Bahr v Nicolay - Detailed case brief, including paragraph/page references Property law: indefeasibility PDF

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Detailed case brief, including paragraph/page references
Property law: indefeasibility...

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Bahr v Nicolay Area of law concerned: Court:

Date

Judge: Counsel: Summary of Facts:

Bahrs sold their property in August 1980 to Nicolay for $32,000. Sale subject to a collateral agreement that the Bahrs could lease the property and occupy the property and repurchase it after three years for $45,000. This was, in effect, a de facto mortgage/financing arrangement. But Nicolay, as proprietor, sold the property to the Thompsons. There was nothing in the contract to stop Nicolay from selling. The Thompsons acknowledged the buy-back arrangement. Thompsons wrote to the Bahr’s solicitors, agreeing to be bound. This is acceptance of the repurchase agreement. Bahrs sent a notice to the Thompsons of exercise of options, with a cheque of $4,500 deposit as per the agreement. The Thompsons said that they were not prepared to resell the property back. They had actually sold the property to someone else

Relief sought: Issues:

Are the Bahrs entitled to specific performance? The issues are substantially whether the registered title of the second respondents (the Thompsons) may now be disturbed and whether, in any event, the appellants are entitled to the remedy of specific performance against the first respondent, the second respondents, or all of them.

Relevant Statute(s): Procedural History: Plaintiff/Appellant’s arguments Defendant/Respondent’s arguments: Result: Judge’s reasoning:

Thompsons are registered proprietors. The only significant exceptions to indefeasibility is fraud. Where there are independent in personam rights, and no further transaction, the court will compel the registered proprietor to reconvey the property. Fraud Timing is significant. The Thompsons wrote to the Bahrs after registration that they agreed to be bound. They repudiated afterwards. If there was fraud, it could only be supervening fraud. No problem with supervening fraud -Mason and Toohey Unlike Sutton v O’Kane, the Thompsons were aware of the legal situation.

Wilson and Toohey JJ: I.) Was there fraud? II.) Could there be supervening fraud? If the designed object of a transfer be to cheat a man of a known existing right, that is fraudulent, and so also fraud may be established by a deliberate and dishonest trick causing an interest not to be registered and thus fraudulently keeping the register clear. -Wahima Having actual knowledge that registration will defeat unregistered interests is not fraud (s182.) What is meant by saying that the second respondents bought lot 340 with the knowledge that they were bound by the terms of the agreement? What does the expression ‘subject to’ mean in this context? Judges: there was no designed object to cheat in the transfer. No intention on the part of the Thompsons at time of transfer. “Can it be said, using the language of Wahima, that the designed object of the transfer to the second respondents was to cheat the appellants of a known existing right? We think that the evidence falls short… No fraud. After registration, there was an active undertaking. The fraud to which ss68 and 134 refer to is fraud committed in the act of acquiring a registered title. No supervening fraud- narrow interpretation In personam In personam rights are not contrary to indefeasibility. (Frazer v Walker) CoT is conclusive, but it won’t protect registered proprietor from consequence of his own conduct, before or after registration, which gives rise to a personal equity in another. Nicolay had legal interest, and Bahr had equitable interest by reason of the contractual provision. It was not a contract of repurchase. It was an agreement/contract to enter into an agreement. Repurchase would have to happen. The agreement did not prevent Nicolay from selling the property, but N still owed an obligation to the Bahrs. Therefore, N should discharge his obligation either by reconveying back to the Bahrs himself, or if he sells it, he should compel his purchaser to reconvey. Clause 4 does this, to discharge N’s liability. Thompson’s actions:

Clause 4- they understood that N would not sell unless they agreed to be bound by the agreement. The Thompsons wrote the letter undertaking to be bound. Evidence shows that they accepted the obligation to the Bahrs to reconvey. In personam is established not because of mere notice, but because of their undertaking to be bound. Brenan J cl.6 conferred an equitable interest for B against N. Ts purchased the property subject to cl6 of the B-N contract. Clause 4 was more than a mere acknowledgement- it was a contractual stipulation. If registered under the LTA, a purchaser takes land free of an unregistered interest (NZ LTA 182). But, there is more than mere notice. Purchaser purchased property on terms that they would be bound, and this makes them subject to the unregistered interests. If you undertake that transfer should be subject to an unregistered interest, he may be compelled to honour it. In equity’s eyes, this is fraud, but under the LTA, it is not technically fraud. LTA is ok if it is just mere notice. But a person is bound by his undertaking to give effect to an unregistered interest. Equity imposes a constructive trust, so that the legal owner holds title as a trustee. So LTA indefeasibility still stands, but legal owner holds title as trustee, and he will have to reconvey. Still not taking away title, but forcing him to give it away. Doesn’t impeach T’s registered title. It just enforces the undertaking. Both give title, two by supervening fraud, and two by in personam rights. Supervening fraud vs in personam. Sutton v O’Kane and this case: judges disagree whether there can be in personam rights under LTA.

Blanchard (extrajudicial, NZ): supervening fraud will cover all situations. Supervening fraud. Equity is murky. Difficult to think of a situation where supervening fraud will cover something that in personam wont

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