Leros Pty Ltd v Terara Pty Ltd [1992] HCA 22

High Court of Australia Mason C.J. Deane, Dawson, Gaudron and McHugh JJ. Leros Pty Ltd v Terara Pty Ltd [1992] HCA 22

ORDER Appeal allowed with costs. Set aside the orders of the Full Court of the Supreme Court of Western Australia and in lieu thereof order that:

(i) the appeal to that Court be allowed with costs;

(ii) the second respondent's motion be dismissed with costs; and

(iii) the orders of the Supreme Court of Western Australia (Rowland J.) be set aside and in lieu thereof order that the first respondent's originating summons be dismissed with costs.

Order that, within fourteen days, the first respondent lodge with the Registrar of Titles a registrable form of withdrawal of caveat E148871 duly executed.

Cur. adv. vult.

The following written judgments were delivered:—

1992, June 3 Mason C.J., Dawson and McHugh JJ.

This appeal raises important questions concerning the enforceability of interests sought to be protected by caveats lodged under the Transfer of Land Act 1893 W.A. ("the Act"). The broad question at issue is whether an option of renewal for a further term of seven years of a lease which is to expire on 5 December 1992 is valid and enforceable against the appellant ("Leros") which, on 12 March 1990, became and still is the registered proprietor of an estate in fee simple in Lot 10 of Strata Plan 17651, being Shop 34 in the Subiaco Village. The option is said to be protected by two caveats.

One is a caveat lodged on 13 July 1989 when Leros' predecessor in title, Western Acquisition Pty. Ltd. ("Western"), was the registered proprietor. The caveat, which was lodged by the present lessee ("Terara"), claimed a leasehold interest under a deed of extension of lease dated 3 December 1987 between the University of Western Australia ("the University"), which was then the registered proprietor of the land, and Halesworth Holdings Pty. Ltd. ("Halesworth"), which had assigned the whole of its interest in the lease and the option to Terara on the same day. The leasehold interest was for a term expiring on 5 December 1992 with the option of renewal for a further term of seven years. The caveat forbade the registration of any instrument affecting the claimed interest unless the instrument was expressed to be subject to the caveator's claim. The principal problem that this caveat presents is that, before the caveat was lodged, the University had transferred the reversion to Seventy-Fifth Jass Nominees Pty. Ltd. ("Jass") which became registered as proprietor on 28 September 1988. That registration was not expressed to be subject either to the lease or to the option to renew. It is common ground that Jass took subject to the lease because it was a lease for a term not exceeding five years to a tenant in actual possession. And it is common ground that Jass did not take subject to the option because the lease was not at that time registered or protected by Terara's caveat, unless the option is protected by the other caveat to which we shall refer shortly.