Section 43A
Cameron Stewart
Version 3
Section 43A
On completion of the contract for sale of land
and before registration the purchaser has less
rights than they would have under the old
system as they only have an equitable interest
which is subject to any earlier equitable
interest (even though they may have taken the
interest for value and without notice) – under
old system they would have had the legal
estate provided they took that estate without
notice of earlier interests and for value.
(c) Cameron Stewart 2005
Section 43A
To remedy this defect in the RPA s43A bestows
upon such a purchaser of Torrens land the
same rights as they would have under old
system – that is the section declares that they
take a legal interest after sale but prior to
registration.
Therefore s 43A allows a purchaser of an
interest in land, who takes for value and
without notice, to get a legal estate – thus
protecting him or her against earlier equitable
interests
(c) Cameron Stewart 2005
Wording
• (1) For the purpose only of protection against
notice, the estate or interest in land under the
provisions of this Act, taken by a person under
a dealing registrable, or which when
appropriately signed by or on behalf of that
person would be registrable under this Act
shall, before registration of that dealing, be
deemed to be a legal estate.
Section 43A and equity’s darling
•
Eg if A buys land from B for value and
without any knowledge of the prior
equitable interest of D, under s 43A A will
take the legal estate and D’s interest will be
defeated. If before registering his interest,
A then executes a mortgage to C, C’s
interest will still take priority over D’s, even
if C had notice of D’s interest.
(c) Cameron Stewart 2005
Section 43A and equity’s darling
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IAC (Finance) Pty Ltd v Courtenay (1963) 110 CLR
550
Courtney bought land off Mrs Austin for 15000
pounds. 3000 was paid as deposit and the rest
was secured by a mortgage back to Mrs Austin.
The documents were not lodged for registration
until seven months after settlement. Mrs Austin's
solicitor had retained these documents to allow
the mortgage to be registered. Later Mrs Austin
and the Courtney's agree that Mrs Austin would
buy the land back. The original transfer and
mortgage had not been registered by this time.
(c) Cameron Stewart 2005
Section 43A and equity’s darling
•
Before the second sale was registered Mrs Austin
agree to sell the land to Denton Subdivisions Pty Ltd.
She did this without the Courtney's knowledge. Mrs
Austin's solicitor uplifted the original sale and
mortgage documents from the RG. When the sale to
Denton was being settled a question was asked about
why these documents had been uplifted. Mrs Austin's
solicitor lied and said it was part of a deal to finalise
the resale back to Mrs Austin. A copy of the second
contract for sale was produced as evidence. Denton's
purchased was financed by IAC as mortgagee. The
documents were lodged by IAC but before they were
registered the Courtney's commenced their action
(c) Cameron Stewart 2005
Section 43A and equity’s darling
• Held: the Courtney's were entitled to
registration.
• Unregistered interests are equitable.
The effect of s 43A is to confer a legal
interest on an equitable interest, to put
it into the position of protected
received by a bona fide purchaser for
value without notice.
• Why did IAC fail?
(c) Cameron Stewart 2005
Section 43A and equity’s darling
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Kitto J - the fact that the solicitor withdrew the
registration without authority meant that s 43A
did not give priority to IAC
Taylor J (similar to trial judge Hardie J) - The
ordinary rules of priority apply. IAC had notice
of the equitable interest of the Courtney's
hence they could not satisfy the rule.
Dixon J - an unauthorised withdrawal was not a
withdrawal and was ineffective. Hence the
conflict was between an early registrable
interest and a later registrable interest. Section
43A meant that two registrable dealings would
be determined by the first in time rule
(c) Cameron Stewart 2005
Must have possession of the CT
• Finlay & Ors v R & I Bank of Western Australia
(1993) NSW ConvR 55-686
• A was a company and was registered proprietor
of fee simple in a property at Taree;
• The Commonwealth Bank was registered on title
as charge holder and had the CT.
• 1988 – A gave a charge over the land to the Bank
of WA. Bank of WA did not register their charge
on Torrens but did register it on the register of
company charges maintained by ASIC.
