The Family Farm is a business that is hoped will be passed down through generations. When the time comes to pass on the family farming business there can be conflict, confusion and uncertainty. Regrettably, it can also end up in Court.
In a 2022 NSW Supreme Court decision of Brose v Slade [2022] NSWSC 1785, the Court gave judgment in relation to an application to extend two caveats that were lodged in the course of a farming family’s intergenerational succession planning dispute.
The dispute concerned 5 blocks of land which formed part of the farming enterprise operated by the parents in West Wyalong, regional NSW. The parents were Bruce and Donna. Bruce and Donna’s daughter, Kelly, and her husband, Gareth, lodged caveats against the property and alleged that the parents held the farming land for them on constructive trust.
A caveat is a statutory injunction that prevents the registration of dealings and plans on title, provided for under the Real Property Act 1900. A caveat operates as a warning on a land title to others by noting a person or organisation’s interest in land or property. The process is an electronic lodgment through Property Exchange Australia (PEXA), which is the electronic lodgment network for caveats in NSW. In order to lodge a caveat, the solicitor or conveyancer who is the certifier on PEXA must certify the caveat electronically to comply with the certification rules and certification must be made that there is a good and valid claim to the estate.
Kelly and Gareth brought an application to extend caveats over the farming land. The basis of the claim was a Deed of Family Arrangement and representations made by Kelly’s parents in relation to taking over the partnership and a transfer of the land. Some of the property had been transferred by the parents to a company, which was the trustee of the self-managed superannuation fund. The parents and the trustee company entered into contracts for sale of land with a combined purchase price of just over $10.1M. The contracts were due to complete on 2 February 2023.
The Supreme Court granted the extension and found that there was a serious issue between the parties to be tried. The effect is that the parents could not proceed with the sale until Kelly and Gareth’s claim was determined.
A caveat is a tool that is available to be issued urgently and in appropriate circumstances to prevent the sale of a property. If the person who lodged the caveat cannot then prove that they had the valid caveatable interest which was claimed, they will be liable to compensate such losses. We recommend that a party proposing to lodge a caveat obtain legal advice.
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