|
|
[Home]
[Databases]
[WorldLII]
[Search]
[Feedback]
High Court of Australia |
I.A.C. (FINANCE) PTY. LTD. v. COURTENAY [1963] HCA 64; (1963) 110 CLR 550
Real Property (N.S.W.)
High Court of Australia
Dixon C.J.(1), Kitto(2), Taylor(3) JJ.
CATCHWORDS
Real Property (N.S.W.) - Torrens System - Contract for sale of land - Transfer to purchasers and mortgage back to vendor lodged for registration by vendor's solicitor - Subsequently withdrawn from registration by same solicitor without knowledge or authority of purchasers - Authority to withdraw not to be implied from authority to lodge - Contract of resale from purchasers to vendor - Not completed - Sale by vendor to new purchaser - New purchaser having express notice of earlier contract - Transfer to new purchaser - Mortgage by new purchaser - Right to registration - Failure of original purchasers to lodge caveat - Whether statutory right to registration lost on equitable principles - Real Property Act, 1900-1956 (N.S.W.), ss. 36, 43, 43A.
HEARING
Sydney, 1962, August 14-17, 20; 1963, December 20. 20:12:1963DECISION
1963, December 20.2. Miss Austin was entitled as registered proprietor to an estate in fee simple in the land sold. It consisted of fifty-two or fifty-three acres. It appears that on 24th February 1958 she executed a contract of sale of her land, which is the subject of these proceedings. The four plaintiffs (i.e. the three Courtenays and Victor Butler) were the purchasers. Some days before 24th February 1958 she had received a preliminary deposit of 100 pounds on the sale. The purchase price named in the contract was 15,000 pounds and the terms contained in the contract were that 3,000 pounds should be paid as deposit, and that the balance of the purchase money would be payable within three years, bearing interest at six per cent. The purchasers would place in the hands of the agent a cheque for 3,000 pounds by way of deposit and the balance was to be secured by mortgage back to the vendor. The contract said the mortgage should contain the usual terms and conditions and be prepared by the vendor's solicitor at the expense of the purchasers. It should be a mortgage for three years and of course interest was provided for. Endorsed on the contract is a receipt for payment of 3,000 pounds in cash by Mr. Hector Lewis Courtenay, one of the plaintiffs. W. T. Easton & Co. were the vendor's firm of solicitors and Mr. W. T. Morck was the purchasers' solicitor. A transfer was executed by the registered proprietor, Thelma Valette Austin, in consideration of 15,000 pounds paid to her, the receipt whereof she thereby acknowledged. The transfer was to the four plaintiffs (three Courtenays and Victor Butler) of her whole estate and interest in the land. The transfer is expressed to be signed at Sydney on 23rd July 1958 by the transferor Thelma Valette Austin in the presence of W. T. Easton, solicitor, and it is accepted and verified as correct by Mr. W. T. Morck, solicitor to the transferees. The evidence shows that Easton lodged the memorandum of transfer and the mortgage back for registration at the Lands Titles Office but that he withdrew them on 16th September 1959. On the day following the withdrawal, namely 17th September 1959, a contract of sale was made between the defendant appellant Denton Subdivision Pty. Ltd. and the vendor whose name though left blank in the particulars is given as T. Austin, witnessed by W. T. Easton as her solicitor. The vendor's solicitors are given as W. T. Easton & Co. The whole amount of the purchase money under this contract is given as 26,000 pounds, the deposit being 1,500 pounds. (at p565)
3. In his reasons for judgment Hardie J. says that the uplifting of the documents from the Registrar-General's office "was undoubtedly related to the negotiations for the sale of the same land by Miss Austin which were then in progress or had just been finalised. . . . On 28th September 1959, again without any reference to or consultation with the plaintiffs or their solicitor, Mr. Easton forwarded a letter to the Registrar-General in these terms: 'Re Dealing Nos. H194403-4. We refer to the aforementioned transfer and mortgage and confirm that same have been withdrawn from registration.' No explanation was forthcoming as to the circumstances under which Mr. Easton came to write this letter." These documents were not relodged for registration and Easton, who was arrested in March 1960, appears to have retained them in his possession. (at p566)
4. The suit out of which this appeal arises was commenced by a statement of claim dated 3rd September 1960 and numbered in the Equity Court No. 1341 of 1960. On 15th August 1960, however, a suit numbered 1154 had been commenced in the Equity Court based upon the contract between Miss Austin and the respondents, the Courtenays and Butler, for the sale of the land for 15,000 pounds, 3,000 pounds being paid as deposit and 12,000 pounds by a mortgage back. Apparently, after delivery of the statement of claim this suit was left in suspense while the question as to who was entitled to the land was fought out in suit No. 1341 of 1960 brought by the three Courtenays and Victor Butler as plaintiffs against Denton Sub-divisions Pty. Ltd., I.A.C. (Finance) Pty. Ltd., Hermes Trading & Investment Pty. Ltd. and Miss Austin. I.A.C. (Finance) Pty. Ltd. and Hermes Trading & Investment Pty. Ltd., a company misnamed in the testimonium of at least one of the documents, were mortgagees, while Denton Subdivisions Pty. Ltd. was a party to the contract with Miss Austin. We were not informed as to the details of the dealings with the moneys. It is enough to say that it is sufficiently evident that the money cannot be restored and there was mishandling of money. As has already been stated Easton was arrested about March 1960. The question in this suit therefore comes back to the priorities in relation to the dealings with the land whether by way of security or otherwise and substantially the question is whether the Courtenays, notwithstanding the withdrawal of the transfer to them, are to be preferred to Denton Subdivisions Pty. Ltd. and those who obtained securities under that company in recourse to the land. (at p566)
5. A question of fact in the case is how the withdrawal of the transfer was related to the transaction with Denton Subdivisions Pty. Ltd. Of course, looking at the transactions in a general way it is obvious that some dishonesty took place somewhere and it is taken for granted that it arose from the dishonesty of Easton. But let it be supposed that the transactions were all straightforward. On such a footing three courses were open to the parties. It would have been open to Miss Austin by agreement with the Courtenays and Butler to rescind the first contract. She then might have resold to Denton Subdivisions Pty. Ltd. Secondly, the Courtenays and Butler might have resold the land to her and she might then have sold it to Denton Subdivisions Pty. Ltd. Thirdly, the Courtenays and Butler, leaving the purchase by them from her standing, might themselves have sold the land to Denton Subdivisions Pty. Ltd. Of course these transactions would have expressed considerations which by agreement of all parties distributed the money passing in accordance with the true intention they all possessed in common. (at p567)
6. The transfer and mortgage which gave effect to the first transaction (i.e. the sale by Miss Austin to the Courtenays and Butler) were executed and placed in the hands of Easton on 23rd July 1958. Hardie J. in his reasons said that he was satisfied that Easton was left with the custody of the transfer for the sole purpose of lodging it, together with the mortgage to Miss Austin, for registration. For some unexplained reason the two documents were not lodged at the Registrar-General's office until 22nd April 1959. It seems apparent that Easton's authority could not have extended to withdrawing the transfer the registration of which was essential to give title to the purchasers. However, it is conceivable that a rescission might have carried with it as a consequence authority for the withdrawal of the transfer as well of course as of the mortgage. On 28th September 1959, Easton wrote a letter to the Registrar-General confirming the fact that the transfer and mortgage had been withdrawn from registration. Had the transfer not been withdrawn it could hardly have been disputed that a subsequent dealing lodged subsequently could not take priority when the question was which should be registered first. Of course in the present case neither the transfer to the Courtenays and Butler nor the dealings with Denton Subdivisions Pty. Ltd. and the other two appellants have been registered. It seems obvious, however, that the withdrawal of the transfer was unauthorized in fact, and was not to be regarded as ostensibly authorized, whatever practice may have developed in the Lands Titles Office. The rights of the Courtenays and Butler - the transferees - could not be prejudiced by the actual but unwarranted withdrawal of the memorandum of transfer. An attempt was made to show that if otherwise under the legal order of priority the Courtenays and Butler might come first, such priority of the Courtenays and Butler as the first purchasers of the land who had completed their contract and lodged the transfer to them for registration had been lost. It was said to have been lost by conduct which on equitable principles would be regarded as postponing a claim in a conflict of interests under the general law. Hardie J. went thoroughly into the facts and I see no reason again to discuss them. I agree that no conduct on the part of the Courtenays and Butler or their solicitor occurred which enabled Easton to defraud Denton Subdivisions Pty. Ltd. or mislead them into adopting any prejudicial step. But I am not disposed to think that under the Torrens system a priority giving a right to registration under the statute can be lost on equitable grounds of such a character. (at p568)
