Priorities

Indefeasibility

The title is limited only by interest on the register and not limited by interest off
the register

s 42(1) of Real Property Act 1900 (NSW):

The register proprietor shall hold for the time being of any estate or
interest in land recorded in a folio of the register shall hold the same,
subject to other such estates and interests and such entries if any as
recorded in that folio. (applies except in fraud)
s 43 of Real Property Act 1900 (NSW):
Purchaser from registered proprietor not to be affected by notice
(equitable interest may not be applicable). Except in the case of fraud no
person contracting or dealing with or taking or proposing to take a transfer
from the registered proprietor of any registered estate or interest shall be
required or in any manner concerned to inquire or ascertain the
circumstances in or the consideration for which such registered owner or
any previous registered owner of the estate or interest in question is or
was registered, or to see to the application of the purchase money or any
part thereof, or shall be affected by notice direct or constructive of any
trust or unregistered interest, any rule of law or equity to the contrary
notwithstanding; and the knowledge that any such trust or unregistered
interest is in existence shall not of itself be imputed as fraud.
s 45 of Real Property Act 1900 (NSW):
Gives some protection to registered clients . Bona fide purchasers and
mortgagees protected in relation to fraudulent and other transactions
s 118 of Real Property Act 1900 (NSW):
Protects property from being taken away when on the register

Exceptions to indefeasibility + 4 limits

Natural right: Natural rights associated with the land that restrict
somebody elses rights
Ancillary rights: Rights restrict title but are not mentioned in the folio
Inconsistent with common law: Not valid
Inherently uncertain

Exceptions:

Outside the Umbrella

Nature: Registration of dealing confers indefeasibility not only on the relevant

interest in the land, but also on the provisions of the dealing that are inherently
related to that interest.

Forged Mortgages:

On one view, registration of a forged Torrens title mortgage validates not

only the mortgagees charge over the land, but also the mortgagors

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 personal promise to pay embodied in the forged mortgage. This means
that even though the mortgagor did not sign the mortgage and did not
receive the money, they still must repay the amount (Mercantile Credits
Ltd v Shell Co of Australia Ltd (1976); Mercantile Mutual life Insurance co
ltd v Gosper (1991))
On the other view, registration does not validate the forged covenant
(Chandra v perpetual Trustees Victoria Ltd (2007)). It only validates the
mortgagees charge over the property, entitling the mortgagee to exercise
its power of sale and recoup the debt from the proceeds of sale but that is
all.

All Moneys Mortgages

Old style: Secures a single stated sum specified in the document and
specifies the term of repayment . It contains an express obligation to
repay the stated sum and the terms of repayment (Small v Tomasetti
2001)
New style: Secure advances made from time to time. The mortgage may
not have an express obligation to repay the sum and the terms of
repayment. The mortgagees charge being contained in the registered
mortgage itself, is indefeasible, but unless the mortgage effectively
incorporates the loan agreements that contain the personal covenant to
repay, the charge secures nothing and the mortgagor is entitled to an
immediate discharge (Citibank Savings Ltd v Riley (1994)). (needs to be
incorporated into the loan and that depends on the construction of the
loan)

Leases:

If a covenant in the lease qualifies or defines the lessees interest then on

registration of the lease the covenant also attracts indefeasibility; if it does not
so qualify or define the lessees interest, it does not attract indefeasibility
(Pigots case)

SIMONS NOTES:

Can indefeasibility go beyond the interest on the register to the contract

(defect)? It can, if the right is intimately connected with the title. Then it falls
under the umbrella and is cured of any defects.

Registrar General v Van Den Heuvel [2010]:

Issue: What happens to the contract? Mortgage was indefeasible; however the
contract was the question.

Outcome: Bank gets to apply against husband and wife gets compensation as a
result of indefeasibility.

Mercentile Credits Ltd v Shell Co of Australia Ltd 1976:

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Principle: Can the registered tenancy extend to the contract? Is the contractual
right so intimately connected with the right to protected or cured?

