Can a caveat be registered on unsubdivided land? What happens when the land is subdivided?

The decision of Australian Commercial Mortgage Corporation Pty Ltd atf The Balmain Opportunity Trust v Negash [2025] VSC 502, published today, concerned a mortgagee seeking to remove caveats from an unsubdivided property in Tarneit, Victoria.

The case is mostly of interest on the limited question of how caveats operate to secure unsubdivided land. The case wasn't 'new law' on this subject, but provides a helpful illustration.

The case also provides an example of how a caveat registering a lower-priority interest (such as a purchaser’s lien) provides little protection to the caveator where land is heavily mortgaged.

The land in this case was undeveloped and unsubdivided land, which had been offered for sale to various purchasers under contracts of sale and deeds of joint venture agreement. The deeds involved purchasers contributing to the development of the land, then exercising an option to acquire a nominated lot. This was intended, at least in part, to avoid violating the Islamic prohibition on riba (lending at interest) (at [4]-[5]).

The various defendants asserted purchasers’ liens, securing the money they had paid to the vendor pursuant to these agreements. They had registered caveats on the land’s title in respect of these liens (at [35]-[38]).

The mortgagee’s application was made under section 90(3) of the Transfer of Land Act 1958 (Vic), which provides that a person who is adversely affected by a caveat may bring proceedings in a court against the caveat for removal of the caveat, and the Court may make any such order as it thinks fit.

In an application under s 90(3), the onus rests on the caveator to satisfy the Court that (1) there is a serious question to be tried, that the caveator has the estate or interest in the land that they claim under the caveat; and (2) the balance of convenience favours the maintenance of the caveat on the land’s registered title until the final determination at trial of the disputed facts or claims that the caveat seeks to preserve (at [32]-[33]).

The application was made on an urgent basis, as the plaintiff had exercised its mortgagee’s power of sale, and sold the property—with settlement due on 10 August 2025. The Court thus heard the application on 31 July 2025, and delivered an ex tempore ruling on 1 August 2025 (at [1]-[2]).

The full details of the decision are unnecessary to set out here. Relevantly, however, the Court noted that it is possible for a purchaser to have a caveatable interest (namely an equitable lien) in unsubdivided land. When the land is subdivided, the caveatable interest will be limited to the lot the subject of the contract of sale (at [35]-[37], referring to Lintel Pines v Nixon [1991] 1 VR 287, 290).

The Court found that there was indeed an arguable case under the Sale of Land Act for the purchasers to seek relief as against the mortgagee. However, it was not possible to reach a view as to the likelihood of success, given unanswered questions for trial such as whether the sale contracts were terms contracts (as the purchasers asserted they were), and if so, whether the mortgagee had notice of the purchasers’ interests under those contracts (at [43]-[59] passim).

The strength of the defendants’ arguable case was, in any event, not determinative. The Court held that the balance of convenience did not favour the caveats remaining on the title. It ordered that the caveats be removed. The critical factor was that there was very little surplus left, following the sale of the land, and the “clear legal position is that the plaintiff, as first registered mortgagee, has priority over those proceeds”. In such circumstances, “the caveats assume minimal significance” (at [60]).

R Hay KC appeared with L Hawas for the Plaintiff.

S Hooper appeared for fifteen of eighteen total defendants. Two defendants appeared in person, while the Registrar of Titles, also named as a defendant (as is usual in caveat removal applications) did not appear.