Lawyers lodging caveats against land on behalf of clients without proper reason leave themselves open to claims for damages. An Auckland property company was awarded $24,300 damages after the director’s former lover held up financing when his lawyers lodged a caveat against title to a residential development.
The High Court was told Qian Du was sole director and shareholder of First Choice Property Investment Ltd. Her company was building on Kea Road, in Silverdale. Construction was delayed in May 2021 with financing frozen after the lender found it could not register its mortgage security over Kea Road because of a caveat lodged against the title two months earlier in name of Suxuan Li. Mr Li had law firm William Gong Lawyers Ltd register the caveat shortly after his relationship with Ms Du came to an end. He claimed to have lent $150,000 for the project and further claimed that Ms Du had promised to give him security over the development with an agreement to mortgage.
The High Court ruled there was never any agreement to mortgage. Mr Li had no legal grounds for a caveat, which had the effect of freezing title and preventing any dealings being registered against the land. When registering the caveat on behalf of Mr Li, law firm William Gong similarly had no grounds to believe Mr Li had a valid claim over the land. Agreements to mortgage land must be in writing. There was no written evidence of Mr Li’s claimed agreement.
William Gong Lawyers was ordered to pay First Choice $24,293 damages: legal fees to have the caveat removed and interest charged for the period access to mortgage funds was on hold. William Gong Lawyers did not appear in court to defend the claim.
First Choice Property Investment Ltd v. Ma & William Gong Lawyers Ltd – High Court (16.06.22)
22.105