Fraud

Is an exception to indefeasibility.

Section 45 & 118 of RPA 1900

Fraud by a predecessor does not affect the title of the present registered
proprietor, unless the present proprietor acquired title through implication
is the fraud, either personally or by agents for whose acts he or she is
responsible

Assets Co Ltd v Mere Roihi (1905):

Dishonesty of some sort

Must be brought home to the person whose registered title is impeached
or to his agents
The mere fact that he might have found out fraud if he had been more
vigilant, and had made further inquiries which he omitted to make, does
not of itself prove fraud on his part
Wilful blindness (an abstention from enquiry for fear of learning the truth)
is tantamount to actual fraud (Young v hoger 2001)

Fraud brought home to the registered proprietor

A registered title is not defeasible for fraud where the fraud is exercised without
the registered proprietors knowledge, by someone whose actions the registered
proprietor is not responsible.

Fraud and equitable fraud

Fraud (in Torrens system) mean actual fraud (Bahr v Nicolay 1988) or actual
fraud, moral turpitude (Butler v Fairclough 1917)or something more than mere
disregard of rights which the person sought to affected had notice (Wicks v
benett 1921).

For equitable fraud to fall within the statutory concept of fraud there must still be
dishonesty or moral turpitude (Grgic v Australia and New Zealand Banking Group
Ltd 1994).

When must fraud exist?

Fraud must be found in circumstances leading up to the registered proprietor

acquiring the registered interest (Loke Yew v Port Swettenham Rubber Co Ltd
1913). HOWEVER Bahr v Nicolay 1988 justices expressed that fraud may be
found also in circumstances occurring after registration.

Fraud against whom?

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 Be shown to have been practiced against the person who seeks to set
aside the fraudulently obtained title (Munro v Stuart 1924)
Fraud can be established where a person, in lodging for registration the
dealing under which he or she derives title, has misrepresented to the
Registrar- general that the statutory formalities for executing the dealings
were satisfied, or were recklessly careless about whether or not they were
satisfied (Australian Guarantee Corportation Ltd v De Jager (1984))
There is no fraud without dishonesty or moral turpitude
A person who falsely asserts that he/she is a witness to a signature and
knows or ought to know tha the assertion will be acted upon by another
person, owes that other person a duty of care and will be liable in
negligence for the other persons loss in reliance on the attestation (Eade
v Vogiazopolus 1999)
In order to render a registered title, defeasible, the fraud must be
practiced with the aim of depriving someone of an interest in land or
deceiving the registrar -general

SIMONS NOTES

Section 42 RPA: (current registered proprietor to commit the fraud)

Actual fraud: dishonesty or moral turpitude (Breskvar v Wall 1971) also
includes wilful blindness -> Constructive or equitable fraud does not
constitute fraud ( if you could have investigated and did then it is not
fraud) -> What should you have known had you investigated the
suspicion. Fraud must be brought home to the registered proprietor.

Cases:

Assets Co Ltd v Mere Roihi (1905):Defines actual fraud and wilful blindness

Loke Yew v Port Swettenham Rubber Co Ltd 1913: Example of actual fraud being
proved-> consequences of proving fraud -> title becomes defeasible and brings
the main case forward

Bahr v Nicolay 1988: Knowledge of another interest does not make it fraud, the
mental element of dishonesty needs to be present

Davis v Williams 2003: No fraud -> example of fraud by agent

Macquarie Bank Ltd v Sixty fourth Throne Pty Ltd 1988: Another case of forgery

Fraud of an agent

First situation: Registered proprietor has become registered through the agents
fraudulent activity. This binds the registered proprietor to make the title
defeasible for fraud (Ex parte Batham 1888). The mere fact that by employing an
agent, the principal gives the agent the opportunity to act fraudulently does not
bring the fraud home to the principal (Schultz v Corwill Properties Pty Ltd 1969).
There must be sufficiently close connection between the tasks the principal set
the agent to perform and the agents fraudulent act (Dollars Sense Financial Ltd

4
v Nathan 2008). A principal who creates an agency in which there is risk of
improper conduct by the agent should normally expect to bear responsibility if
the risk eventuates and loss is thereby caused to a third party.

