In many family law cases, one party has control over all of the assets and liabilities of the marriage or de facto relationship. This situation can leave the other party in a vulnerable and stressful position as the spouse in control of the asset pool can elect to interfere with or dispose of the assets without the other party’s knowledge or consent.
Depending on the circumstances of the case, the spouse not in control of the assets may have the following options available to them to protect their interests in the asset pool:
- Lodge caveat/s over the real properties to prevent the other party from transferring the real properties to a new owner and from extending existing loan facilities.
- Request that the other party sign an undertaking that he/she will not deal with the assets or liabilities of the asset pool.
- File an urgent application at Court seeking that the other party be restrained from disposing of or dealing with the assets and liabilities pending resolution of the property matter except by agreement or by court orders.
An undertaking is a promise to the Court which is binding. An undertaking has the same effect as an order of the court. If breached, the person may be found guilty of contempt of the court and may be punished by a fine or imprisonment
In order to lodge a caveat, a caveator must claim “an estate or interest in land” pursuant to section 90(1) of the Transfer of Land Act 1958. A caveat cannot be used as a type of injunction by a person who does not have the relevant interest in the subject land. The use of a caveat in such a manner may result in an order for compensation or costs against the caveator. There is no definition in the Transfer of Land Act of “an estate or interest in land” and therefore this issue must be determined by reference to the facts of each particular case.
In order to lodge a caveat, the lodging party is not required to provide evidence to substantiate their claimed interest. However, the claimed interest will need to be established by the caveator if there is an application to remove the caveat.
There are categories of claims that have been held by the courts to constitute “an estate or interest in land” including but not limited to:
- Unregistered mortgage;
- Claim by a purchaser under an uncompleted contract of sale;
- An agreement by the registered proprietor to allow a person to lodge a caveat;
- A claim under a charge;
- By a guarantee which gives the right to lodge a caveat;
- A lease;
- An option to purchase;
- A purchaser’s lien;
- A claim that land is held on trust for the caveator. This includes an implied, resulting or constructive trust.
The caveator should be aware that if a caveat is lodged without reasonable cause the person lodging the caveat may be liable for any loss caused by the caveat pursuant to section 118 of the Transfer of Land Act.
In the event the other party seeks to remove the caveat, the caveator must issue proceedings within 30 days to substantiate the caveat/s pursuant to section 89A if the Transfer of Land Act. Alternatively, other party may seek removal of the caveat/s under section 90(3) of the Transfer of Land Act by way of an application to the court. Such application could be sought in the Family Courts.
The case of Trevi & Trevi  Fam CA 123 is an example of the way in which the Family Court of Australia has dealt with caveats lodged by a spouse over their former spouse’s property. In this case, the Husband was a partner of a law firm and the Wife was engaged in home duties. The Wife lodged caveats over three properties owned by the Husband during the course of proceedings. The Wife notified the Titles Office that she had a claim over the properties by way of “an implied or resulting or constructive trust”.
The Husband made an urgent application seeking that the caveats be removed. He claimed that the caveats lodged by the Wife would cause him to suffer loss by way of an increased tax burden and prevent him from further borrowing against the property. The Husband asserted that the Wife did not make any financial contribution to the acquisition of the properties, maintenance, expenses or outgoings and that all payments for interest and other expenses have been funded from his income. The Wife submitted that the Husband’s investments strategies had caused losses exceeding $1.8 million and therefore she required the caveats to protect her substantial further entitlements.
The Court found that a claim under section 79 of the Family Law Act 1975 (the Act) is not a caveatable interest. We advise that section 79 provides for how a Court alters the legal and equitable interests of parties in relation to property (real and personal). Justice Thornton noted the Wife’s concern that the Husband was accepting a new liability and may dispose of an interest in land to defeat her claim but made orders requiring the Wife to remove the caveats on the basis that the Wife did not claim an equitable interest in the investment properties and therefore she did not have a caveatable interest.
Written by Alexandra Finemore, Associate