• Specific Year
    Any

Harding, Matthew --- "Barnes v Addy Claims and the Indefeasibility of Torrens Title" [2007] MelbULawRw 15; (2007) 31(2) Melbourne University Law Review 343

[∗] BA (Hons), LLB (Hons) (Melb), BCL, DPhil (Oxon); Lecturer, Faculty of Law, The University of Melbourne. My grateful thanks go to Michael Bryan for generously commenting on a draft of this article.

[1] [1874] UKLawRpCh 20; (1874) LR 9 Ch App 244.

[2] Michael Bryan, ‘The Liability of the Recipient: Restitution at Common Law or Wrongdoing in Equity?’ in Simone Degeling and James Edelman (eds), Equity in Commercial Law (2005) 327, 327.

[3] Barnes v Addy itself was a case involving a breach of trust, but accessory liability also arises with respect to breaches of obligation by fiduciaries other than trustees.

[4] With regard to terminology, in order to remain neutral with respect to the debates to which I allude in the following paragraph in the text, I refer to ‘Barnes v Addy claims’ of ‘accessory liability’, which can be broken down into claims of ‘recipient liability’ and claims of ‘assistant liability’. I take no position on whether recipient liability is triggered by fault or by unjust enrichment. Nor do I take a position on whether assistant liability is triggered by knowledge or by dishonesty, or on whether assistant liability may be broken down into liability for inducing a breach of fiduciary obligation and liability for participating in a breach of fiduciary obligation. With regard to classification, as I make clear in Part IV(B) below, Barnes v Addy claims are distinct from proprietary claims supported by equitable tracing, even though both types of claim may arise from the same facts.

[5] [2007] HCA 22 (Unreported, Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ, 24 May 2007).

[6] For a discussion of the cases which establish a fault requirement and an argument for a basis in unjust enrichment: see Lord Nicholls, ‘Knowing Receipt: The Need for a New Landmark’ in W R Cornish et al (eds), Restitution: Past, Present and Future: Essays in Honour of Gareth Jones (1998) 231. In Farah Constructions [2007] HCA 22 (Unreported, Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ, 24 May 2007) [130]–[158] (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ), the High Court decisively rejected any basis in unjust enrichment.

[7] For the view that assistant liability is triggered by knowledge: see, eg, Consul Developments Pty Ltd v DPC Estates Pty Ltd [1975] HCA 8; (1975) 132 CLR 373 (‘Consul’); Farah Constructions [2007] HCA 22 (Unreported, Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ, 24 May 2007). For the view that assistant liability is triggered by dishonesty: see, eg, Royal Brunei Airlines Sdn Bhd v Tan [1995] UKPC 4; [1995] 2 AC 378 (‘Royal Brunei’); Twinsectra Ltd v Yardley [2002] UKHL 12; [2002] 2 AC 164 (‘Twinsectra’); Barlowe Clowes International Ltd (in liq) v Eurotrust International Ltd [2005] UKPC 37; [2006] 1 All ER 333.

[8] This division is often manifested in arguments about the utility of the infamous classification of knowledge first introduced into the law in Baden v Société Générale pour Favoriser le Développement du Commerce et de l’Industrie en France SA [1992] 4 All ER 161. For masterly accounts of the issues: see Charles Harpum, ‘The Stranger as Constructive Trustee’ (1986) 102 Law Quarterly Review 114, 120–7; Simon Gardner, ‘Knowing Assistance and Knowing Receipt: Taking Stock’ (1996) 112 Law Quarterly Review 56, 57–64. For a brief survey of responses to the so‑called ‘Baden scale’ of knowledge: see Lord Robert Walker, ‘Dishonesty and Unconscionable Conduct in Commercial Life — Some Reflections on Accessory Liability and Knowing Receipt’ [2005] SydLawRw 9; (2005) 27 Sydney Law Review 187, 194. In Farah Constructions [2007] HCA 22 (Unreported, Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ, 24 May 2007)

[171]–[178] (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ), the High Court appears to have provided clear guidance as to what types of knowledge will suffice to ground assistant liability (at least where a defendant participates in a fiduciary’s dishonest breach of obligation). However, the Court appears to have provided only limited guidance as to what types of knowledge will suffice to ground recipient liability: at [112], [121], [134] (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ).