Second situation: Where the agent has knowledge of fraud in a transaction where
the principal has been registered. The agents knowledge is imputed to the
principal because the law assumes that an agent communicates to the principal
all information coming to the agents knowledge during the transaction (Schultz v
Corwill Properties Pty Ltd 1969).

Exception to the 2nd situation: If the information sought to proprietor is

knowledge of the agents own fraud (agent commits the fraud) or if the agent
acquired information while a party to fraud , then the principal is permitted to
negate the implication (Schultz v Corwill Properties Pty Ltd 1969).

Solution: An agent is unlikely to tell his/her principal that he/she is committing

fraud (particularly so if fraud is being practiced against the principal), the
principals liability should be based simply on the fact of the agents own
fraudulent act (Dollar Sense Finance Ltd v Nathan 2008).

Recorded Interest

Registration not only confers title but also determines priority. As between
registered dealings, priority is governed by order of registration (not date of
execution) s 36(9) RPA 1900. Order of registration is determined in order of
lodgement form (s 36(5) RPA 1900).

Bursills Case

An interest is sufficiently recorded in the folio if the folio states the

registration number of the dealing creating it and identifies the interest (R
v Recorder of Titles 1991)
An interest is sufficiently recorded in the folio if the recording refers to
another folio of the Register where registration number of the dealing is
provided and the nature of the interest is identified
IT IS NOT sufficient for the folio to merely identify the interest without also
stating the dealing number from which terms can be ascertained
(Siemenski v Brooks Nominees Pty Ltd 1990)

SIMONS Notes

Change the entry in the folio to read the correct detail

If something is referred to in the folio and it refers to a written external
document and the document gives rise to an easement then it is a valid
restriction
What you can find through the Register

Case: Bursills Case

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Subject to what can be discovered through Register

Prior folio of the Register

Whoever has the prior folio on the Register has priority

SIMONS NOTES:

There should only be one folio

Easements omitted or misdescribed

Under s 42(1)(a1) of the RPA 1900 (NSW), the registered proprietor holds subject
to certain easements that do not appear in the Register. The owner of the
servient land must submit to it even if the easement does not appear in the folio
of the Register for the servient land. The estate or interest is subject to the
omission or misdescription of an easement in two circumstances:

The easement was in effect before the land was brought under the RPA
The easement was validly created under the RPA or any other Act

When is an easement omitted?

It was enough to show that the easement was left out, in the colourless sense of
being not there; it was not necessary to link its absence to the Registrar-
Generals fault or neglect (Dobbie v Davidson 1991)

Note: An easement is not validly created under the RPA 1900 NSW unless te
transfer creating it is registered, nor in the case of creation under s 88B of the
Conveyencing Act 1919, is an easement validly created unless the plan is
registered. For the parties to merely execute and lodge the documents is not
enough to validly create an easement.

SIMONS NOTES:

If something is referred to in folio and it refers to a written external aspect and

that aspect gives rise to easements, then it is a valid restriction.

Wrong description on land

S 42(1)(c) wrong description of parcels or of boundaries

The registered proprietors estate or interest is indefeasible to the land only

where the proprietor is a purchaser or mortgagee for value or derives title
through such a purchaser or mortgagee. This exception to indefeasibility applies
where land is included in a folio as result of surveying mistakes. It applies as a
result of such mistakes, there is included in the folio land which parties did not
intended to be included (Michael v Onisiforou 1977).