(c) Cameron Stewart 2005
Must have possession of the CT
• A gave a charge to Finlay; Finlay had no notice of the
existence of the Bank of WA’s charge and did not search the
ASIC register – only the Torrens register.
• Finlay reaches settlement and goes to register. While Finlay
is getting the CT from the Commonwealth Bank, the Bank
of WA lodges a caveat.
• Two competing equitable interests. Finlay argues that they
are protected by s 43A and therefore should be able to
proceed to registration. To show that Finlay is protected by
43A Finlay had to show:
– the purchaser has a "legal estate"
– the purchaser has a "registrable dealing"
– the purchaser is dealing with an RP
(c) Cameron Stewart 2005
Must have possession of the CT
• Does Finlay have a legal estate? Is Finlay without
notice? WA Bank argued that registration of the
charge on the company register was constructive
notice so this denied Finlay the protection of 43A
– Court rejected this argument as there is no
conveyancing practice of checking the company
register and this would be inimical to the clear
meaning of the Torrens system that you just have
to check the Torrens register:
“it is likely that Mr Torrens would turn in his grave
to think that any such search could possibly be
thought to be necessary for land under the
system devised by him” (per Windeyer J at
59,925).
(c) Cameron Stewart 2005
Finlay & Ors v R & I Bank of Western
Australia (1993) NSW ConvR 55-686
• So, if Finlay got to settlement and had a
registrable dealing, he’d have a legal estate as
no notice. Does Finlay have a registrable
dealing?
• Court held no. At the time the caveat was
lodged and notice was given, Finlay had not
yet got the CT from the first mortgagee so was
not ‘registrable’.
(c) Cameron Stewart 2005
Section 43A and equity’s darling
•
Taylor J’s interpretation was endorsed by a
unanimous High Court in Meriton
Apartments Pty Ltd v McLaurin & Tait
(Developments) Pty Ltd (1976) 133 CLR 671;
10 ALR 296.
(c) Cameron Stewart 2005
Immediately registrable?
The interest purchased must had been
effected by a “dealing registrable” that is
you must be able to lodge the dealing for
immediate registration
(c) Cameron Stewart 2005
Immediately registrable?
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Weller v Williams [2010] NSWSC 716
The Williams family owned a property at Kurrajong
Weller was their solicitor. A charge was given to him concerning fees owed. A
right to lodge a caveat was also given as part of the agreement
The property was subject to a registered to Permanent Mortgages Pty Ltd
dated 6 March 2008
In June 2009 the Williamses contracted to sell the land to the Xerri family and
the property was settled on 21 September 2009. The Xerri agreed to mortgage
the and to the Bank and the Bank received the CT, discharge of the Permanent
Mortgage, transfer from W to X, and the Mortgage dealing from Z to the Bank.
Weller became aware of the agreement and Iodged a caveat on 29 September
2009
On 6 October 2009 the bank tried and failed to register the documents
A lapsing notice was served
Immediately registrable?
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•
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Weller argued that the Xerries did not have an immediately registrable dealing
Ball J:
18 In my opinion, this argument is a misapplication of the principles stated by
Taylor J and Hardie J [in IAC Finance]. Mr and Mrs Xerri’s interest in the Property
derives from the transfer executed by the first and second defendants as the
registered proprietors. The transfer is immediately registrable because the interest
that is sought to be registered is derived immediately from the person who is
entitled to grant it. It is true that, if it is registered in that form without a discharge
of the mortgage to Permanent Mortgages, then Mr and Mrs Xerri would take their
interest subject to that mortgage. But that does not mean that the transfer is not
immediately registrable. Nor does the fact that Mr and Mrs Xerri may not be
prepared for the transfer to take place in those circumstances; or that a transfer in
those circumstances may be a breach by the first and second defendants of their
obligations under that mortgage. The requirement that the interest be in
registrable form goes to the characteristics of the instrument, not whether or not
the parties would want it to take effect in certain circumstances.
