Categories of Disputes under Torrens Title PDF

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This set of notes discusses the categories of disputes under the Torrens Title...

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Categories of dispute under Torrens title Under Torrens title, the disputes can arise in the following categories: (i)

A dispute between a registered interest and subsequent registered interest - priority will be determined by date of registration (s48 LTA);

(ii)

A dispute between a registered interest and subsequent unregistered interest - the registered interest is subject only to such estates and interests as noted on the register, accordingly the registered interest will prevail, but note the following case; Barry v Heider (1914) 19 CLR 197.

(iii)

A dispute between an unregistered interest and subsequent registered interest - a registered interest will prevail unless one of the exceptions to indefeasibility applies, such as in personam, fraud etc;

(iv)

A dispute between an unregistered interest and subsequent unregistered interest - this areas occupies the most attention – generally the rule is that the first in time will prevail, but there is confusion about the role of caveats, the importance of notice, whether the rule is one of last resort or presumptive, and the theoretical basis of the rule;

Butler v Fairclough (1917) 23 CLR 78 FACTS: Failure to lodge a caveat may lead to a loss of priority for the interest created first in time. Here there were 2 equitable interests both unregistered and 1 st in time fails to caveat, then that interest is postponed. However, it is not accurate to say that mere failure to caveat, of itself, would lead to loss of priority. Instead, postponement will occur where the failure to caveat, considered with all other circumstances, leads to another interest being created.

DECISION Griffith CJ took the view that the caveat had the effect of giving notice to the world that the caveator claims to have an equitable interest. In a dispute between two equitable interests where the holder of the first interest fails to caveat and the holder of the second has searched the Register, the failure would be considered to be postponing conduct such that priority in time would be displaced. *Later cases weakened the principle from this case.

Abigail v Lapin [1934] AC 491

Facts: 

L were RP.



L executed transfers of land in favour of Mrs Heavener as security for costs owed by L to Mrs H.



L has a right to redeem upon repayment.



Mrs H became RP and created a mortgage over the land to A



Dispute is between two equitable interests: L’s right to redeem and A’s subsequent equitable mortgage

Held: -

In favour of A.

-

L had provided Mrs H with indicia of title and armed her to go ‘into the world under false colours as the absolute owner’.

-

A has been misled and entered into mortgage on the basis of Mrs H’s representation that she was the unencumbered owner.

-

L had placed Mrs H in a position to make representation and were thus bound by the natural consequences of their acts.

-

L did not lodge a caveat when their right to redeem came into existence. If they had lodged a caveat, it would ‘disarm’ Mrs H and neutralised their earlier arming conduct.

Concept: -

A failure to caveat by the holder of first equitable interest ( L) may be a relevant factor in a priority dispute and must be considered in light of circumstances of each case.

J & H Just (Holdings) Pty. Ltd. v Bank of NSW (1971) 125 CLR 546

Facts: Mr Josephson the RP of land. He created equitable mortgage in favour Bank of NSW. No caveats was lodged at that time common to the conveyancing practice. The bank protected themselves and took possession of certificate of title. Then, Mr Josephson created second mortgage in favour of J&H Just Holdings. J&H found finding of another mortgage and accepted the explaination that the bank is holding the cert of title for safekeeping. Issue: 2 equitable mortgage in one land and the RP has not maintained payment to mortgage and so the land has to be sold. Who prevails? Held: -

In favour of Bank. Duplication of cert of titles sufficient to protect interest of Bank.

-

Barwick J: The failure to lodge caveat may lead to postponement but does not automatically lead to postponement. ( compare Callinan J in Black v Garlic)

*Heid v Reliance Finance Corp Pty. Ltd. (1983) 154 CLR 326 FACTS: Heid was owner of the property. Sold land to Connel. Signed memorandum of transfer indicating he has received full purchase price but in fact has not. Heid retained the vendor’s liam ( =security) Connell represent the person Gibby as solicitor who is actually not. Heid then passed the certificate of title to Gibby. Gibby then create equitable mortgage to Reliance. Heid has vendor land –euqitable interest. Reliance finace has equitable finacnce DECISION: In favour of Reliance. Conduct of Heid in allowing Gibby to have cert if title , a representation by that person added to his detriment. Heid is to be estopped.



o Priority is only be considered is when competing o Is there foreseeable consequence of what Hied has done that led the interest be created? Yes. o Only get compensation if register is faulty.