[9] See, eg, Twinsectra [2002] UKHL 12; [2002] 2 AC 164, 180 (Lord Millett).

[10] On this point: cf Royal Brunei [1995] UKPC 4; [1995] 2 AC 378 with Farah Constructions [2007] HCA 22 (Unreported, Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ, 24 May 2007).

[11] See, eg, Peter Birks, ‘Misdirected Funds: Restitution from the Recipient’ [1989] Lloyd’s Maritime and Commercial Law Quarterly 296.

[12] But see Steven B Elliot and Charles Mitchell, ‘Remedies for Dishonest Assistance’ (2004) 67 Modern Law Review 16.

[13] [2007] HCA 22 (Unreported, Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ, 24 May 2007) [200]–[201] (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ).

[14] See, eg, Lynden Griggs, ‘The Tectonic Plate of Equity — Establishing a Fault Line in Our Torrens Landscape’ (2003) 10 Australian Property Law Journal 78; Peter Butt, ‘Rights in Personam and the Knowing Receipt of Trust Property’ (2003) 77 Australian Law Journal 280.

[15] [1998] 3 VR 133.

[16] [2002] QCA 232; [2003] 1 Qd R 556.

[17] [2002] WASCA 291; (2002) 26 WAR 517.

[18] [2007] HCA 22 (Unreported, Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ, 24 May 2007).

[19] [2002] QCA 232; [2003] 1 Qd R 556, 582.

[20] [1998] 3 VR 16.

[21] [2005] NSWCA 309 (Unreported, Mason P, Giles and Tobias JJA, 15 September 2005).

[22] [1998] 3 VR 16, 75 (Hansen J).

[23] [2005] NSWCA 309 (Unreported, Mason P, Giles and Tobias JJA, 15 September 2005)

[236]–[238] (Tobias JA).

[24] [2002] QCA 232; [2003] 1 Qd R 556, 582.

[25] (1971) 126 CLR 376, 385.

[26] [1967] 1 AC 569, 580 (Lord Wilberforce for the Board).

[27] On the correlation between immunity and disability: see Wesley Newcomb Hohfeld, Fundamental Legal Conceptions as Applied in Judicial Reasoning (1919) 36, 60–3.

[28] The speech, which Torrens delivered on 11 November 1857, is quoted and discussed in Stanley Robinson, Transfer of Land in Victoria (1979) 4–5.

[29] Land Titles Act 1925 (ACT) s 58; Real Property Act 1900 (NSW) s 42; Land Title Act 2000 (NT) s 188; Land Title Act 1994 (Qld) s 184; Real Property Act 1886 (SA) s 69; Land Titles Act 1980 (Tas) s 40; Transfer of Land Act 1958 (Vic) s 42; Transfer of Land Act 1893 (WA) s 68.

[30] The principle of indefeasibility was applied by the Privy Council subject to such a qualification in Gibbs v Messer [1891] UKLawRpAC 2; [1891] AC 248, and by Dixon and McTiernan JJ in Clements v Ellis [1934] HCA 18; (1934) 51 CLR 217. In Clements v Ellis, the High Court was divided evenly, with Rich and Evatt JJ applying the principle of indefeasibility rigorously. The decision of the trial judge — with which Dixon and McTiernan JJ had agreed — thus prevailed. Nonetheless, as Sir Anthony Mason has pointed out, ‘[s]uch was the influence of Sir Owen Dixon that his judgment was taken as reflecting Australian law on the point’, at least prior to the High Court’s decision in Breskvar v Wall (1971) 126 CLR 376: see Sir Anthony Mason, ‘Indefeasibility: Logic or Legend?’ in David Grinlinton (ed), Torrens in the Twenty‑First Century (2003) 3, 6.