Immediately registrable?
•
Did the Bank have an immediately registrable interest? No
• 19 The position is different in the case of the Bank. It takes its interest
from Mr and Mrs Xerri, who are not the registered proprietors.
Consequently, in accordance with the principles stated by Taylor J in IAC
Finance v Courtenay [1963] HCA 64; (1963) 110 CLR 550, it is not entitled
to the benefit of s 43A. However, I do not think that that conclusion assists
the plaintiff. The plaintiff is not entitled to prevent the registration of the
transfer to Mr and Mrs Xerri, since their interest takes priority over his.
Immediately on registration of their interest, the Bank is entitled to
register its mortgage. Mr and Mrs Xerri’s interest is an interest that will
have the effect of extinguishing the plaintiff’s interest in the Property: see
s 42 of the Act. It follows that the mortgage to the Bank cannot be subject
to that interest either.
Transfers by direction
•
•
Jonray (Sydney) Pty Ltd v Partridge Bros Pty Ltd (1969)
89 WN (NSW) Pt 1) 568
M contracts to sell land to J. At the date of the contract
M was not the registered proprietor but was a
purchaser of the land in a contract from A. The land
was subject to a mortgage to B. To settle the sale to J
M intended to hand over the transfer of the land to J,
executed by A at the direction of M, in conjunction
with a discharge of mortgage executed by B. J was not
happy with this arrangement and said that it wanted to
receive the title from M. J wanted the mortgage
discharged before the settlement. J sought to rescind
the contract. However it had not lodged its objections
within the time period for the making of objections to
title. The issues were whether a purchaser could refuse
a transfer by direction and whether it could require the
title free from incumbrances.
(c) Cameron Stewart 2005
Transfers by direction
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•
The court found that the purchaser could not
object to the sale by direction as it was still a
sale from the registered proprietor. A purchaser
received the same protection as a purchaser
taking directly from a registered proprietor.
As for the objection to the discharge of
mortgage, the court found that the purchaser
could not object as uon registration it would
receive indefeasible title. After completion or
prior to registration the purchaser was
protected by s 43A against any defects of which
it had no notice.
(c) Cameron Stewart 2005
Defects in the dealing
•
The instrument cannot be a forgery. Nor can
a person who obtains an interest by fraud
gain the protection offered by s 43A
•
Diemasters Pty Ltd v Meadowcorp Pty Ltd
(2001) 52 NSWLR 572
(c) Cameron Stewart 2005
Defects in the dealing
•
In both Jonray (Sydney) Pty Ltd v Partridge
Bros Pty Ltd (1969) 89 WN (NSW) Pt 1) 568
and Mayer v Coe (1968) 88 WN (NSW) (Pt 1)
549 it was suggested that if notice of a void
instrument was received after completion of
the transaction but before its registration,
the true proprietor could prevent
registration of it by obtaining an injunction
to prevent registration.
(c) Cameron Stewart 2005
Defects in the dealing
• IAC (Finance) Pty Ltd v Courtenay [1963] HCA
64; (1993) 110 CLR 550 at 591, Taylor J:
[The] section clearly contemplates the position of a
person dealing with a registered proprietor for it
speaks of "the estate of 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.
(c) Cameron Stewart 2005
Prompt lodgement
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In Diemasters Pty Ltd v Meadowcorp Pty Ltd, at
581, Windeyer J said:
[Section 43A] envisages that a dealing will be
lodged for registration. Its purpose is to assist a
party who lodges a dealing for registration, not to
assist one who makes no effort to get protection of
registration.
In that case his Windeyer J held that s 43A
protection was not available to a person who had
taken no steps to get registered within a period of
fourteen months after settlement of the
transaction.
(c) Cameron Stewart 2005
Stamp duty?
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•
•
The fact that the holder of an unregistered
instrument has not, at the time of settlement of
the transaction, paid the relevant stamp duty and
had the instrument stamped by the Office of State
Revenue does not mean that such a holder is not
able to obtain the protection offered by s. 43A:
Diemasters Pty Ltd v Meadowcorp Pty Ltd [2001]
NSWSC 495 at para 22.
