A caveat is a powerful instrument: it stops the Registrar registering dealings with someone else’s land. Section 90 of the Land Registration Act is the counterweight.
Section 90 — damages for lodging without reasonable cause
Where a caveat is lodged with the Registrar without reasonable cause, a person aggrieved by the lodgement of the caveat may bring an action to recover damages against the person who lodged it.
Three elements: a caveat lodged without reasonable cause, a person aggrieved by the lodgement, and damages. Note that the action lies against the person who lodged it — which is the caveator, not the Registrar.
What “without reasonable cause” means
The touchstone is section 82: a caveat may be lodged by a person claiming an estate or interest in the land. A caveator who had no such interest, and no reasonable basis for thinking they had one, has lodged without reasonable cause.
- A claim for money, not land. An unsecured creditor, an unpaid contractor with no charge, a judgment creditor. These are the commonest and clearest cases.
- A caveat used as leverage in an unrelated dispute — to force payment, or to pressure a party into a settlement.
- A caveat lodged to delay a sale by someone who simply does not want it to proceed.
- A stale claim long since abandoned, satisfied or determined against the caveator.
- A customary claim over registered land, where the real dispute belongs to the Land Courts and not the Register.
Section 90 does not make you liable simply because you lost. The question is whether there was reasonable cause to lodge — a genuine, arguable claim to an estate or interest, honestly asserted. A caveator who identified a real interest, took advice and acted promptly is in a very different position from one who used the Register as a pressure point.
Who is a “person aggrieved”
Most obviously the registered proprietor whose dealing was blocked. But the expression is wider, and section 88(1)(a) gives a useful indication of who the Act regards as affected by a section 82(a) caveat: the proprietor “and includes a person claiming under a transfer or other instrument signed by the proprietor”.
So a purchaser holding a signed but unregistered transfer, whose settlement collapsed because of the caveat, is capable of being a person aggrieved. A mortgagee unable to register its security may also be.
The kinds of loss claimed
- A sale that fell through — the difference between the lost price and what the land later fetched, plus costs thrown away.
- Finance withdrawn or delayed — a lender will not advance against a caveated title. Additional interest, break costs, or the collapse of a project.
- Holding costs during the delay — rates, insurance, rent to the State, security.
- Legal costs of getting the caveat removed under sections 88 or 89.
- Lost development time — particularly serious for an urban development lease, which runs for no more than five years and carries a twelve-month planning deadline.
A caveat that delays a transaction can leave a State lease exposed under the Land Act — rent accruing, improvement conditions unmet, and ultimately a notice to show cause. Those consequences are foreseeable, and a caveator without reasonable cause may find them laid at their door.
How to protect yourself before lodging
- Write down the interest you claim and the document or transaction that creates it, before you lodge. If you cannot express it in a sentence, reconsider.
- Ask whether it is an interest in land, not a claim for money.
- Take advice where the interest is arguable. Advice taken and followed is strong evidence of reasonable cause.
- Choose a proportionate scope. Under section 83 a caveat may operate absolutely or until after notice of intention to register has been served, and may forbid one or more instruments or classes. A narrower caveat that achieves your purpose is far less exposed than a blanket one.
- Act promptly once lodged. Decide whether to litigate, and remember the caveat lapses after three months unless you commence proceedings and notify the Registrar in writing.
- Consent where you reasonably can. Under section 86(2), an instrument endorsed with the caveator’s consent may be registered. Refusing consent to a dealing that does not affect your interest is the kind of conduct a court will notice.
- Withdraw promptly under section 93 once the claim is satisfied or abandoned — available at any time before proceedings commence.
If you are sued under section 90
The issue is reasonable cause at the time of lodgement — not whether the claim would ultimately have succeeded. Assemble:
- the document founding the interest — contract, mortgage, trust instrument, option;
- any advice obtained before lodging;
- the correspondence showing you asserted the interest openly and promptly;
- evidence that you consented, withdrew or narrowed the caveat when it became appropriate.
Section 82 makes a caveat easy to lodge, because an unregistered interest can be destroyed in the time it takes to register a competing dealing. Section 90 is what stops that becoming a licence to obstruct. Lodge when you genuinely claim an interest in the land; do not lodge to create leverage.
Sources
Before relying on anything here, read the current text of the Land Act 1996 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.