6
SIMONS NOTES

Can be corrected via survey

Boundaries via title

Tenancies for less than 3 years

Section 42 (1)(d)
i) The term of the tenancy must not exceed 3 years
ii) If there is an option to renew, the total term of the tenancy plus
option must not exceed 3 years
iii) The tenant must be in possession or entitled to immediate
possession
iv) The registered proprietor, before becoming registered, must have
had notice of the tenancy against which he or she was not
protected

Tenancy includes:

Enforceable in equity for the grant of a lease (Alcova Holding Pty Ltd v
Pandarlo Pty Ltd 1988)
Periodic tenancy: week to week, month to month or year to year (United
Star Bowkett Co-Operative Building Society Ltd v Clyne (1967)

Notice: Notice of the unregistered tenancy is a prerequisite to its protection. A

registered proprietor who took without notice of tenancy holds free of it.

Options to Renew:

An option to renew is not protected under s 42 (1)(d) might yet be salvaged in a

number of ways.

An option to renew is not a mere extension of the original term, it is a new

lease for a new term
Even if the option is exercised after the transferee from the lessor
becomes registered as proprietor, the new lease may be enforceable as a
result of s 118 of the Conveyencing Act. This section permits a lessee to
enforce certain covenants against the lessors success
The transferee from the registered proprietor may have undertaken
(words or conduct) to honour the tenants right to a new lease on exercise
of the option, giving rise to rights in personam exception to indefeasibility
(Bahr v Nicolay 1988)

SIMONS NOTES

S 42 (1)(d)
If you are a tenant for less than 3 years, then the idea is that tenant are
continuously changing, hence no need to register due to cost
i) Tenant must be in possession or immediate possession

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 ii) Notice is given to owner (Actual notice and constructive notice
(inquisition)/should have know there was a tenant)
iii) Tenancy must not exceed 3 years
4 year lease does not get protected
2 year lease + 2 year renewal does not get protected
1 year lease + 1 year renewal + 1 year renewal = does get protected
It is inefficient to record every short term lease
Would arise against unregistered tenancy (legal interest vs equitable
interest)

Rights in personam

SIMONS NOTES

In personam = only personal

Equity can restraint exercising legal interest
Arise out of conduct by registered proprietor
Limitation: If there is another registered proprietor (passed on) rights in
persom does not apply

LOOK AT UNI CRAM NOTES

Correction of errors in register

S 12 (1)(d): The Registrar General is authorised to correct errors and

omissions in the Register (since a system that depends so completely on
the Register cannot function properly unless the Register is accurate (Pirie
v The Registrar General (1962)).
S 136 (1)(b) empowers the Registrar General , when satisfied that
recording in the Register has been made in error, to call in the certificate
of title for the land
S 136 (1)(c) empowers the Registrat General to call in the certificate title
where satisfied that the certificate of title or recording in the Register has
been obtained fraudulently or wrongfully
S 39(3) to correct patent errors in dealings lodged for registration
S 12(3) the power to correct exists, but the correction is not to prejudice
rights already accrued from recordings made in the Register before the
correction
S 12(1)(d1) allows the Registrar General, with the consent of the
proprietors and any mortgagees of the land , to correct the Register by
correcting one or more lot numbers in the plan
S 12(1)(d) The court will not interfere with the Registrars Generals
exercise of the discretion, unless he or she has its limits or has properly
interpreted, or has exercised it on some wrong principle, or perhaps has
wrongfully refused to exercise it all
S 138(1) empowers a court, in proceedings for the recovery of any land or
interest from the registered proprietor
S 138 (3) the court can order the Registrar General to cancel or amend a
folio of the Register, to cancel, amend or make a recording in the folio of

8
 the Register; to create a new folio of the Register; or to issue a new
certificate of title

Overriding legislation

Where a statute is silent on its effect on indefeasibility of title, the courts

interpretive task may be difficult
To resolve conflict between statutes, the later statute will prevail if
statutes cannot be reconciled (Miller v Minister of Mines 1963)
S 42(3) The RPA is to prevail over inconsistent legislation

Case type Priority Rule

Legal v Legal Legal First in time of
registration (date of
registration)
Legal v Equitable Legal Indefeasibility. However
exceptions are applicable
Equitable v Legal Legal Indefeasibility. However
exceptions are applicable
Equitable v Equitable Equitable i) Search for
better equity
ii) Last resort rule
if equity is the
same (first in
time by
creation)