[31] Assets Co Ltd v Mere Roihi [1905] UKLawRpAC 11; [1905] AC 176; Boyd v Mayor of Wellington [1924] NZGazLawRp 58; [1924] NZLR 1174; Frazer v Walker [1967] 1 AC 569; Breskvar v Wall (1971) 126 CLR 376. In Chasfild Pty Ltd v Taranto [1991] VicRp 16; [1991] 1 VR 225, 228–9, 234–5, Gray J reintroduced a conception of qualified indefeasibility into Victorian law through a broad reading of s 44(1) of the Transfer of Land Act 1958 (Vic). However, this flirtation with what is usually called ‘deferred indefeasibility’ was quickly corrected by Hayne J (then of the Supreme Court of Victoria) in Vassos v State Bank of South Australia [1993] VicRp 74; [1993] 2 VR 316 and (as a member of the Victorian Court of Appeal) in Pyramid Building Society (in liq) v Scorpion Hotels Pty Ltd [1998] 1 VR 188. In the latter case, Chasfild Pty Ltd v Taranto [1991] VicRp 16; [1991] 1 VR 225 was formally overruled: at 191 (Hayne JA).

[32] In Victoria, a non‑statutory exception to the indefeasibility of title appears to exist where a registered proprietor has acquired title as a volunteer: King v Smail [1958] VicRp 44; [1958] VR 273; Rasmussen v Rasmussen [1995] VicRp 38; [1995] 1 VR 613. In NSW, no such exception exists: Bogdanovic v Koteff (1988) 12 NSWLR 472. Another exception to indefeasibility may exist, depending on the circumstances, where a registered proprietor fails to comply with the provisions of legislation other than the Torrens statute: Hillpalm Pty Ltd v Heaven’s Door Pty Ltd [2002] NSWCA 301; (2002) 55 NSWLR 446; cf Hillpalm Pty Ltd v Heaven’s Door Pty Ltd [2004] HCA 59; (2004) 220 CLR 472. Of course, statutory exceptions to indefeasibility other than fraud exist in every jurisdiction and these are uncontroversial: see Transfer of Land Act 1958 (Vic) s 42(2) for a typical list.

[33] [1967] AC 569, 585 (Lord Wilberforce).

[34] Peter Butt, Land Law (5th ed, 2006) 788–9. However, emphasis on the conduct of the defendant has been questioned by Robert Chambers, ‘Indefeasible Title as a Bar to a Claim for Restitution’ [1998] Restitution Law Review 126, 130–1.

[35] [1988] HCA 16; (1988) 164 CLR 604, 653.

[36] Garofano v Reliance Finance Corporation Pty Ltd (1992) NSW ConvR 55‑640, 59 662–3 (Meagher JA); Grgic v Australian & New Zealand Banking Group Ltd (1994) 33 NSWLR 202, 222–3 (Powell JA). Arguably, the judgments of Mahoney JA and Kirby P in Mercantile Mutual Life Insurance Co Ltd v Gosper (1991) 25 NSWLR 32 represent a relaxation of this requirement, but note the strident dissent of Meagher JA in that case.

[37] Vassos v State Bank of South Australia [1993] VicRp 74; [1993] 2 VR 316; Grgic v Australian & New Zealand Banking Group Ltd (1994) 33 NSWLR 202; Pyramid Building Society (in liq) v Scorpion Hotels Pty Ltd [1998] 1 VR 188.

[38] [1998] 3 VR 133, 146–54 (Tadgell JA). Cf at 162–70 (Ashley AJA).

[39] [2002] WASCA 291; (2002) 26 WAR 517, 547 (Murray J).

[40] Robert Chambers, An Introduction to Property Law in Australia (2001) 475–6.

[41] (1971) 126 CLR 376, 385.

[42] Ibid.

[43] See below Part IV(B).

[44] By ‘remedies with proprietary consequences’ I mean remedies that, according to their terms, protect, create or destroy specific property.

[45] As Tadgell JA noted in Sixty‑Fourth Throne [1998] 3 VR 133, 138, the trial judge ordered rectification of the register on the basis of a finding of in personam liability. That order should not have been made. Because it does not operate on the person of the defendant, an order that the register be rectified is an inappropriate response to an in personam claim. Consequently, I do not address such orders in what follows. For a discussion of the operation of the remedy of rectification of the register in a case of statutory fraud: see Loke Yew v Port Swettenham Rubber Co Ltd [1913] UKLawRpAC 11; [1913] AC 491, 504–5 (Lord Moulton for the Board).

