Eden Pty Ltd was the joint venture vehicle, and each of the three joint ventures became unitholders of the 1A Eden Unit Trust of which 1A Eden was the trustee.
To facilitate the purchase and development of the North Sydney property, 1A Eden purchased it and thereafter developed it into 34 apartments and two retail spaces for an expected profit of between $9 to $10 million. By 2016, 26 apartments had been sold, with 8 apartments for distribution to the co-ventures subject to agreement as to their market value. Garawin, as the holder of a 50% interest in the trust sought to claim four apartments. However, the Owners Corporation subsequently sued the co-ventures, alleging defects in the North Sydney property. Caveats were lodged on three remaining units held in 1A Eden by one of the parties to the joint venture.
Garawin sought removal of the caveats, and an order of specific performance that these titles be transferred forthwith to it. The Court held that each caveat was ‘incompetent and embarrassing in form’ because neither caveat identified nor described any maintainable equitable interest in the land, such that the caveats had to be removed. Additionally, the caveats wholly ignored the fact that 1A Eden was a trustee and did not hold beneficially the land subject to the caveat. The court applied the equitable principle that ‘equity is equality’ which distributes property and losses in proportion to the several claims or liabilities of the relevant parties. The parties were ordered to continue to the extent possible to perform their mutual agreements, consistently with meeting 1A Eden’s external liabilities. This case demonstrates the ability for caveats to be set aside under the Real Property Act.