SIMONS NOTES

Equity v Equity

1) Search for better equity

Which is the fairer party? Which party took more steps to protect their
interest? (came with cleaner hands maxim)
Postponing conduct (have you done something to weaken you position)
Failure to search
Failure to caveat
Other steps to protect their title
Notice (does one party have notice of the other party? Then the other
party has better equity)
2) Last resort Rule
First in time of execution

Trump cards

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 S 23 D Conveyencing Act 1919 (leases)
Fulfil s 23D becomes legal -> then legal v equitable

(1) All interests in land created by parol and not put in writing and signed by the
person so creating the same, or by the persons agent thereunto lawfully
authorised in writing, shall have, notwithstanding any consideration having been
given for the same, the force and effect of interests at will only.

(2) Nothing in this section or in sections 23B or 23C shall affect the creation by
parol of a lease at the best rent which can reasonably be obtained without taking
a fine taking effect in possession for a term not exceeding three years, with or
without a right for the lessee to extend the term at the best rent which can
reasonably be obtained without taking a fine for any period which with the term
would not exceed three years

S 43A RPA becomes legal -> then case becomes legal v equitable

1) For the purpose only of protection against notice, the estate or interest in land
under the provisions of this Act, taken by a person under a dealing registrable, or
which when appropriately signed by or on behalf of that person would be
registrable under this Act shall, before registration of that dealing, be deemed to
be a legal estate.

(2) No person contracting or dealing in respect of an estate or interest in land

under the provisions of this Act shall be affected by notice of any instrument,
fact, or thing merely by omission to search in a register not kept under this Act.

(3) Registration under Division 1 of Part 23 of the Conveyancing Act 1919 shall
not of itself affect the rights of any person contracting or dealing in respect of
estates or interests in land under the provisions of this Act.

(4) Nothing in subsection (2) or (3) operates to defeat any claim based on a
subsisting interest, within the meaning of Part 4A, affecting land comprised in a
qualified folio of the Register.

Case:

Heid v Reliance Finance Corporation Pty Ltd (1983)

Gives authority to the elements for equity v equity

Heid had the lesser equity because Heid armed and clothed Gibby
as the owner, hence he cannot be held guilty for that, because
given the opportunity to cheat, they will cheat -> Reliance won
because Heid took steps to weaken their own equity

Caveat

Nature of caveats

S 74F(1) RPA 1900

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 The caveator who claims to be entitled to a legal or equitable estate or
interest in Torrens title land by virtue of an unregistered dealing or
otherwise, may lodge a caveat prohibiting the recording of any dealing
affecting the estate or interest claimed. No requirement that interest
be threatened in any way; it is enough that the caveator possess the
claimed interest (Holt v Anchorage Management Ltd 1987)
Lodging a caveat does not prevent the caveator to simultaneously seek an
injunction or other equitable relief to protect the interest in land (Walsh v
Alexander 1913)
S 12(1)(e)
The Registrar General may record a caveat on behalf of a person under
legal disability or on behalf of the Queen in order to prohibit dealings
with land supposedly belonging to them
May record a caveat to prohibit dealing with Land where there has been an
error of the land or otherwise in an instrument or in the folio of the
Register

Caveatable Interest

Need for proprietary interest

A caveat cannot be lodged to protect a mere contractual/personal

right/statutorily based right that does not confer an interest in land
(Linden v Wigg 1968)
The caveatable interest must exist at the time the caveat is lodged; it
cannot be lodged to protect an interest in land that can arise only in the
future (Martin V Official Trustee in bankruptcy 1990)
It is sufficient if the caveatable interest arises simultaneously with the
lodging of the caveat
Whether a caveatable interest is created by or evidenced in an instrument
depends on the construction of the instrument as a whole, to see if the
parties have demonstrated a clear intention to create a caveatable
interest
Because of the need for a proprietary interest, a caveat cannot be lodged
to protect what is merely a claim to exercise a cause of action

Agreement to grant caveatable interest

A contract may expressly or impliedly grant a proprietary interest to secure

rights under the contract. A caveat can then be lodged to protect the proprietary
interest (e.g. a mortgage over land of a borrower to secure obligation under the
guarantee). Depending on its wording the security interest may come into
existence, and thereby support a caveat, even in advance of any default under
the obligation it secures.