[46] For timely reminders that accessory liability is personal: see Lord Nicholls, above n 6, 231; Lionel Smith, ‘Constructive Trusts and Constructive Trustees’ (1999) 58 Cambridge Law Journal 294. In his short but important article, Lionel Smith explains how an accessory, although personally liable, may be said sensibly to have to account to the plaintiff as a constructive trustee.

[47] (1971) 126 CLR 376, 385. See also above n 41 and accompanying text.

[48] See the comprehensive treatment in Elliot and Mitchell, above n 12, 36–45.

[49] For a discussion of this point: see Charles Mitchell, ‘Assistance’ in Peter Birks and Arianna Pretto (eds), Breach of Trust (2002) 139, 182–7.

[50] Such a remedy was sought in the two leading Australian cases on assistant liability: Consul [1975] HCA 8; (1975) 132 CLR 373; Farah Constructions [2007] HCA 22 (Unreported, Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ, 24 May 2007). In Consul, the High Court denied the remedy sought, as the majority thought that the defendant was not liable as an assistant: at 366–7 (Barwick CJ), 399–401 (Gibbs J), 413 (Stephen J). In Farah Constructions, no remedy was awarded because the High Court did not think that there had been a breach of fiduciary obligation for the defendants to assist: at [106]–[109] (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ).

[51] The plaintiff may also argue for a remedy requiring the defendant to disgorge a gain made by the fiduciary, based on the premise that liability of a defaulting fiduciary and liability of an assistant is joint and several. Elliot and Mitchell, above n 12, 40–1, approve of the premise but are sceptical of the argument.

[52] I lay to one side cases of ‘ministerial’ receipt, which do not give rise to recipient liability but may, depending on the circumstances, give rise to assistant liability: see, eg, Twinsectra [2002] UKHL 12; [2002] 2 AC 164.

[53] In drawing this distinction, I follow Lord Nicholls, above n 6, 232–9.

[54] This is so whether recipient liability is fault‑based or based on unjust enrichment. For a summary of the seminal views of Peter Birks on the question of whether such a defendant is enriched for the purposes of a claim based on unjust enrichment: see Lionel Smith, ‘Tracing’ in Andrew Burrows and Lord Rodger (eds), Mapping the Law: Essays in Memory of Peter Birks (2006) 119, 129–30.

[55] [1998] 3 VR 16.

[56] [1998] 3 VR 133.

[57] [2002] QCA 232; [2003] 1 Qd R 556.

[58] [2002] WASCA 291; (2002) 26 WAR 517.

[59] [2007] HCA 22 (Unreported, Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ, 24 May 2007).

[60] In LHK Nominees [2002] WASCA 291; (2002) 26 WAR 517, the recipient had died but the Barnes v Addy claim was brought against his estate. In Farah Constructions [2007] HCA 22 (Unreported, Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ, 24 May 2007) [116]–[122] (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ), the High Court found that there had been no receipt for the purposes of recipient liability. However, that does not affect the point that I make in the text.

[61] [2002] WASCA 291; (2002) 26 WAR 517.

[62] Ibid 547 (Murray J).

[63] Ibid 549 (Murray J), 554–6 (Anderson and Steyler JJ), 566–72 (Pullin J). Wallwork J dissented: at 536.

[64] Ibid 556 (Anderson and Steyler JJ).

[65] [1998] 3 VR 16.

[66] Ibid 23–4 (Hansen J). The trust also sought a declaration that the mortgage was void, a declaration that its interest in the mortgaged land was held in priority to the interest of the mortgagee, delivery up of the mortgage for cancellation and an indemnity under the then s 234(7) of the Corporations Law for any loss it might suffer by reason of the provision of the mortgage to the bank.

[67] Koorootang [1998] 3 VR 16, 105–8. Prior to making this finding, Hansen J undertook an extensive review of the law and the literature on recipient liability and expressed his view that recipient liability ought to be based on unjust enrichment: at 78–105. However, his Honour felt constrained by precedent to find liability on the basis of the bank’s wilful blindness to the fraud.