BUT – Duties Act 1997 s301, implies documents
void ab initio
Westpac Banking Corporation v Ollis [2008] NSWSC
824 at [47], per Einstein J
(c) Cameron Stewart 2005
Purchaser?
• Westpac Banking Corporation v Ollis [2008]
NSWSC 824 at [47], per Einstein J
• Complicated litigation – numerous properties
and fraud
• One party, Docos Estate claimed a s43A
interest
• Einstein J found that s 43A did not apply
Purchaser?
[49] Section 43A only applies where the registrable dealing is taken by
the purchaser for value and without notice: Meriton Apartments
Pty Ltd v McLaurin & Tait (Developments) Pty Ltd [1976] HCA 30;
(1976) 133 CLR 671 per Barwick CJ, Mason & Jacobs JJ. The
protection it extends prior to registration is therefore not the
equivalent of the immediate indefeasibility provided upon
registration by section 42, but it permits the purchaser to rely upon
the common law doctrine of purchaser for value without notice
which doctrine otherwise has little role to play with respect to
Torrens land: see Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd
[1998] 3 VR 133 at 151 per Tadgell JA, Winneke P agreeing; and
Meagher, Heydon & Leeming, Meagher, Gummow & Lehane’s
Equity, Doctrines & Remedies 4th edition, 2002, at [8-295].
•
50 Docos Estate has failed to adduce sufficient admissible evidence
that it has paid anything to the vendor Mr Ollis such that it could be
said to be a purchaser for value.
Notice?
• Finlay & Ors v R & I Bank of Western Australia (1993)
NSW ConvR 55-686
• Does Finlay have a legal estate? Is Finlay without
notice? WA Bank argued that registration of the charge
on the company register was constructive notice so this
denied Finlay the protection of 43A – Court rejected
this argument as there is no conveyancing practice of
checking the company register and this would be
inimical to the clear meaning of the Torrens system
that you just have to check the Torrens register:
“it is likely that Mr Torrens would turn in his grave to
think that any such search could possibly be thought to
be necessary for land under the system devised by
him” (per Windeyer J at 59,925).
(c) Cameron Stewart 2005
Notice?
• Section 43A
• (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.
(c) Cameron Stewart 2005
The successive effect
Successive effect – recall priority rule earlier
equitable v later legal – bona fide purchaser
for value without notice and the extension
on that principle – eg Wilkes v Spooner later purchasers who buy the original
purchaser’s interest with notice are
protected by the original purchaser’s title –
to allow the purchaser the full right to deal
with the property as he or she wishes
(c) Cameron Stewart 2005
The successive effect
•
•
Eg A buys an estate of B, for value and
without notice of C’s earlier equitable
interest in the property – A takes priority – if
a then sells to D and D knows of C’s interest
he can still take priority over C
So too does s 43A have this “successive
effect”
(c) Cameron Stewart 2005
The successive effect
Jonray (Sydney) Pty Ltd v Partridge Bros Pty Ltd (1969) 89
WN (Pt 1) (NSW) 568 at 477:
• ... s 43A operates not only to protect against notice the
mortgagor who takes the discharge of mortgage, but also
any person claiming under the mortgagor, i.e. the
purchaser. It gives what has been described before us as a
"successive" effect to s 43A, but such an effect seems to us
to accord with the general law. If A has the benefit of a
defence of purchaser for value without notice, all persons
claiming under A have the same benefit, whether or not
they had notice and whether or not they were purchasers
for value, provided they did not participate in an original
breach of trust (In re Stapelford Colliery Co. (Barrow's
Case) [(1880) 14 Ch D 432 at 445]).