Agreement to not lodge a caveat

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A person possessing a caveatable interest may enter into a contract not lodge a
caveat. However lodgement entails a breach of contract and the court will take
the contractual provision into account if the caveator seeks to maintain or extend
the caveat (Australian Property and Management pty Ltd v Devefi 1997). It is
open to a court to order that a caveat lodged in breach of contract be maintained
or extended.

Formal requirements

74F(5)
In addition to being in the approved form, a caveat must specify the
prescribed particulars of the interest the caveator claims. (mention
definitely or explicitly)

Effects of a caveat

Its primary purpose is to protect the caveators interest from being defeated by a
registered dealing without the caveator first having the chance to approach the
Supreme Court for an order protecting the interest (Kerabee Park Pty Ltd v Daley
1978) The purpose of a caveat is to restrain the Registrar General and to give
notice.

Exception to caveat

S 74H(1)(b) A caveat can prohibit the recording of a dealing only to the

extent that the recording would affect the interest claimed in the caveat.
The court would strike down a caveat that purported to prohibit
registration of category of dealings wider than necessary to protect the
interest claimed by the caveator
S 74H(5) This permits certain specified dealings and entires to be
recorded despote the caveat, unless the caveat otherwise specifies.
Inlcude matters such as applications by executors, or surviving joint
tenants following the death of a registered proprietor and resumptions,
writs and vesting orders
S 74H(4) Even though a caveat is operative immediately it is lodged, a
caveat does not prevent recording of a dealing that has been lodged in
registrable form before the caveat was lodged

Removing Caveats

Under s 74I(1), where a dealing was lodged but its recirding is prevented
vy a caveat, the registered proprietor or any person claiming am interest
in the land to which the dealing relates may require the Registrar General
to serve a lapsing notice to the caveator. The notice will inform the
caveator that dealing has been lodged and the caveat will lapse in 21 days
if the caveator does obtain a Supreme court order extending the caveat. If
this neglected, the Registrar General records in the Register that the
caveat has lapsed to the extent that it would prohibit the dealing being
recorded

12
 S 74J(1) the registered proprietor of an interest in the land described in
the caveat may require the Registrar-General to serve a lapsing notice on
the caveator. The notice will inform the caveator that dealing has been
lodged and the caveat will lapse in 21 days if the caveator does obtain a
Supreme court order extending the caveat. If the caveator neglects to
comply with the notice, the Registrar General records in the register that
the caveat has lapsed
S 74MA(1)- any person claiming an interest in the land described in the
caveat may apply to the Supreme Court for an order that the caveat be
withdrawn

Extending caveats

The caveator must demonstrate an entitlement to an interloctury injunction

restraining the registered proprietor from dealing with the land pending
substantive trailof the caveators claim. This involves two steps

i) A serious question to be tried

ii) The balance of convenience

If step 1 does not occur, step 2 cannot arise

Serious question to be tried

The caveator must establish that it is reasonably arguable that the caveator has
the interest claimed. The onus of establishing this rests with the caveator,
whether it is the caveator who seeks to extend the caveat or the registered
proprietor who seeks to have it removed

Balance of convenience

The caveator bears the onus of showing that, on the balance of convenience, it
would be better to maintain the status quo until substantive trail of the
caveators claim, by leaving the caveat in place. Courts are often prepared to
hold that the balance of convenience favours maintaining the caveat (kingstone
construction pty ltd v Crispel pty lt 1991)