[68] Ibid 131.

[69] Ibid 24. On damages under s 2 of the Chancery Amendment Act 1858 (UK) c 27, commonly known as Lord Cairns’ Act: see generally R P Meagher, J D Heydon and M J Leeming, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies (4th ed, 2002) 842–55.

[70] [1998] 3 VR 16.

[71] [2002] WASCA 291; (2002) 26 WAR 517.

[72] [1998] 3 VR 16.

[73] [2002] WASCA 291; (2002) 26 WAR 517.

[74] Cf Lord Nicholls, above n 6, 239:

the existence of a proprietary remedy is not in itself a compelling reason for declining to impose concurrent personal liability covering the same ground. There are good practical reasons why a judgment for payment of the value of property may be preferable to an order for the return of the property.

[75] Such cases are unlikely to be numerous given that plaintiffs often pursue Barnes v Addy claims precisely because the defendant is solvent.

[76] See above Part IV(A).

[77] The claim may also be upheld by the declaration of an equitable lien over the property to secure the restoration of the value of what was misappropriated from the trust: Foskett v McKeown [2000] UKHL 29; [2001] 1 AC 102 (‘Foskett’). A similar claim may be made against a person who receives without notice of the trust, but as a volunteer: Re Diplock [1948] 1 Ch 465; Foskett [2000] UKHL 29; [2001] 1 AC 102. In Foskett itself, although all the judges agreed that an equitable lien was available, only a minority would have declared one: at 113 (Lord Steyn), 119 (Lord Hope). The majority upheld the plaintiffs’ claim by declaring a constructive trust: at 111 (Lord Browne‑Wilkinson), 115 (Lord Hoffmann), 131, 145 (Lord Millett).

[78] Cf Foskett [2000] UKHL 29; [2001] 1 AC 102, 109 (Lord Browne‑Wilkinson): ‘This case does not depend on whether it is fair, just and reasonable to give the [plaintiffs] an interest as a result of which the court in its discretion provides a remedy. It is a case of hard‑nosed property rights.’

[79] Property Act 1900 (NSW) s 43; Land Title Act 1994 (Qld) s 184(2)(a); Real Property Act 1886 (SA) ss 72, 1867; Land Titles Act 1980 (Tas) s 41; Real Transfer of Land Act 1958 (Vic) s 43; Transfer of Land Act 1893 (WA) s 134; Land Titles Act 1925 (ACT) s 59; Land Title Act 2000 (NT) s 188(2)(a).

[80] For a striking illustration of the effect of the abolition of the doctrine of notice: see Mills v Stokman [1967] HCA 15; (1967) 116 CLR 61.

[81] The same appears to be true of liability as an assistant: Farah Constructions [2007] HCA 22 (Unreported, Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ, 24 May 2007) [177] (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ); possibly also Royal Brunei [1995] UKPC 4; [1995] 2 AC 378, 389 (Lord Nicholls). However, because cases of assistance do not presuppose the receipt of property — even though they sometimes entail a receipt — the likelihood of a proprietary claim based on notice arising from their facts is small. I therefore refer in the text only to cases of receipt.

[82] This seems to be the case irrespective of whether recipient liability is fault‑based or based on unjust enrichment. If recipient liability is fault‑based, the recipient appears to be liable if they have knowledge of facts that would indicate a breach of fiduciary obligation to an honest and reasonable person: Koorootang [1998] 3 VR 16, 105 (Hansen J). The origin of this formulation is the Baden scale: see above n 8. And it may not have survived Farah Constructions [2007] HCA 22 (Unreported, Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ, 24 May 2007) [112], [121], [134] (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ). If recipient liability is based on unjust enrichment, liability is strict, subject to defences. One available defence is that of good faith purchase for value without notice: James Edelman and Elise Bant, Unjust Enrichment in Australia (2006) 350–2. Because notice includes constructive notice, it is clear that a person may be liable as a recipient, based on unjust enrichment, in circumstances where the reasonable purchaser would have drawn the inference that the property received was encumbered by the plaintiff’s interest: Meagher, Heydon and Leeming, above n 69, 342–3.