7. This case raises no question of the priority which a registrable instrument may take as a dealing made bona fide on the state of the Register as against a prior unregistered dealing. Here the title prior in time existed in the form of a registrable instrument lodged for registration, and the competition is with a later registrable instrument made in pursuance of a later transaction. (at p568)
8. Whatever be the meaning of s. 43A, it cannot give priority to the later dealing over the earlier in circumstances like this. (at p568)
9. I am therefore of opinion that Hardie J. was right and I do not think Denton Subdivisions Pty. Ltd. and I.A.C. (Finance) Pty. Ltd. and Hermes Trading & Investment Pty. Ltd. obtained any interest or interests in the land to which the interest of the Courtenays and Butler should be postponed or by which that interest could be defeated. I am therefore of opinion that the defendants in suit No. 1341 fail. (at p568)
10. I think the appeals should be dismissed with costs. (at p568)
KITTO J. Three appeals are before us. Each is by one of five defendants to a suit in the quitable jurisdiction of the Supreme Court of New South Wales. The plaintiffs in that suit, who for convenience will be referred to as the Courtenays, sued to establish their right to have registered under the provisions of the Real Property Act, 1900-1956 (N.S.W.) a transfer of certain land which had been executed in their favour by the registered proprietor. The defendants were (1) the registered proprietor, a Miss Austin; (2) a company called Denton Subdivisions Pty. Limited, (I shall refer to it as Denton), which had obtained from Miss Austin a transfer in its favour subsequent in date to the Courtenays' transfer, and asserted a right to registration which, if soundly based, would defeat the Courtenays' claim to registration of their transfer; (3) a company called I.A.C. (Finance) Pty. Limited (to be called I.A.C.), which held a memorandum of mortgage from Denton and claimed a right to have it registered in the event of Denton's transfer being registered; (4) a company called Hermes Trading and Investment Pty. Limited (to be called Hermes) which held a later memorandum of mortgage from Denton and claimed a right to have it registered, subject only to I.A.C.'s mortgage, in the event of Denton's transfer being registered; and (5) the Registrar-General. The appellants are the three companies. Miss Austin having died since the date of the Supreme Court's order, a representative of her estate has been made a party to the appeal but has taken no part in the argument. The Registrar-General has appeared before us by counsel who has assisted us with a thoughtful argument, but he properly maintains an attitude of neutrality as between the contending parties. (at p569)
2. The Courtenays' transfer from Miss Austin was produced to the Registrar-General for registration on 22nd April 1959, together with a memorandum of mortgage back from the Courtenays to Miss Austin. Denton's memorandum of transfer from Miss Austin and I.A.C.'s memorandum of mortgage from Denton were produced for registration some seven months later, on 25th November 1959. Hermes' memorandum of mortgage from Denton was produced later still, on 10th February 1960. None of the five instruments has been registered. Since s. 32 (2) of the Real Property Act requires the Registrar-General to record (i.e. to register, see. s. 35) registrable instruments and s. 36 (1) provides that every instrument presented for registration shall be registered in the order of time in which the same is produced for that purpose, it would be clear, if there were no other relevant facts than I have stated, that the Courtenays' transfer would have to be registered first; and the result would be that Miss Austin's transfer to Denton, and Denton's mortgages to I.A.C. and Hermes, would all become incapable of registration. The argument for the appellants both at the trial and on appeal revolved around three contentions. The first was that the Courtenays' application of 22nd April 1959 for registration of the transfer to them was withdrawn, in the sense of being terminated, on 16th September 1959; that, as no new application for registration of the instrument was made before Denton and its mortgagees lodged their respective instruments to be registered, s. 36 (1) works against the Courtenays and not for them; and that by virtue of s. 43, or alternatively s. 43A, of the Real Property Act the appellants are free to obtain registration of their instruments notwithstanding any notice they may have received at any time of the Courtenays' interest in the land. A second contention was that the Courtenays have resold the subject land to Miss Austin and are no longer entitled to have her transfer to them registered. Finally it is said that the circumstances in which each of the appellants parted with the moneys for which it obtained the instrument it now seeks to have registered were such that as against them the Courtenays are in equity disentitled to insist on their statutory right to priority of registration. (at p570)
3. The facts that are relevant to the first contention may be quickly related. The transfer to the Courtenays was taken, and their mortgage back to Miss Austin was given, upon completion of the contract of sale from Miss Austin to the Courtenays. The sale price was 15,000 pounds. A deposit of 3,000 pounds had been paid to Miss Austin at the time of the contract, and the mortgage was given, in accordance with the contract, to secure the balance, viz. 12,000 pounds. Settlement of the transaction took place on 23rd July 1958, the vendor-mortgagee acting through one solicitor and the purchasers-mortgagors acting through another. The memorandum of transfer and the memorandum of mortgage had been executed in anticipation. Miss Austin's signature to each was witnessed by her solicitor, he being described on the face of the mortgage as her solicitor. The Courtenays' signature to the mortgage was witnessed by their solicitor; but they did not sign the transfer at all: their solicitor signed it, with the addition of the words: "solicitor for Transferee(s) whose signatures cannot be obtained without difficulty or delay". (The statutory authority for this is to be found in the Fifth Schedule to the Act.) A procedure for settlement was adopted which, according to the evidence, followed the usual practice. The transfer, duly executed, was produced by Miss Austin's solicitor but retained by him. A representative of the Courtenays' solicitor then handed to Miss Austin's solicitor the mortgage, signed by the Courtenays, together with a cheque for a sum covering usual adjustments and the amount of the registration fee payable in respect of the transfer. The transfer was left with Miss Austin's solicitor for the sole purpose (as the trial Judge expressly found) of its being lodged by him, together with the mortgage, with the Registrar-General for registration. (at p570)
4. For some unexplained reason, seven months went by before the instruments were lodged in the Registrar-General's office. The profession had apparently become used to long delays in that office, and the Courtenays' solicitor, having no reason to doubt that the transfer had been lodged with due expedition, made no inquiry as to what had happened. Nothing turns, however, on the delay, for no event occurred in the interval that could affect the relative positions of the parties. It was after the transfer and the mortgage had been lodged, and while they were still awaiting registration, that Miss Austin entered into a contract with Denton to sell the same land to it. Her solicitor was informed by a firm of estate agents on 15th September 1959 that this sale had been agreed upon, and on the next day he uplifted from the Registrar-General's office both the transfer to the Courtenays and their mortgage to Miss Austin. A receipt which he signed for these documents contained the words "dealings withdrawn". A few days later he wrote the Registrar-General a letter confirming that the instruments had been "withdrawn from registration". It may be that he had no dishonest purpose in doing this, and thought that the best way of carrying out a repurchase of the land by his client from the Courtenays would be by cancelling the transfer that had been lodged and giving Denton a direct transfer from Miss Austin. But he did not consult the Courtenays or their solicitor, and he received no authority from either of them to terminate the application which he had initiated on their behalf for registration of their transfer. The appellants contend that he had implied or at least ostensible authority to do so, because he had been authorized to lodge the instruments in the first place, and it was well known at the time that in the Registrar-General's office a practice existed of allowing instruments awaiting registration to be uplifted by the person who lodged them. (at p571)