(c) Cameron Stewart 2005
The successive effect
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Barlin Investments Pty Ltd v Westpac
Banking Corporation [2012] NSWSC 69
Barlin had sold land to be developed and the
sale was funded partly by a an unregistered
mortgage back to Barlin and an agreement
that Barlin’s directors would be sold lots off
the plan
A caveat was lodged but later released
One of the units was sold to Chiha who
financed the sale with a mortgage from
Westpac
Documents were bulk lodged for processing
(c) Cameron Stewart 2005
The successive effect
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Para 10.,
Those dealings (together the Chiha Dealings) were
lodged by what is commonly referred to as the "Bulk
System". Under that system, batches of documents are
lodged with LPI in bulk by frequent users. At the time the
documents are delivered, they are left with an LPI
employee at the bulk lodgment counter. Cheques
presented for payment of registration fees are separated
from the documents and presented to cashiers who
provide receipts for the presented cheques. The
documents themselves are placed in "batts" for
processing by an examination officer. No distinctive
reference is given to the individual documents at that
stage and no document details are entered into the
Integrated Titling System (ITS) on which the Torrens
Register is maintained. Documents waiting lodgment are
allocated to an examination officer and are generally
processed within 24 hours of presentation. Once
examined, the documents are accepted for lodgment, in
which case they are given a distinct reference and are
entered into the ITS. Alternatively, if not accepted, they
are returned to the lodging party
(c) Cameron Stewart 2005
The successive effect
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Barlin’s caveat was relodged in the meantime
Did Chiha get s43A protection? Yes
Could that protection pass to Westpac? Yes
In the present case, on the findings I have
made, Mr Chiha was entitled to the protection
of s 43A because he took his interest from the
registered proprietor for value and without
notice of Barlin's interest. Westpac and Mr and
Mrs Mitchell were entitled to the same
protection because they took their interests
from him. In any event, on registration of Mr
Chiha's interest, Barlin's interest would be
extinguished under ss 42 and 43 of the RPA. In
those circumstances, there is nothing to
prevent registration of the subsequent
dealings: Weller v Williams [2010] NSWSC 716.
(c) Cameron Stewart 2005
Black v Garnock (2007) 230 CLR 438
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Creditors obtained a judgment in the District Court of
New South Wales for a money sum against the judgment
debtor
The judgment debtor was the registered proprietor of
some farming land comprised in three folios
Some months after the judgment creditors obtained
judgment against the judgment debtor, but before the
issue of any writ of execution, the judgment debtor
agreed to sell the land to the first to fourth-named
respondents ("the purchasers").
The contract of sale was completed at about 2.00 pm on
24 August 2005. The purchasers paid the balance of the
purchase price to or at the direction of the vendor of the
land, the judgment debtor. The judgment debtor, as
vendor, gave the purchasers:
memorandums of transfer,
discharges of mortgages, and
Surrender of current lease
(c) Cameron Stewart 2005
Black v Garnock (2007) 230 CLR 438
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At about 9.00 am on settlement day, the
purchasers' solicitors obtained a title search
with respect to the land.
No unexpected encumbrance.
30 mins after that search was made, the
solicitor for the judgment creditors notified
the purchasers' solicitors that the judgment
creditors had an unsatisfied judgment
against the
A charging order had been obtained a in
respect of the deposit that had been paid
under the contract of sale.
(c) Cameron Stewart 2005
Black v Garnock (2007) 230 CLR 438
•
•
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At about 11.53 am on that day (2 hours
before the settlement) a writ of execution,
issued out of the District Court of New South
Wales was recorded in the Register
Sec 105(2) of the RP Act permitted the
Registrar-General to "record a writ in the
Register pursuant to an application in the
approved form". Section 105(1) provided
that "[a] writ, whether or not it is recorded
in the Register, does not create any interest
in land under the provisions of this Act".
Transfers could not be registered
(c) Cameron Stewart 2005
Black v Garnock (2007) 230 CLR 438
•
Gummow and Hayne JJ held that s 43A
‘confers upon a purchaser who has received
a registrable instrument and paid the
purchase money the same protection
against notice of an earlier unregistered
interest as that achieved by a purchaser who
acquires the legal estate at common law’.