[83] A recipient of trust property with actual notice of the trust is likely to be liable for statutory fraud, which means that the plaintiff in such a case is unlikely to rely on a proprietary claim based on notice.

[84] [1998] 3 VR 133, 166 (emphasis added).

[85] Farah Constructions [2007] HCA 22 (Unreported, Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ, 24 May 2007) [112] (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ). As I have pointed out already, the High Court in Farah Constructions did not spell out clearly what other facts, if any, a defendant must have had notice of, or what facts a defendant must have had knowledge of, before they may be made liable as a recipient: see above nn 8, 82 and accompanying text.

[86] Specifically, when it comes to whether or not the defendant is able to establish the defence of good faith purchase for value without notice.

[87] I am grateful to one of the anonymous referees of this article for a powerful statement of the argument.

[88] See above Part IV(A)(2).

[89] Of course, this makes it all the more important to know precisely whether recipient liability is fault‑based or unjust enrichment‑based, and, if it is fault‑based, to know precisely what types of notice and knowledge are sufficient to trigger liability. On the first of these questions, the High Court has spoken clearly in Farah Constructions [2007] HCA 22 (Unreported, Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ, 24 May 2007): see above n 6 and accompanying text. On the second, it has not: see above nn 8, 82, 85 and accompanying text.

[90] This was one of the remedies sought in: Sixty‑Fourth Throne [1998] 3 VR 133; Koorootang [1998] 3 VR 16.

[91] See, eg, Supreme Court Act 1986 (Vic) s 22. The court may also seek to enforce its order by the committal of the defendant or the sequestration of their property: see, eg, Supreme Court (General Civil Procedure) Rules 2005 (Vic) r 66.05(2).

[92] See, eg, Transfer of Land Act 1958 (Vic) s 59.

[93] Barry v Heider [1914] HCA 79; (1914) 19 CLR 197.

[94] For the procedure relating to the seizure and sale of interests in Torrens land in Victoria: see Supreme Court (General Civil Procedure) Rules 2005 (Vic) r 66.02(1), O 69; Transfer of Land Act 1958 (Vic) s 52.

[95] See above Part IV(A).

[96] It must be acknowledged that this narrow sense is not the only sense in which the phrase ‘remedial constructive trust’ has been used. For instance, Donovan Waters writes, ‘I understand the remedial constructive trust as a name for the redress that takes the form of awarding specific assets to the successful claimant’: Donovan Waters, ‘The Nature of the Remedial Constructive Trust’ in Peter Birks (ed), The Frontiers of Liability (1994) vol 2, 165, 174. In the text, when I refer to the ‘remedial constructive trust’, I intend the narrow sense.

[97] Of course, qua remedy, it arises because of the occurrence of events prior to the Barnes v Addy claim being brought, evidence of which has satisfied the court that the claim ought to succeed. But qua constructive trust, it arises because the court chooses it as the most appropriate remedy. As Michael Bryan has pointed out to me, those who think that recipient liability is based on unjust enrichment may not agree with this view, and may find reasons for their disagreement in Peter Birks, ‘Property and Unjust Enrichment: Categorical Truths’ [1997] New Zealand Law Review 623; Chambers, above n 34, 475–81.

[98] Such a person may also be liable as an assistant: see Mitchell, above n 49 and accompanying text. I intend my remarks in the text to apply in either case.

[99] [2007] HCA 22 (Unreported, Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ, 24 May 2007).

[100] Farah Constructions Pty Ltd v Say‑Dee Pty Ltd [2004] NSWSC 800 (Unreported, Palmer J, 19 August 2004) [74]–[77].

[101] Say‑Dee [2005] NSWCA 309 (Unreported, Mason P, Giles and Tobias JJA, 15 September 2005) [235], [238], [244] (Tobias JA).

[102] Ibid [235] (Tobias JA).

[103] Farah Constructions [2007] HCA 22 (Unreported, Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ, 24 May 2007) [200] (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ).