5. On the assumption that this view as to the solicitor's authority should be accepted, the appellants rely on s. 36 (1) to entitle them to registration ahead of the Courtenays' transfer. To any suggestion that their right is subject to the Courtenays' interest as having been acquired with notice of that interest they make the reply that s. 43, or alternatively s. 43A, of the Real Property Act exempts them from the effect of any such notice. If the preliminary assumption were sound, I should be of opinion that Denton, if not the other appellants, should succeed by virtue of s. 43A, though not of s. 43; and as the operation of these sections has been argued at length I shall explain at once why that would be my conclusion, although, for reasons which I shall state subsequently, I think the assumption as to the solicitor's authority is unwarranted. (at p571)
6. The purpose and effect of s. 43A (1) have been the subject of controversy among legal writers, and they are not apparent until the provision is read, as its numbering suggests that it should be, as a supplement to the preceding provisions, and in particular ss. 41, 42 and 43. Until registration, a person who has dealt with a registered proprietor cannot have more than an equitable interest, for until that event even a registrable instrument cannot pass the estate or interest which it specifies: s. 41. After registration, he holds, by virtue of s. 42, free from all encumbrances, liens, estates or interests not notified on his certificate of title (with immaterial exceptions); but this does not exclude equitable interests: Barry v. Heider [1914] HCA 79; (1914) 19 CLR 197 ; Great West Permanent Loan Co. v. Friesen (1925) AC 208 ; Abigail v. Lapin (1934) AC 491, at p 500; [1934] UKPCHCA 1; (1934) 51 CLR 58, at pp 64, 65 . Even as regards equitable interests he has a degree of immunity by virtue of s. 43. But the immunity under that section is limited: it is only such immunity as is created by exonerating him from the effect of notice of any trust or unregistered interest. "Except in the case of fraud," the section says, "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 affected by notice, direct or constructive, of any trust or unregistered interest." It is settled law that the immunity thus conferred, upon a purchaser for example, is afforded to him if and when he becomes registered and not before: Templeton v. Leviathan Pty. Ltd. [1921] HCA 55; (1921) 30 CLR 34, at pp 54, 55 ; Lapin v. Abigail [1930] HCA 6; (1930) 44 CLR 166, at pp 182, 188, 196, 203 (cf (1934) AC, at p 509; (1934) 51 CLR, at p 73) . In order to appreciate the nature of the addition which s. 43A enacts it is important to have in mind that this conclusion as to the operation of s. 43 is not reached by a process of interpretation. It is a conclusion not as to the meaning of the section but as to the way it works. A purchaser, his interest before registration being necessarily equitable only, derives no priority over the holder of a pre-existing equitable interest from absence of notice: Phillips v. Phillips [1861] EngR 1044; (1861) 4 De G F & J 208, at pp 215, 216 [1861] EngR 1044; (45 ER 1164, at p 1166) ; Abigail v. Lapin (1934) AC, at pp 498, 499, 504; (1934) 51 CLR, at pp 63, 64, 68 . Consequently, a provision that a person is not to be affected by notice of prior interests has no application to him so long as he remains unregistered. For the same reason, it has no application even to one who has become registered, if he acquired his estate or interest as a volunteer. It is only a person having a legal estate or legal interest acquired for value whose position is prejudiced by his having received, before paying his money, direct or constructive notice of an outstanding equitable interest. This is so even under the Real Property Act, for a registered interest is not (as was suggested in the course of the appellants' argument) some special kind of statutory interest - it is a legal interest, acquired by a statutory conveyancing procedure and protected from competition to the extent provided for by the Act, but having, subject to the Act, the nature and incidents provided by the general law. So all that the provision does which I have quoted from s. 43 is to protect against notice of any trust or unregistered interest a legal estate acquired for value. The statement that it has no operation in favour of a person before he becomes registered means, simply, before he acquires a legal estate by registration. (at p573)
7. It is to this situation, as I understand the matter, that s. 43A (1) is addressed. Indeed, the introductory words by which its operation is limited, "For the purpose only of protection against notice", preclude, I think, any other view. Something which is less than a legal estate is to be deemed a legal estate for the purpose of the protection against notice which s. 43 provides for a legal estate. What is to receive this protection is the estate or interest in land "taken" by a person under an instrument which either is registrable or, if signed by or on behalf of that person, would be registrable. The word "taken" must be construed having regard to the provision in s. 41 that no instrument until registered shall be effectual to pass any estate or interest in land under the Act. The estate or interest "taken" under an unregistered instrument must therefore mean the estate or interest which the instrument on its true construction purports to confer, and upon its being registered will confer. That estate or interest is given by s. 43A the same immunity from the effect of notice as s. 43 provides for registered estates or interests in virtue of their being legal estates or interests. The result is that (fraud apart) a purchaser may pay his money to the registered proprietor in exchange for a registrable instrument (or one that will be registrable upon his signing it) without troubling about any notice that he may have received of a trust or unregistered interest. Provided that he lodges his instrument for registration before the holder of a competing prior interest renders the purchaser's instrument no longer registrable by lodging a registrable instrument for registration or entering a caveat, s. 36 (1) will ensure that the purchaser obtains registration and thus obtains the protection of s. 43 (see also s. 36 (3)). This is so because, by reason of a proviso added to s. 74 by the amending Act which inserted s. 43A, no caveat subsequently entered can defeat him, and the holder of the competing interest will not be entitled to the intervention of a court of equity on the ground that the purchaser acquired his right to registration with notice of that interest. (at p573)
8. Accordingly in the present case Denton would be entitled by virtue of s. 43A, in my opinion, to have its transfer from Miss Austin registered, notwithstanding that before the settlement of its purchase it had express notice of the Courtenays' interest, if the Courtenays' prior application for registration had been effectually determined by the action that was taken by Miss Austin's solicitor. But Hardie J.'s conclusion that the application was not so determined seems to me to be plainly correct. It may well be that where a person has lodged an instrument on behalf of another as his solicitor, or in any other capacity which implies an authority to act for him in regard to the matter generally, the Registrar-General and other persons are justified in assuming in the absence of any indication to the contrary that the general authority is undetermined and extends to uplifting the instrument so as to withdraw the application for its registration: cf. Barry v. Heider [1914] HCA 79; (1914) 19 CLR 197, at p 210 . But the situation cannot be the same where a memorandum of transfer is lodged by a person who is shown as the solicitor for the transferor only, and whose possession of the instrument - which normally would be lodged by the transferee's solicitor - is to be accounted for by the fact that the transferor is taking a mortgage back and requires the transfer in his hands so that he may be in a position to perfect his security by lodging it for registration and lodging the mortgage immediately afterwards. It seems to me that in such a case, even if both solicitors know that the Registrar-General's office follows the loose practice referred to, there is nothing to make it a reasonable inference that the transferee meant to make the transferor's solicitor his agent not only to apply for registration but also to withdraw the application if he should choose to do so. What was said by Isaacs J. in relation to a caveat in his dissenting judgment in Barry v. Heider [1914] HCA 79; (1914) 19 CLR 197 states, I think, what anyone would naturally infer in such a situation: "the authority to lodge (the instrument) is complete in itself, and is exhausted when the (instrument) is lodged . . . The person authorized to lodge the (instrument) is then functus officio" [1914] HCA 79; (1914) 19 CLR 197, at pp 220, 221 . In my opinion the proper conclusion in the present case is that the purported withdrawal of the transfer by Miss Austin's solicitor, being unauthorized, left the application for registration on foot notwithstanding the physical removal of the document from the Registrar-General's custody. The appellants' first contention, in my opinion, fails. (at p574)
