Electronic caveats case

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The recent case of Guirgis v JEA Developments Pty Ltd highlights the obligations of a practitioner when certifying an electronically lodged caveat and the importance of making proper inquiries to ascertain whether the caveator had an interest in land.

The plaintiff in those proceedings sought removal of a caveat under s 74MA of the Real Property Act 1900 plus compensation from the Defendant on the basis that the caveat had not merit. The interest claimed by the caveat was a charge, which was said to have been created by Agreement. In fact, there was no Agreement. Instead, the caveat had been placed in anticipation of matrimonial proceedings between the plaintiff and his wife.

The Caveat had been prepared, certified and lodged electronically on behalf of the defendant by a licenced conveyancer.

The case examined caveats in light of electronic lodgment. The Court observed that under Rule 8.6 of the Conveyancing Rules, nearly all caveats signed on or after the 1 July 2018 must be lodged electronically using an electronic lodgment network. The NSW Participation Rules sets out the rules in relation to the electronic certification noted on electronically lodged caveats, and that Participation Rule 7.10.1 provides that a Subscriber must provide those of the certifications when digitally signing an electronic registry instrument.

The caveat that was prepared and lodged by the conveyancer was deficient in at least five respects with regard to the certifications and representations that the conveyancer/subscriber made on behalf of their client.

The Court noted that: “As New South Wales’ conveyancing system moves to a completely electronic platform, the role of conveyancers, solicitors and others as persons qualified to prepare and lodge caveats becomes all the more important. Ordinary members of the public are, in practical terms, no longer able to lodge caveats without the intervention of a “Subscriber”, who in many cases will be a solicitor or licensed conveyancer. The requirement to give the requisite representations and certifications operates to confer on them the role of a guardian at the gate.”

The court found that the conveyancer failed to meet the standard of care to be expected of a reasonably competent conveyancer in the preparation of the Caveat. The Court considered referring the Conveyancer to Fair Trading for disciplinary action, but decided against further action after the conveyancer apologised without reservation and acknowledged to the Court that there had been a complete departure from appropriate standards.

The conveyancer was ordered to attend an appropriate course in the next 12 months in relation to the electronic lodging of caveats.