[104] For a sense of that debate: see Peter Birks, ‘Rights, Wrongs and Remedies’ (2000) 20 Oxford Journal of Legal Studies 1; Simon Evans, ‘Defending Discretionary Remedialism’ [2001] SydLawRw 20; (2001) 23 Sydney Law Review 463.

[105] For a discussion of the issue: see Giumelli v Giumelli (1999) 196 CLR 101, 111–13 (Gleeson CJ, McHugh, Gummow and Callinan JJ), 127–8 (Kirby J), where the High Court held that a constructive trust should not be declared if, in all the circumstances of the case, there is an appropriate remedy which falls short of the declaration of a trust.

[106] Peter Birks, ‘Proprietary Rights as Remedies’ in Peter Birks (ed), The Frontiers of Liability (1994) vol 2, 214, 217: ‘a remedial constructive trust … necessarily implies, indeed is, a discretion to vary property rights.’

[107] For a discussion of when a remedial constructive trust comes into existence: see Simon Gardner, ‘The Element of Discretion’ in Peter Birks (ed), The Frontiers of Liability (1994) vol 2, 186, 189–92.

[108] It affords such priority only when all else is equal: Rice v Rice [1853] EngR 1102; (1854) 2 Drew 73; 61 ER 646; Heid v Reliance Finance Corporation Pty Ltd (1983) 154 CLR 326.

[109] On the obligation of trusteeship: see Armitage v Nurse [1998] Ch 241, 253–4 (Millett LJ).

[110] Although, of course, the purchaser may be personally liable under Barnes v Addy. That, in essence, was the situation in Tara [2002] QCA 232; [2003] 1 Qd R 556, although, in that case, the constructive trust was not remedial but arose because of the existence of a specifically enforceable contract for the sale and purchase of an interest in Torrens land. See generally Bunny Industries Ltd v FSW Enterprises Pty Ltd [1982] Qd R 712.

[111] A court may also order a constructive trustee to sell and transfer the interest to a third party and pay all or some of the proceeds of the sale to the beneficiary. The court may even order the sale prior to the conclusion of the trial ‘where it is necessary or expedient for the purposes of the proceeding’: Supreme Court (General Civil Procedure) Rules 2005 (Vic) r 55.02.

[112] See above Part IV(B).

[113] Ibid.

[114] See above Part IV(B)(1).

[115] As I stated above, whether courts ought to resist declaring remedial constructive trusts because such trusts are not justified — either in response to successful Barnes v Addy claims, or more generally — is a separate question which I do not address here.

[116] This was one of the remedies sought in LHK Nominees [2002] WASCA 291; (2002) 26 WAR 517. On the equitable lien generally: see Edward I Sykes and Sally Walker, The Law of Securities (5th ed, 1993)

199–206; Fiona R Burns, ‘The Equitable Lien Rediscovered: A Remedy for the 21st Century’ [2002] UNSWLawJl 1; (2002) 25 University of New South Wales Law Journal 1.

[117] Sykes and Walker, above n 116, 199.

[118] Ibid. Note that an equitable lien also entails the right to the appointment of a receiver.

[119] Although not, of course, where the property is a registered interest in Torrens land: see the discussion of the doctrine of notice at above Part IV(B).

[120] On the nature of the hypothecation: see Sykes and Walker, above n 116, 17–20.

[121] This quotation, from Sir John Salmond’s Jurisprudence (11th ed, 1957) 469, appears at ibid 18.

[122] See above Part IV(B)(1).

[123] I leave to one side questions about whether a plaintiff must demonstrate a pre‑existing proprietary ‘base’ in property over which the declaration of an equitable lien is sought, as well as questions about whether a general equitable lien, operating over all of the property in the defendant’s hands, is ever acceptable. On these matters: see Burns, above n 116, 24–31.

[124] Such a criticism is made by Mary‑Anne Hughson, Marcia Neave and Pamela O’Connor, ‘Reflections on the Mirror of Title: Resolving the Conflict between Purchasers and Prior Interest Holders’ [1997] MelbULawRw 16; (1997) 21 Melbourne University Law Review 460, 490.