(c) Cameron Stewart 2005
Black v Garnock (2007) 230 CLR 438
•
•
The effect of the registration of the writ of execution
overrides the interests held by the purchaser. At [33]
Furthermore, to speak of the purchasers' rights as having
"priority" over the writ or the rights of the judgment
creditors imposes upon the debate an assumption,
contrary to the explicit terms of the Act, that there is
some competition between the holders of different
interests in land. Section 105 of the RP Act makes plain
that a writ, whether or not recorded in the Register, does
not create any interest in land. Hence counsel placed no
reliance upon s 43A of the RP Act[24]. As interpreted in
Meriton Apartments Pty Ltd v McLaurin & Tait
(Developments) Pty Ltd[25], the section confers upon a
purchaser who has received a registrable instrument and
paid the purchase money the same protection against
notice of an earlier unregistered interest as that achieved
by a purchaser who acquires the legal estate at common
law. In the present case, there is no competition between
unregistered interests and the unregistered interest of
the purchasers cannot defeat the statutory consequence
of the earlier recording of the writ.
(c) Cameron Stewart 2005
What if s 43A doesn’t apply?
• The go back to competing equities
• Heggies Bulkhaul v Shirlaw [2004] NSWSC 805
Problem
• Roger was the registered proprietor of Brownacre, being
two hectares of land at North Ryde held under the Real
Property Act 1900. To finance the purchase of Brownacre
Roger had borrowed money from Loane and executed a
mortgage securing the amount in her favour. The mortgage
was registered but after registration the certificate of title
was returned to Roger.
• Unfortunately Roger had a gambling problem and needed
extra cash. He sought an advance from Don, who gave him
money, secured by Roger giving Don possession of the
certificate of title for Brownacre. No documents were
executed by Don and Roger. Don never bothered to check
the Register to see if there were other interests registered
in relation to Brownacre
Problem
• A few days later Roger, tired of his growing debts, decided to sell
Brownacre to meet his costs. He decided to rid himself of Loane's
debt by forging Loane's signature on a discharge of mortgage in
relation to the registered mortgage in favour of Loane. To register
the forged discharge of mortgage, Roger spoke to Don and asked
him to return the certificate of title. Don agreed, and Roger used
the certificate of title to register the forged discharge of mortgage.
Roger did not return the certificate to Don.
• Two days after Roger had registered the forged discharge of
mortgage, Belinda offered to purchase Brownacre from Roger for
an agreed sum. Belinda inspected the property and found no
evidence that it was being occupied and Roger neglected to
mention the loan from Don. Belinda then exchanged contracts of
sale for Brownacre with Roger.
• Settlement of Roger's sale to Belinda occurred
on a Friday a few weeks after their exchange
of contracts. Roger and Belinda did the
settlement themselves. Belinda did a final
search of the register before settlement. In
exchange for the cheque to Roger, Belinda
received a transfer signed by Roger, and the
certificate of title. Belinda then went home.
She did not register her transfer.
• On the Monday following the settlement of Roger's sale to Belinda,
Don went to see his solicitor. Don had been worried about his loan
to Roger. The solicitor advised that Don lodge a caveat over the
property. On Don's instructions the solicitor lodged a caveat on
that day.
• Two days after Don's caveat was lodged, Belinda spoke to
representatives of Macquarie Developments Ltd (MDL), a
development company which was looking for property in the North
Ryde area. MDL and Belinda quickly agreed upon a price, exchanged
contracts and settled the matter. On settlement, Belinda handed to
MDL a transfer of Brownacre from herself to MDL, the transfer of
Brownacre from Roger to Belinda and the certificate of title.
• An agent of MDL ran down to the Land Titles Office to register the
two transfers. When she reached the front of the counter she was
informed that Don had lodged a caveat and that the transfers could
not be registered.
Questions
• What is the nature of MDL’s interest in the
land?
• Will MDL be subject to Loane’s mortgage?
• Will MDL be subject to Don’s mortgage?