9. The contention based on the resale by the Courtenays to Miss Austin ought also, I think, to fail. The contract of resale was entered into on 24th September 1959. The agreed price was 22,275 pounds, payable by a deposit of ten per cent and a cash payment of the balance on completion. The Courtenays repeatedly pressed for completion of the matter, but in March 1960 Miss Austin's solicitor was found to have misappropriated moneys including the money he had received from the Courtenays on settlement of their purchase from Miss Austin. Having lost this money, Miss Austin was unable to complete the repurchase, and it is still uncompleted. The Courtenays asserted before Hardie J. that they had determined the contract by reason of Miss Austin's default; but his Honour found it unnecessary to decide whether or not the contract was still on foot, being of opinion that even if it was the Courtenays were entitled to have their transfer from Miss Austin registered. This conclusion seems clearly correct. The contract of resale did not rescind or discharge the contract of sale from Miss Austin to the Courtenays: it assumed its completion. Each contract contemplated a transfer, the one from Miss Austin to the Courtenays and the other from the Courtenays to Miss Austin, and there was no agreement at any time to obviate the circuity thus involved. A passage from the majority judgment in Currey v. Federal Building Society [1929] HCA 28; (1929) 42 CLR 421, at pp 433, 434 was relied upon in support of the argument that the contract of resale put an end to the Courtenays' right as against Miss Austin to have their transfer effectuated by registration. The passage shows that a decree for specific performance of both a contract of sale and a contract of resale would not require the parties to go through the steps of transfer and retransfer in a case where no transfer under either transaction has been lodged for registration. But that is only a matter of the machinery by which the Court will give effect to the rights of the parties under both instruments taken together. Where, as in the present case, the contract of sale has been carried out to the extent that a transfer has been lodged for registration, and the original vendor is unwilling or unready to complete his repurchase, there is no ground whatever for holding that the existence of the contract of resale provides a legal obstacle to the registration. (at p575)
10. I turn to the appellants' third contention. In relation to each of the appellants, the case is one of competing equitable interests, with the addition that the Courtenays have not only the prior equity but also a statutory right to registration. Neither can be postponed to the interests of the appellants unless the Courtenays have by act or omission made it inequitable that they should be allowed to insist upon the priority which order in time prima facie gives them. The general principle applicable in such a case is thus stated in the judgment of the Privy Council in Abigail v. Lapin [1934] UKPCHCA 1; (1934) AC 491; (1934) 51 C L R 58 : "the possessor of the prior equity is not to be postponed to the possessor of a subsequent equity unless the act or omission proved against him has conduced or contributed to a belief on the part of the holder of the subsequent equity, at the time when he acquired it, that the prior equity was not in existence" (1934) AC, at pp 498, 499; (1934) 51 CLR, at p 63 . (at p576)
11. The facts concerning the appellants' transactions with respect to the land are as follows. It was in September 1959 that Miss Austin agreed to sell to Denton the land she had already sold to the Courtenays. According to the learned trial judge's findings, which must be accepted, the Courtenays had no knowledge until some time in 1960 that Miss Austin contemplated a second sale of the land. However, she had entered into a contract to sell to Denton on 17th September 1959, the price (26,000 pounds) being made payable as to 1,500 pounds in cash as a deposit, as to 5,000 pounds by second mortgage to the vendor, and as to the balance in cash on completion. It was contemplated that the cash to be paid on completion would be raised partly by a first mortgage, and in fact it was so raised from I.A.C. Settlement took place on 23rd November 1959. By that time Miss Austin had got the Courtenays to agree to resell the land to her for 22,275 pounds, and a contract was entered into. It had not been completed, however, when the time came for settlement of her sale to Denton. Settlement of that sale took place in the office of Miss Austin's solicitor. Denton's solicitor arrived there before the representative of I.A.C. He had been told by a search clerk of the existence in the Registrar-General's office of certain notations indicating that the land had been the subject of a transfer to the Courtenays and a mortgage to Miss Austin, and that both instruments had been lodged for registration but uplifted. While awaiting the arrival of I.A.C.'s representative, Denton's solicitor, who at that stage was under the misapprehension that the transfer and mortgage he had been told about related to other land, mentioned the instruments to Miss Austin's solicitor, and was told that in fact they related to the land his client was buying. He asked what was the nature of the withdrawal of the instruments from the Registrar-General's office, and received the answer that Miss Austin had purchased the land back from the Courtenays. He was shown the contract of sale which the Courtenays had executed, but he did not ask whether it had been completed or whether the purchase money had been paid. Miss Austin's solicitor spoke of having withdrawn the Courtenays' instruments for registration as a way of settling the resale from the Courtenays to Miss Austin; and apparently Denton's solicitor was satisfied to take it, without further inquiry, that the Courtenays' interest in the land as purchasers from Miss Austin had ceased. The representative of I.A.C.'s solicitor was not present until after the conversation on this topic had finished. His principal had learned by search that the Courtenays' transfer and mortgage back had been withdrawn and that on the register Miss Austin's title was clear. It was in this situation that the settlement took place. I.A.C. advanced 16,000 pounds to Denton and that sum together with about 3,000 pounds was paid to Miss Austin's solicitor. A transfer by Miss Austin to Denton and a first mortgage by Denton to I.A.C. were then handed to I.A.C.'s solicitor. As to the remaining 5,000 pounds, promissory notes from Denton were given and accepted in place of the second mortgage for which the contract had provided. On 23rd November 1959 the transfer to Denton and its mortgage to I.A.C. were lodged in the Registrar-General's office for registration, and were still awaiting attention there when the litigation commenced. Finally, there came the Hermes transaction. On 28th January 1960, Hermes advanced 5,000 pounds to Denton, receiving as security a memorandum of mortgage in respect of the subject land. It was duly executed by Denton as mortgagor, and it named Hermes as mortgagee in the body of the instrument; but in the testimonium clause it named Challis (Finance) Pty. Limited as mortgagee. The security was expressly subject to I.A.C.'s first mortgage. The negotiations for the loan by Hermes had all taken place in January 1960, and Hermes had no notice before parting with its money that the Courtenays had or claimed any interest in the land. Hermes lodged its mortgage on 1st February 1960 for registration, but it was still unregistered when the proceedings began. (at p577)