Jacobs v Platt Nominees [1990] VR 146 FACTS: -

Mr and Mrs Platt are owner to a motel, controlled by company Platt

Nominees. -

Jacobs the daughter wants to buy motel. Father and daughter did not get along well and agreed intervention of mother to get father agree to sell to daughter.

-

So far as registor is concerned, Platt Nominees are still the registered owners.

-

Jacobs gets an estate contract and has equitable interest. Mr Platt set a second sale t Perpetual Trustee.

-

The sons could stand in the place of mother- father then convinced one of the sons to sign the document. Platt Nominees says interest unequal and that he does not have to look further into the matter ( ie behind the curtain). Jacobs says he is first in place and so prevails.

Held: In favour of Jacob. -

Not critical that a caveat be lodged back in the days.

-

Has reasonable belief that further interest cannot be created by anyone except for her mother.

*Moffett v Dillon [1999] 2 VR 480 Facts: -

M sells his land to D. D is required to make purchase payment.

-

To secure payment, D provide M with an equitable mortgage over the land. Thus, M holds the equitable mortgage (not registered). M lodges caveats to protect his interest.

-

D then obtains mortgage not registrable for from Westpac Bank on the same land. Westpac aware of D’s mortgage but went ahead to M has lodged a caveat which advance the registration of W’s mortgage.

Issue: Dispute is between M equitable charge/mortgage and W’s equitable charge/mortgage. Which of them prevails? Held (unanimous) : In favour of M. -

2 mortgages in one land. Only one is going to get paid.

-

The notice that W has of the earlier interest means that they were bound. No need to consider who has the better equity when there is notice ( Rice v Rice).

-

No conduct by M that warrant postponement. Has equitable mortgage and lodged caveats- everything they could under the Torrens system to protect their interests.

*NB: Consider also Moffett v Dillon: good illustration of the different nuances in the test between first in time, or do you only look at this if the equities are equal (i.e do you consider conduct before applying first in time). Brooking J in Moffett v Dillon retreated from Heid approach of relating equitable principles to the facts of the case to determine which is the better equity – simply notice of earlier interest was fatal to the chance of the second interest taking priority. Thus, the fairness and justice issue is replaced by a simpler question – was there notice? Buchanan J. was along similar lines. Ormiston J. whilst recognizing the logic and simplicity of this test said it was preferable to employ the prima facie first in time test – under this test notice only becomes relevant where there is some other factor which might point to the later equitable interest as being the better equity. With Brooking and Buchanan JJ. the focus is on the second interest holder – by contrast with Ormiston J. the focus is on the first interest holder. Arguably Ormiston J. approach preferable because it proceeds on view that first interest is fully effective according to its terms, and that the person creating the second interest can only carve this out from what is left after giving away first interest. His approach also accords with doctrinal frameworks of estoppel and reasonable foreseeability. *Consider also doctrinal frameworks, agency, estoppel and reasonable foresseability. Agency was used in Abigail v Lapin, estoppel (Gibbs and Wilson JJ., Heid v Reliance – for criticisms of this see Rodrick, p183, reasonable foresseability, (Mason and Deane JJ. Heid).

Overview: 1. Identify who has competing unregistered interest 2. Do the two interests compete with each other? 3. How to resolve? - Apply Rice v Rice 3 elements - Apply theoretical basis in Heid v Reliance Finance ( was it RF that the second interest would be created?) - Does notice operate as a separate category in notice scenario ( Moffett v Dillon) 5. Authorities for aguments: - Apply Jacobs v Platt Nominees, J&H Holdings Just and distinguish from other cases -

Distinguish Jacobs (because unusual family situation/ Just distinguishable because the nuances of immediate indefeasibility has not been worked out then , Callinan J in Black v Garlic says caveat is important ) and apply others ( 2nd entitlement applies)

(v)

A dispute between a mere equity and subsequent unregistered interest - the good faith purchaser for value of the equitable estate and without notice of the mere equity will prevail.

Latec Investments v Hotel Terrigal (1965) 113 CLR 265. Facts: Hotel T grant mortgage to Latec. Latec did not get repayments and so exercise power of sale. Latex sold to Southern Hotels which was wholly owned and controlled by Latex at reserve price (which was later found out to be fraudulent). Southern went to MLC Nominees and got equitable mortgage called floating charge (a type of equitable security) over Hotel T. A security floats over the assets and not crystalise/attach the assets. Hotel T only has mere equity ( a right to set aside this transaction) due to the fraudulent sale. Issue :Whether MLC a good faith purchaser Yes....