Lodgement of a caveat without reasonable cause

S 74P(1)(a) a person who lodges a cveat without reasonable cause is

liable to pay compensation to any person sustaining financial loss
attributable to the lodgement
S 74P (1)(b),(c) a person who without reasonable cause procures a
caveat to lapse or fails to withdraw a caveat after being requested to
do do

Test: Whether the caveator had an honest belief based on reasonable grounds
that a caveatable interest exists ( Beca developments pty ltd v Idameneo pty ltd
1990)

13
Competing unregistered interests

Nature of unregistered interests

Rights arise from the agreement between the parties to the transaction
and, if enforceable in a court of equity, they entitle the parties to have a
dealing executed and registered- an entitlement that in itself gives to an
equitable interest
Unregistered mortgages of Torrens title land are regarded as being in the
nature of equitable mortgages and are enforced in the same way as
equitable mortgages (Barry v Heider 1914)

Equitable interest v equitable interest

Judicial practice shows that a claimant whose interest is earlier in time can
normally expect to succeed in an evaluation of relative merits, unless some
conduct or inaction in his or her part has prejudiced the position of the later
holder (Reynolds v Arthur 1990). The court considers all the facts as they are
known as the date of the decision and fixes the priorities according to which
party is perceived at that time as having the better equity.

The effect of notice

The existence of notice has been crucial in several decisions where the
competing interest arose at the same time (notice gives better equity)
The existence of notice is not merely a factor in the search for better
equity, but a distinct and fundamental ground for disqualification

Exceptions:

The holder of the earlier interest has by agreement or conduct waived the
right to prevail (Commonwealth bank of Australia ltd v platzer 1997)
Holder of the earlier interest engaged in some act or omission which
caused the later holder to believe, at the of acquiring the later interest,
that the earlier interest had ceased to exist (Lapin v Abigail 1930)
Single transaction situation pg 712

No purchaser for value without notice rule does not apply

The mere fact that a latter acquired equitable interest was purchased for value
without notice of an earlier equitable interest does not give the latter priority
over the earlier. Lack of notice is simply one of the circumstances to be taken
into account.

Seeking the better equity

Where competing equitable interests exist in the same parcel of land, an earlier
interest generally has stronger claim than a later( qui prior est tempore potior
est jure). A court of equity regards itself free to determine priority by seeking the

14
best equity (Lapin v Abigail 1930). Equity considers all the circumstances of the
case, including the nature of competing interests, the manner of their acquisition
and the whole conduct of the parties, to determine the respective merits of the
parties , and falls back on the first in time principle only when the merits are in
all respect equal and no other sufficient ground exists for preferring one interest
over the other (rice v rice 1853).

Conduct of the first in time

In searching for the better equity, an important factor is whether the

conduct or inaction of the earlier interest holder ought to be regarded as
postponing
As a general rule, an earlier equitable interest will be postponed to a later
one where the conduct of the earlier interest holder has lead or allowed
the later interest holder to acquire that interest in the mistaken belief that
the earlier interest did not exist (Barry v heider 1914)

Equitable v Equitable: failure to caveat

Failure to lodge a caveat may in certain circumstances, deprive an interest

of the priority it would otherwise enjoy
Mere failure to caveat to protect an unregistered interest does not
postpone that interest to a later one (Jacobs v Platt Nominees Pty Ltd).
Failure to caveat to protect an interest in the light of all the circumstances,
allows another person to acquire a later unregistered interest in the land
on the mistaken assumption that interests such as the earlier interest does
not exist (Butler v Fairclough 1917)

Mere equity v equitable interest

Equity may give a person a remedy in relation to property without

necessarily conferring an interest in any quantifiable part of the property
Australian courts recognise an equity that has proprietary characteristics
but is somehow less than a full equitable interest in land
Mere equity is used to refer to a right that has no proprietary
characteristics , however if established in court of equity it may lead to an
equitable interest arising but until then conferring no proprietary interest
(Double Bay newspapers pty ltd v A W holdings pty ltd 1996)
Mere equity can also be used to refer to a right that has proprietary
characteristics, but a right that ranks at the bottom of the hierarchy of
proprietary interests, behind equitable and legal