12. Hardie J. found as a fact that Denton, before the settlement of its contract of purchase from Miss Austin, received through its solicitor positive and unambiguous notice, by the oral statements made by her solicitor in the conversation which preceded the settlement, that the Courtenays had been the owners (his Honour meant, of course, the beneficial owners) of the subject land at the date of Miss Austin's contract with Denton, and his Honour held that nothing contained in the contract of resale or said in the conversation before the settlement justified the conclusion that the resale agreement had been carried out, or that Miss Austin had been restored to the position of beneficial owner of the land. This is plainly correct. Denton's solicitor took the chance that the Courtenay's rights as purchasers from Miss Austin had ceased. Miss Austin's solicitor no doubt meant him to understand that that was so, and he saw the contract; but he did not trouble to go into the question whether the contract had been completed, and in particular he made no inquiry of the Courtenays or their solicitor. The question, however, is not whether he acted wisely or unwisely, reasonably or unreasonably; and it is not to the point that what he was told gave his client notice of the Courtenay's rights. This is not a case of a competition between a legal interest and an equitable interest. The question is whether Denton is entitled in equity to insist that the Courtenays' statutory right to get a legal title be postponed to its own; and in order to succeed it must show that by "something tangible and distinct having grave and strong effect to accomplish the purpose" (1934) AC, at p 504; (1934) 51 CLR, at p 68 the Courtenays led it to acquire its interest in the belief that the Courtenays' interest did not exist. Denton's solicitor having been told enough to show that the Courtenays' interest existed unless by or under the contract of resale to Miss Austin it had been terminated, what was there to induce the belief that it had been so terminated? Nothing whatever, beyond the statement of Miss Austin's solicitor to that effect; and for that statement the Courtenays neither gave any authority nor can properly be held responsible. The only ground suggested for holding that they should be postponed to Denton because of the representation made by Miss Austin's solicitor is that by letting him lodge their transfer for registration they put him in a position to take advantage of the Registrar-General's practice in the matter of withdrawals, and, having done that, by not entering a caveat to guard against the possibility of an unauthorized withdrawal they provided him with the opportunity of persuading Denton that the Courtenays no longer had any interest in the land. But the question is not whether anything they could possibly have done would have prevented the deception of Denton's solicitor; it is whether their conduct was such that the deception was a natural consequence, so that they may fairly be said to have "armed" Miss Austin's solicitor, as Lord Selborne would have said, "with the power of going into the world under false colours": Dixon v. Muckleston (1872) LR 8 Ch 155, at p 160 . I am prepared to assume, though I do not say it was established, that all the solicitors concerned were well aware of the Registrar-General's practice. Even so, the answer to the question, in my opinion, is that in the circumstances it was not reasonably to be foreseen by the Courtenays or their solicitor that a third party might, without inquiring of them, part with money on an assumption that, contrary to all ordinary experience, their transferor's solicitor had their authority to withdraw from registration the transfer which to all appearances they were absolutely entitled to have registered. It is true that a caveat would have given notice to the world of the continuing claim of the Courtenays to an interest as purchasers of the land; but the mere lodging of the transfer gave clear notice that the interest had come into existence, and put persons in the position of Denton upon inquiry as to whether the interest had ceased. We have been reminded that in Butler v. Fairclough [1917] HCA 9; (1917) 23 CLR 78 Griffith C.J. said: "If a man having a registrable instrument neither lodges it for registration nor lodges a caveat to protect it, it is clear that a registrable instrument later in date, but lodged before his, will have precedence, notwithstanding notice of the earlier instrument received before lodging his own. That is by reason of the express provisions of the Statute" (1917) 23 CLR, at p 92 . But the Courtenays did lodge their transfer for registration, and in my judgment it is not to be laid at their door that Denton's solicitor was deceived by the assurances of a rogue. (at p579)
13. In my opinion the appeals fail and should be dismissed. (at p579)
TAYLOR J. These appeals are from a decree of the Supreme Court of New South Wales (Hardie J.) whereby the respondents, as plaintiffs, secured against the defendant in the suit the relief hereinafter mentioned. The respondents I shall hereinafter refer to as Courtenays. The defendants in the suit were Thelma Valette Austin (hereinafter called Austin), Denton Subdivisions Pty. Limited (hereinafter called Denton), I.A.C. (Finance) Pty. Limited (hereinafter called I.A.C.), Hermes Trading & Investment Pty. Limited (hereinafter called Hermes) and the Registrar-General of New South Wales. Denton, I.A.C. and Hermes have appealed from the decree and all three appeals were heard together in this Court. (at p579)
2. The suit arose out of a complicated set of facts and these have been amply traversed in a careful and well-reasoned judgment of the learned trial judge. Nevertheless, it will be necessary for a proper understanding of the matters discussed in argument upon the appeals to mention again a number of the salient facts of the case. (at p579)
3. On and prior to 24th February 1958 Austin was registered under the provisions of the Real Property Act, 1900-1956 as the proprietor for an estate in fee simple of some fifty-four acres of land at Church Point near Sydney. This was the land comprised in Certificate of Title Vol. 6795 Fol. 6. On that date she entered into a written contract to sell approximately fifty-two acres of this land to Courtenays. The purchase price was expressed to be 15,000 pounds of which 3,000 pounds was payable by way of deposit whilst the balance, 12,000 pounds, was to be secured by a mortgage upon specified terms back to Austin. There was some delay in settlement because of the necessity of obtaining consent to the necessary subdivision but, eventually, settlement took place on 23rd July 1958. It should be mentioned that at all material times the relevant certificate of title was in the custody of the Registrar-General in order that a new certificate might be issued for the residue of the land. For the purpose of settlement two essential documents had been prepared. One was a memorandum of transfer of the subject land from Austin to Courtenays and the other a memorandum of mortgage from Courtenays to Austin. These documents, fully executed, were left with Austin's solicitor, one Easton, for the purpose of registration and so that, upon receipt after registration, the duplicate memorandum of mortgage and the certificate of title for the subject land might be held by him as the solicitor for the mortgagee during the currency of the mortgage. This was done in accordance with what was proved to be the usual conveyancing practice in such circumstances. In fact, the memorandum of transfer and the memorandum of mortgage were lodged by Easton for registration but they were not lodged until 22nd April 1959. The reason for the delay does not appear but in the circumstances of the case it is not of any significant importance. It should be added, however, that at this time there was such a pressure of business in the office of the Registrar-General that there was a delay of up to twelve months between the lodging of instruments and their subsequent registration in accordance with the provisions of the Act. (at p580)
4. Passing over intervening matters for the present I now mention that on 17th September 1959 Austin entered into a written contract to sell the same land to Denton. The purchase price was expressed to be 26,000 pounds and this was to be satisfied by payment of a deposit of 1,500 pounds, as to 5,000 pounds thereof, by a second mortgage back to Austin repayable in twelve months and, as to the balance of 19,500 pounds in cash on completion. Denton had arranged with I.A.C. for a loan of 16,000 pounds to be secured by a first mortgage on the subject land and when settlement took place under the contract of sale that company's representative attended. The settlement took place in Easton's office on 23rd November 1959 when the sum of 19,500 pounds, less an adjustment (in respect of arrears of rates), was paid to Easton as Austin's solicitor. In lieu of a second mortgage back for the residue of 5,000 pounds Easton accepted promissory notes for that amount. The memorandum of transfer from Austin to Denton was dated 23rd November 1959 as also was the memorandum of mortgage from Denton to I.A.C. whose advance of 16,000 pounds was included in the abovementioned sum of 19,500 pounds. In the final result of the settlement these instruments found their way into the hands of the solicitors for I.A.C. who lodged them with the Registrar-General for registration on 25th November 1959. (at p581)
