Property Law B Summary Notes (condensed version):
CAVEATS:
Purpose:
(a) To freeze the register, or temporarily protect the land in anticipation of legal
proceedings – Butler v Fairclough (1917)
(b) No interest will be registered while the caveat is in force affecting the land,
estate or interest until after a certain notice to the person lodging the caveat –
Abigail v Lapin [1934]
S74F Real Property Act – caveats used to prevent dealings in land
1. REQUIREMENTS:
a. The claim must be an interest in the land: Proprietary interest –
Municipal District of Concord v Coles (1905)
b. The interest must exist at the time the caveat is being lodged:
‘caveatable interest’ – Miller v Minister of Mines [1963
c. Cannot be lodged to protect a ‘mere equity’ – Mijo Developments Pty
Ltd v Royal Agned Waters Pty Ltd
d. Cannot lodge a claim if you merely have a cause of action – Ryan v
Kalocasy
e. A contract is not a caveatable interest
f. Formal Requirements:
i. S74F Real Property Act
ii. Approved form
iii. Clear description of interest claimed
iv. No need for strict compliance of formal requirements – S74L
2. Extending a caveat:
a. S74k(2) – treated like an interlocutory injunction
b. Must show serious question to be tried and balance of convenience
3. Removing a caveat:
a. Lapsing of notice: s74(1) – where dealing lodged anyone with interest
can request Registrar General to serve lapsing notice which gives
caveator 21 days to extend caveat by applying to Supreme Court (only
partial lapsing)
1"
b. S74J(4) – where still serve lapsing notice without any dealings being
lodged – the Registered Proprietor can do that (entire lapsing and
cannot be relodged)
c. Court order s74MA
4. Lodging the Caveat incorrectly:
a. Beford Properties Pty Ltd v Surgo (1991) (NSW)
i. Two tiered test –
ii. Caveator must have honestly believed that they had a
caveatable interest (subjective test) and;
iii. had reasonable grounds for lodging the caveat (objective test)
b. Person may be liable even through they were honest but their solicitor
was neglectful in lodging the caveat
c. Compensation:
i. Loss is recoverable only where attributable to wrongful
lodgment: such as: 1. Interest payable under a mortgage because the caveat
delayed completion of sale
2. Waste expenses because of delay of sale in rates and
taxes
3. If sale fell through because of caveat may include
damages paid to a purchaser
PRIORITIES:
If a legal interest is in dispute with an unregistered equitable interest, the dispute is
resolved by application of the old system priority rules.
1. Identify whether the interest is legal or equitable
2. Determine when the interests were created
Rules:
1. Earlier equitable interest vs later legal interest:
2"
a. OLD SYSTEM TITLE: If the doctrine for bona fide purchaser is
satisfied, then the later legal interest will prevail. The elements to
satisfy the doctrine are as follows:
1. Must be genuinely unaware of the existent of prior
claims.
2. They have paid valuable consideration (volunteers
aren’t protected)
3. They have purchased the legal estate
b. TORRENS SYSTEM: three provisions fundamentally alter the
general law priority rules above:
i. Indefeasibility provision – upon registration, a party usually
obtains an indefeasible title to property. Unless an exception to
indefeasibility applies, the interest of the registered proprietor
will not be postponed to the earlier interest.
ii. Doctrine of notice has been abolished under s43(1) Real
Property Act 1900 (NSW). More than mere notice of the
unregistered interest is necessary for the later registered interest
to be postponed to the earlier equitable interest – Loke Yew v
Port Swettenham Rubber Co Ltd [1918]
iii. If an interest is a parmount interest, it does not require
registration to defeat a later registered interest i.e. short-term
leases
2. Earlier legal interest vs later equitable interest:
a. GENERAL LAW: Legal interests will prevail over equitable interests
unless: (and the earlier legal interest will be postponed)
i. The legal interest holder has been party to fraud that created the
equitable interest – Northern Counties of England Fire
Insurance Co v Whipp (1884)
ii. Holder of earlier interest has been grossly negligent in failing
to inquire after, obtain, or retain possession of the title deeds to
the property – Walker v Linom [1907]
iii. Earlier interest holder allows another to appear to be the true
owner of the property – Barry v Heider (1914)
3"
b. TORRENS TITLE: the earlier legal interest will prevail unless the
later equitable interest holder falls within an exception to indefeasible
title.
3. Equitable interest vs equitable interest: the following factors will need to be
considered in order to decide which interest will prevail:
a. Arming conduct:
i. Rice v Rice (1853) – competition between vendor’s lien for the
purchase price and a later equitable mortgage, the conduct of
the prior interest holder was held to be sufficient to postpone
that interest. The prior interest holder armed the purchaser to go
out and create a subsequent mortgage. In this matter, the first in
time will only prevail as a last resort where the equities are
equal.
ii. Abigail v Lapin [1934] – arming conduct such as giving
another party the means to deal with the estate as though that
party were the legal and equitable owner, giving the receipt but
not collecting the purchase price.
b. Failure to Caveat: No duty to caveat however may cause priority
dispute
i. Butler v Fairclough (1917) – dispute between someone
purchasing the land and someone with a charge over the land
(both interests were unregistered). The mortgagee later had put
a caveat over the land after the purchaser has done a search.
The court held that because the caveat had not been lodged
before the purchaser had paid the money and received the
transfer, the caveat did not protect the mortgagees against the
purchaser’s interest. The mortgagee’s interest was postponed
(loses priority despite being first in time).
ii. Abigail v Lapin [1934] - the Lapins executed a transfer meant
as a security loan to Heavener. Heavener treated the transfer as
though she was the genuine title holder and mortgaged the land
to Abigail who was unaware of the Lapin’s interest. Neither
interested was registered. The court held that Abigail’s interest
4"