S 43A Protection v later unregistered interest

In order to keep the protection of this section, the dealing must be lodged
promptly, or within a reasonable time after settlement (Courtenay v Austin
1961)

15
It is open to the later equitable interest holder to show that the conduct of the
earlier legal interest holder has been such that the legal interest ought to be
postponed to the equitable. They can be done in 4 ways, they are:

i) Where the legal interest holder was a party to fraud that led to the
equitable interest being created (Northern Countries of England Fire
Insurance Co v Whipp 1884)
ii) Where the legal interest holder was grossly negligent in failing to
inquire after, obtain, or retain possession of title deeds to the land,
thereby allowsing another person to pose as the legal owner and
thereby create a later equitable interest in the land (Walker v Linom
1907)
iii) Where the legal interest holder entrusted the titled deeds to an agent
with limited authority to raise money by giving security intended to
bind the legal interest and the agent exceeded this authority by
creating a security for a larger sum in favour of a person who had no
notice of the limitation (Perry-Herrick v Attwood 1857)
iv) Where the legal interest holder ,(although not parting with the title
deeds) handed another person a document appearing to give that
other a beneficial interest in the land or the right to acquire the legal
interest, and the other, so armed them purported to create an
equitable interest in favour of a third person who took on faith of the
document (barry v heider 1914)

Earlier unregistered legal lease v later unregistered interest

S 42(1)(d) lease interest will be legal interest . The lease would prevail
over earlier unregistered interests of which the tenant had no notice. It
would also normally prevail over later unregistered interests
An unregistered lease not exceeding 3 years and meeting the
requirements of s 23D(2) of the Conveyencing Act 1919 (NSW) will have
legal status
Leases created under the Retail Leases Act 1994 (NSW) will be given legal
status
S 43A(1) If at completion the purchaser has no notice of a prior equitable
(unregistered) interest, the purchasers deemed legal ensures that the
purchaser holds free of that prior interest (Black v Garnock 2007). The
purchaser can then proceed to registration unhindered and once
registered will acquire an indefeasible title.
Where two or more legal interests in the one parcel of land are
inconsistent with each other, priority depends on the date of creation
interests. The rule is nemo dat quod non habet
Refer to previous 4 exceptions

Effect of registration of writs (judgements) on unregistered interests

A writ binds the land from the time it is delivered to the sheriff. However
binding the land does not mean creating an interest in the land (s 105(1))
S 105A(9)

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 The recording of the writ in the Register sets in motion a protected
period which lasts for 6 months or until earlier expiry of the writ
S 105A(2)
During this period the Registrar General cannot register a dealing in
favour of anyone except a transferee from the Sheriff, unless the
dealing is expressed to be subject to the writ
S 105B(2)
On registration of a transfer from the Sheriff in execution of the writ,
the transferee takes free of unregistered interests created by
judgement debtor
Page 851

SIMONS NOTES

Only operate in Torrens title

Provides temporary protection
Does not give legal rights
Stops inconsistent dealings with your interest

Life cycle of a caveat

S 74 Apply

s 74(6) gives notice

s 74 on register/ not in the register

s 74H given effect: no other interest adverse to your caveat can be

implemented

s 74M removes the caveat (withdraws)

S 74MA court order to remove the caveat

S 74J to put in a notice by the proprietor to remove the caveat

S 74I Protection (temporary) 21 days -> negotiate with other side or register
your own interest

S 74O The caveat must be removed unless Supreme Court allows for extension
of caveat or implement a new caveat

Case: Jacobs v Platt Nominees Pty Ltd 1990

How caveat fits into search for better equity

Case: Person to Person Financial Services Pty Ltd v Sharari 1984

Tredgolde (registered legal interest)

Sharari (unregistered/equitable): Paid money and asked to be registered; failure

to caveat

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Person to person financial services pty ltd (unregistered/equitable): search the
registry of the folio; request the CT, lodging caveat (won)

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