5. At a later stage, on 28th January, Denton secured an advance of 5,000 pounds from Hermes and presumably this money was used to retire the abovementioned promissory notes. In return for the advance Hermes obtained a memorandum of mortgage from Denton over the subject land and this instrument was lodged for registration with the Registrar-General on 10th February 1960. On its face this instrument seems to be irregular for in the body of the instrument the mortgagee is expressed to be "Hermes Trading & Investment Pty. Limited" whereas the instrument appears to have been accepted for and on behalf of "Challis (Finance) Pty. Limited". (at p581)
6. Courtenays brought their suit for the purpose of obtaining, in effect, declarations that they were entitled to have their memorandum of transfer registered in priority to the transfer to Denton and that neither Denton, I.A.C. nor Hermes were entitled to register their respective instruments and, further, for an appropriate order restraining the Registrar-General from registering the later set of instruments. Courtenays were successful in the suit and these appeals are brought from the decree which gave effect to their claims. It should, perhaps, also be mentioned at this stage that on 16th September 1959, which was the day before the contract between Austin and Denton was entered into, Courtenays' memorandum of transfer and the memorandum of mortgage which they had executed were removed from the Registrar-General's office. In fact, they were uplifted by Easton who early in 1960 was found to have been misappropriating trust funds and was then arrested. The circumstances in which Courtenays' transfer was uplifted, or, as it was said, withdrawn, will be the subject of discussion after consideration has been given to other aspects of the case. (at p581)
7. So far I have not attempted to traverse or to refer to the whole of the facts relevant to all of the contentions advanced by the appellants. But what has been said is sufficient to enable us to deal with two fundamental submissions which they made. The first of these was based upon s. 43 of the Real Property Act and it asserted that Denton's dealings with Austin as the registered proprietor of the subject land had resulted in the acquisition by the former of an indefeasible title. In other words, it was contended that the protection given by that section to a person contracting or dealing with a registered proprietor does not await the registration of the appropriate instrument but is afforded from the time when the contract is made with the registered proprietor or, perhaps, from the time when a registrable instrument is obtained. The contention, however, is directly contrary to law which has been settled for a great many years. Indeed, s. 43 was enacted in its present form when its prototype had already been given, judicially, a meaning contrary to the submission now made (See Baker's Creek Gold Mining Co. v. Hack (1894) 15 LR (NSW) Eq 207 . The provision with which that case was concerned was s. 111 of the Real Property Act of 1862 (N.S.W.) - 26 Vict. No. 9). Previously, in Victoria in 1887, the counterpart of s. 111 in the Land Transfer Act of that State was also held to confer an indefeasible title only upon registration (Cowell v. Stacey (1887) 13 VLR 80 ). The same view has been taken upon consideration in this Court concerning s. 43 and its present counterpart in Victoria (Templeton v. Leviathan Pty. Ltd. [1921] HCA 55; (1921) 30 CLR 34 ; and Lapin v. Abigail [1930] HCA 6; (1930) 44 CLR 166, at pp 182, 188, 196, 203 ). The lastmentioned case was decided over thirty years ago in accordance with what was then said to be settled law and it is unthinkable that we should now proceed to unsettle it. Particularly is this so when it is seen that s. 43A of the Act, which was enacted in 1930, must have been enacted on the basis that the protection afforded by s. 43 accrues only upon registration and in an attempt to make appropriate provision in favour of a purchaser who, having upon settlement obtained a registrable instrument, has not yet obtained registration. In these circumstances I am of the opinion that the appellants' submission on this point should not be entertained and, accordingly, that they can obtain no assistance from the provisions of s. 43. (at p582)
8. Alternatively, it was contended that the effect of s. 43A was such as to enable Denton to assert that its interest in the subject land should be held to prevail over that of Courtenays. That section is in the following terms: "(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 an instrument registrable, or which when appropriately signed by or on behalf of that person would be registrable under this Act shall, before registration of that instrument, 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 the Registration of Deeds Act, 1897, 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." Clearly enough the section was designed to deal with the position of the holder of a registrable instrument between the time of its receipt and the time of its registration. But its effect is by no means clear. No doubt it proceeds on the basis that under the law as settled at the date of its enactment s. 43 did not afford any degree of protection to a purchaser prior to registration and that any conflict between competing equitable interests prior to registration fell to be determmined according to ordinary equitable principles. That is to say, that the earlier of two competing equitable interests must, in the ordinary course, be taken to prevail over the later. Of course, in any particular case, circumstances may be shown to have existed which will result in the earlier equitable interest being postponed. However, in the case where no such circumstances are shown to have existed, the question whether the second interest was acquired with notice of the earlier interest is completely irrelevant; the prior interest will prevail whether the later interest was acquired with or without notice of it. What use was it then for the section to stipulate "For the purpose only of protection against notice, the estate or interest in land . . . taken by a person under an instrument registrable . . . under this Act shall . . . be deemed to be a legal estate"? The section has been the subject of much professional discussion (see e.g. Baalman - A Commentary on The Torrens System in New South Wales, (1951) pp. 176, 177; Kerr - Australian Land Titles (Torrens) System, (1927) p. 28; and (1932) 6 Aust. Law Journal 85). Various possibilities have been discussed but no really satisfactory answer appears as to the meaning of the section. Read literally is accomplishes nothing. If an intended transferee has paid his purchase money his position will not be worsened by notice, subsequently, of a prior equitable interest. It is, of course, true that his interest may be entirely defeated, in the absence of fraud, by prior registration of the earlier interest but if this occurs he will be defeated, not because he had notice of that interest at any stage, but by the transformation of that interest into the interest of a registered proprietor. On the other hand, if he secures registration first his interest will be likewise transformed into the estate of a registered proprietor and, in the absence of fraud, he will secure an indefeasible estate. Accordingly, a person who has paid his purchase money and who has secured a registrable memorandum of transfer needs no protection against notice received thereafter and a provision which purports, merely, to protect him against the effects of notice will not confirm his title. It is, however, not unreasonable to assume that the section was intended to achieve some object. And that object, it seems, was to make some appropriate provision for "filling" what has been called the "gap" left in s. 43 by the "settled law" concerning that section (Baalman - supra, at p. 177). Does the section, then go further than merely to afford a so-called protection against notice and operate to give to the holder of a registrable memorandum of transfer priority over an earlier equitable interest where he has, without notice thereof, paid his purchase money and obtained his registrable instrument? The suggestion that it does is based upon the contention that the holder of a registrable instrument in such circumstances is enabled to assert, as against the prior equitable interest, that he has by virtue of the section a legal estate in the land acquired without notice of the earlier interest and that he is, therefore, entitled to perfect his title by registration. Such a construction, it is said, does some violence to the terms of the section but it is, it seems to me, the result, which notwithstanding its "ungainly approach" to the subject (See Baalman, supra, at p. 177), the section was intended to produce. (at p584)
9. A further suggestion is that the section was intended to advance in point of time the protection afforded by s. 43 upon registration. That is to say, that the concluding words of the section - "legal estate" - should be understood to mean "the estate of a registered proprietor". But if it was intended so to advance the unqualified protection given by s. 43 upon registration it would have been a simple matter to say so. To my mind the expression "a legal estate" was used advisedly and with a view to affording, at the most, the same measure of protection as that given at common law to a person who has acquired a legal estate in land without notice of some prior equitable interest. Some light is, I think, thrown on this particular problem by the provisions of s. 42 (d) of the Act which, itself, was introduced into the Act at the same time as s. 43A. That sub-section contains an exception from the conclusiveness of a registered proprietor's title in respect of any tenancy "whereunder the tenant is in possession or entitled to immediate possession . . . of which . . . the registered proprietor before he became registered as proprietor had notice against which he was not protected". The italicized expression, it seems to me, is intended as a reference to the measure of protection afforded by s. 43A. So read the provision acknowledges that the protection afforded by s. 43A is not unqualified and provides some indication that the expression in sub-s. (1) of the section - "legal estate" - is not to be understood as synonymous with "the estate of a registered proprietor". Further, if the other view as to the meaning of the expression "legal estate" were to be entertained, it would have been unnecessary for the purposes of the section to make the specific provisions contained in sub-ss. (2) and (3). Upon the stated hypothesis notice either before or after the acquisition of a registrable instrument would be quite irrelevant. (at p585)
10. Once the contention that the expression "legal estate" in s. 43A (1) is synonymous with "the estate of a registered proprietor" be rejected - as I think it must - it is unnecessary for us to express any positive view as to the meaning of the sub-section. I say this because it is clear upon the facts that Denton had express notice of Courtenays' interest before the contract of sale between Austin and Denton was carried to completion. This will appear from the facts to which I shall presently refer. In the circumstances of the case, therefore, the rights of the parties must, subject to one matter, be determined according to the ordinary principles upon which a court of equity would proceed. These principles were the subject of discussion during the course of argument but in order to appreciate the submissions which were made concerning their application to the facts of the case it is desirable to refer to some, at least, of the other events which occurred, in the main, shortly before Austin entered into the contract of sale with Denton, that is to say, 17th September 1959. (at p585)
11. Early in that month Austin telephoned H. L. Courtenay, who represented Courtenays, and offered to repurchase the land in question for the sum of 22,500 pounds. The offer was accepted and a contract of sale between them was entered into. But it was not entered into until a week after the contract of sale between Austin and Denton had been made. Austin maintained that she told Courtenays that she was desirous of repurchasing the land in order to resell it to Denton but this was denied by H. L. Courtenay. Austin's evidence was rejected by the learned trial judge who found that Courtenays had no knowledge that Miss Austin had a purchaser in view at that time. We are asked to review this finding of fact but I see no reason upon the evidence why we should. Indeed, I see no reason to suppose that Courtenays would have been prepared to resell the land to Austin for 22,500 pounds if they had known that there was a purchaser in the market prepared to pay a substantially larger sum for it. Austin's evidence, however, was the first step in an attempt to establish that it was arranged between her and Courtenays that the purchase money payable under the contract of resale was to be paid out of the moneys received by her on the sale to Denton. But as I have said this evidence was not accepted and his Honour found that Courtenays had no knowledge of the sale to Denton until after Easton's arrest in 1960. This fact, I think, must be taken to have been established in the case. The challenge which was made to that finding rested upon some evidence given by Mrs. Gibson, a conveyancing clerk in the office of Courtenays' solicitor, concerning a telephone conversation which she had with Austin at a time when she was pressing for settlement of the contract of resale. Upon an examination of that evidence it is clear that Mrs. Gibson was told that Austin was not in a position to settle because she was awaiting the receipt of the proceeds of a sale which she had made. But it is apparent that Mrs. Gibson was at all material times under the impression that the reference was to the sale of other land owned by Austin, settlement of which was awaited, and not a sale of the subject land. We see nothing in the evidence to justify us in reviewing his Honour's finding on this point. (at p586)
12. The next matter to which we should refer is the fact, already mentioned, that on 16th September 1959 Easton purported to withdraw from the Registrar-General's office the memorandum of transfer from Austin to Courtenays and the accompanying memorandum of mortgage. This was done on the day before the contract of sale from Austin to Denton was executed. The withdrawal, of course, left the register clear for the registration of the memorandum of transfer from Austin to Denton. Whether this was done as a matter of conveyancing convenience or as a step in the perpetration of Easton's frauds is a matter with which we need not concern ourselves for the fact was that it was done without the knowledge or authority of Courtenays. But it was said to have been done in accordance with the practice of the Registrar-General's office pursuant to which the person who has lodged an instrument for registration is permitted to withdraw it at any time before registration. Whether the practice is justified in all circumstances is not of much importance for if, as Courtenays assert, their equitable title should be held to prevail over that of Denton, the registration of the latters' memorandum of transfer must be restrained and Courtenays will be entitled to proceed to registration. On the other hand, if the latter's equitable interest should be held to be postponed to that of Denton that company will be entitled to register. (at p586)
13. The last matter to be mentioned on this aspect of the case is that prior to settlement pursuant to the contract of sale from Austin to Denton the latter's solicitor, Dennis, became aware that the earlier memorandum of transfer from Austin to Courtenays had been lodged for registration. He became aware of this as the result of a search made by one of his firm's employees in the Registrar-General's office. The search notes also conveyed to him some information that was not entirely correct. This was to the effect that the memorandum of transfer and the memorandum of mortgage which had accompanied it had been withdrawn by "Leask & Nicholas". So far as the evidence shows no enquiries were made by Dennis concerning these dealings or the withdrawal of these instruments until the day when he attended at Easton's office to effect a settlement of a contract of sale to Denton. At that time Dennis seems to have been under the impression that the instruments which had been uplifted, or withdrawn, related to land other than that which had been purchased by Denton. Dennis was the first of those interested in the settlement to arrive in Easton's office and he made some enquiries of Easton concerning the withdrawal of these instruments. When he remarked that he understood that they did not relate to the land the subject of the sale to his client Easton informed him that they did in fact rlate to the same land. When asked to explain the nature of the withdrawal Easton informed Dennis that Miss Austin had purchased back the land from Courtenays and said "It is now Miss Austin's land". Dennis then asked whether Easton could show him anything in relation to that transaction and Easton produced an unstamped contract which purported to evidence a sale from Courtenays to Austin. Easton also informed him that he had withdrawn the original memorandum of transfer from Austin to Courtenays because "that was his method of settling the matter between those parties". No enquiries were made by Dennis as to whether that contract had been carried into effect but the fact that it was unstamped was, perhaps, some indication that it had not. Further, it was apparent on the face of the contract that Easton had no authority to act on behalf of Courtenays and yet the matter proceeded to settlement that day and without reference to the Courtenays or their solicitor. In cross-examination Mr. Dennis said that the information conveyed to him that day, in fact, meant that there had been an earlier contract of sale between Austin and Courtenays and it must have been apparent to him that settlement under this contract had taken place because the memorandum of transfer had been prepared and subsequently lodged with the Registrar-General for registration. To my mind, it is as clear as it could be that Dennis must have known that day that Courtenays had purchased the land in question from Austin, that that contract had been carried to completion and that the subsequent contract from Courtenays to Austin had not. Indeed, a mere perusal of the document produced by Easton would have shown that it was not at that stage a contract binding Austin and Courtenays with relation to the resale and, further, that Easton had no authority to act on behalf of Courtenays. This, to my mind, was the clearest indication to Dennis of the Courtenays' outstanding equitable interest. Yet he made no further enquiries. Nor did he insist, or even suggest, that Courtenays' representative should be present at the settlement. He, merely, accepted Easton's statement that he proposed to pay Courtenays out of the proceeds of the sale to Denton. (at p588)
14. This is the broad outline of the relevant intervening events though they may be supplemented by reference to the very full account of the dealings between the parties which appear in the reasons of the learned trial judge. (at p588)
15. For the respondents, it is said, Easton's withdrawal from the Registrar-General's office of the first memorandum of transfer was effected without their knowledge or authority and, consequently, the withdrawal did not destroy their right to priority in registration pursuant to s. 36 of the Act. In effect, it is said, there never was an effective withdrawal of the application for registration of that memorandum of transfer and, therefore, it should now be registered as an instrument lodged in point of time prior to the lodging of Denton's memorandum of transfer. The appellants, however, assert that Austin, having authority to lodge Courtenays' memorandum of transfer, should, in the light of the practice prevailing in the Registrar-General's office as to the right to withdraw dealings, be held to have had implied authority from Courtenays to withdraw the instrument. In my view, there is no substance in this submission but, in any event, it is unnecessary to consider the opposing contentions. What we are bound to determine is which of the two competing interests should be allowed to prevail and in resolving this question it is immaterial which was first lodged for registration. If this were not so little would be achieved by the lodging of a caveat to protect an unregistered interest for the only purpose served by a caveat is to keep the matter in statu quo for a limited time after an instrument dealing with a competing interest has been lodged for registration and so that the caveator may take the appropriate proceedings for the protection of his interest (Walsh v. Alexander [1913] HCA 24; (1913) 16 CLR 293 ). (at p589)
16. The next step in the appellants' argument was to deny that the situation ever arose which there were competing interests. They asserted that at no time between 17th September and 25th November 1959 did Courtenays have any equitable interest in the land. This argument rests upon the fact that Courtenays entered into the agreement to resell the subject land to Austin. But this, as already appears, did not occur until 24th September 1959; that is to say, one week after Austin had contracted to sell the land to Denton. Nevertheless, it is asserted, that thereupon Courtenays parted with their equitable interest and had only a contractual right to receive an ascertainable amount of money under their contract of sale. I am unable to recognize any sound basis for this submission for it is quite apparent that Austin was never at any time in a position to succeed in a claim for specific performance against Courtenays. The contract between them was for the resale of the land but the legal estate was at all material times outstanding in Austin and, this being so, the latter could not have succeeded in a claim for specific performance until Courtenays' title had been perfected by the registration of the memorandum of transfer to them. Further, the contract for sale from Courtenays to Austin was, as appears, never brought to completion and, ultimately, it was rescinded on the grounds of Austin's default. In these circumstances the principles enunciated in Wall v. Bright [1820] EngR 472; (1820) 1 Jac & W 494 (37 ER 456) ; Rayner v. Preston (1881) 18 ChD 1 ; and Ridout v. Fowler (1904) 1 Ch 658 would deny that Courtenays' equitable interest ever passed to Austin. (at p589)
17. The next submission made on behalf of the appellants is that the conduct of Courtenays was such as to require us to hold that their interest in the subject land should be postponed to that of the appellants. As I see it, this submission has two aspects. The first is that Courtenays' conduct was so neglectful that Easton was enabled to hold out to Denton that the title to the land was not the subject of any prior interest. The second is, in effect, that, upon the evidence, Courtenays acquiesced in settlement between Denton and Austin taking place when it did and were content to permit Easton to receive Denton's purchase money on the understanding that he would then settle with Courtenays. In support of the first branch of the submission stress was laid upon the fact that no caveat was lodged by the Courtenays and we were invited to consider a number of observations in Oertel v. Hordern (1902) 2 SR (NSW) Eq 37 ; Barry v. Heider [1914] HCA 79; (1914) 19 CLR 197 ; Butler v. Fairclough [1917] HCA 9; (1917) 23 CLR 78 ; and Lapin v. Abigail (1930) 44 CLR 166; [1934] UKPCHCA 1; (1934) AC 491; (1934) 51 CLR 58 concerning the effect of caveats and the possible consequences of a failure of the owner of an unregistered interest to lodge a caveat. But these observations have no application where, as here, the later equitable interest is acquired with full knowledge of the existence of the earlier interest. Moreover, it must be borne in mind that Courtenays' memorandum of transfer was lodged for registration on 22nd April 1959, it lay in the Registrar-General's office for nearly five months awaiting registration, it was withdrawn only on the day before the contract between Austin and Denton was made and it was then withdrawn without the knowledge or authority of Courtenays. In these circumstances I fail to see how it can be said that the failure of Courtenays to lodge, independently, a caveat to protect their interest constituted any ground upon which neglect or unreasonable conduct ought to be attributed to them. The submission to the contrary is, I think, fanciful as also is the suggestion that the Courtenays could and, perhaps, should have notified the Registrar-General, at some unspecified time, that Easton did not have their authority to withdraw their memorandum of transfer. Again, it was suggested that Courtenays were neglectful in failing to enquire, from time to time, concerning the progress of their application for registration. But it was well known that registration might not be effected for as long a period as twelve months and there was no reason why Courtenays should have been concerned to make enquiries before half this period had elapsed. In any event, if they had made enquiries they would have learnt, right up to 16th September 1959, that their memorandum of transfer was still awaiting registration. We should add in relation to the second aspect of the appellants' submission that, once Miss Austin's evidence be rejected, the evidence in the case provides not the slightest ground for thinking that Courtenays acquiesced in any proposal that the sale from Austin to Denton should proceed to completion in order that Austin might be put in funds to enable her, subsequently, to meet her obligation to pay to Courtenays the purchase money under the contract of resale. (at p590)
18. The final question is concerned with the position of Denton's proposed mortgagees - I.A.C. and Hermes. The learned trial judge has held that they parted with their money without notice of Courtenays' interest and no reason appears for challenging this finding. In these circumstances they claim, independently of Denton, to be entitled to a degree of protection pursuant to s. 43A. But I agree with the learned trial judge that this claim must fail. That section clearly contemplates the position of a person dealing with a registered proprietor for it speaks of "the estate or interest in land under the provisions of this Act, taken by a person under an instrument registrable . . . under this Act" and an instrument would only be so registrable if executed by the registered proprietor. But I.A.C. and Hermes dealt only with Denton and their respective instruments would become registrable only upon registration of Denton's memorandum of transfer. That being so, the additional submission made on their behalf must fail and, accordingly, all three appeals should, in my view, be dismissed. (at p591)
ORDER
Appeals dismissed with costs.
AustLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.austlii.edu.au/au/cases/cth/HCA/1963/64.html