LAW253 Property Assignment
Semester 2, 2005
Peter Clay (30276837)
1494 Words
Part A
1) What kind of interests do Marjorie, Lucille and Bernie have over “Hillside” and
Why?
Marjorie
Frederick agreed to mortgage his Old System Land parcel “Hillside” to Marjorie. This
agreement was evidenced in writing. Ordinarily, for there to be a legal mortgage of
General Law Land the mortgagor would convey the title deeds to the mortgagee. In this
case the transfer never happened; Marjorie does not have the title deeds. Therefore
Marjorie cannot have a legal interest in “Hillside”.
If Marjorie has an equitable interest in “Hillside” it must be an equitable interest.
Equitable interests can arise when a legal mortgage is incomplete. When “there has been
no legal transfer of a proprietary interest but merely a binding undertaking to confer such
an interest, that obligation, if specifically enforceable will confer a proprietary interest in
the subject matter in equity”1.
Marjorie will have an equitable interest if she has a valid enforceable contract. It would
need to be evidenced in writing for s4 of the Statute of Frauds meaning it contains the
parties, the contractual terms and the consideration2. It would also need to be signed by
Frederick at a bare minimum (as the party agreeing to be obliged)3. The facts are not
clear on this point. However, its a fair assumption that the letter by Marjorie and
Frederick's agreement are sufficient for s4 of the Statute of Frauds. Therefore Marjorie
has an Equitable Interest in “Hillside”.
1Swiss
2Law
Bank Corporation v Lloyds Bank Ltd & Ors [1982] AC 584, 595D (Buckley LJ).
Reform (Statute of Frauds) Act 1962 (WA) s2; Statute of Frauds 1677 s4.
3Ibid.
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Lucille
Lucille does not have a legal interest. For her to have a legal interest she would need to
have the original title deeds and the original conveyance deed 4. The facts indicate that
Lucille has neither the title deeds nor a valid deed of conveyance. She cannot have a
legal interest.
Lucille cannot have an equitable interest due to a valid contract that satisfies s4 of the
Statute of Frauds. There is nothing in the facts to suggest that Lucille has anything
approaching a document that would satisfy s4 of the Statute of Frauds. Lucille cannot
have an equitable mortgage by deposit of deeds. This is because she only had a copy of
the deeds, not the deeds themselves. Lucille cannot have an equitable mortgage due to
part performance as the only performance of the contract was the money paid by Lucille.
The “payment of money is such an equivocal act as to be an inappropriate foundation for
a finding of part performance”5.
However, Lucille would have an equitable interest because of estoppel.
To show
estoppel she would need to show that she suffered material detriment resulting from
relying on an assumption induced by Frederick, and that it would be unconscionable for
Frederick to depart from that assumption6. Lucille suffered material detriment because of
the assumption of a mortgage induced by Frederick, and it would be unconscionable to
allow Frederick to depart from his representations. Therefore, Lucille has an equitable
interest by estoppel.
Bernie
4Property
Law Act 1969 (WA) s33.
and New Zealand Banking Group Ltd v Widin (1990) 102 ALR 289, 292 (Wilcox J).
6Walton Stores (Interstate) Ltd v Mayer (1988) 164 CLR 387, 428-9 (Brennan J).
5Australia
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Peter Clay (30276837)
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Bernie has a legal interest. He and Frederick have a written agreement which it is fair to
assume satisfies s4 of the Statute of Frauds. He took and has possession of the deeds to
“Hillside” which its fair to assume includes a valid deed of conveyance under s337.
Therefore he received and has a legal interest in “Hillside”.
2) Whose Interest in “Hillside” Takes Priority and Why?
This is a priority dispute between a legal interest (Bernie's) and two prior equitable
interests (Marjorie's and Lucille’s). The general rule in these disputes is that the holder
of the later legal interest will prevail so long as they are a bona fide purchaser for value
without notice of the equitable interest8.
If someone is not acting bona fide, not
purchasing for value or has notice of the prior equitable interest they will take the legal
interest subject to that equitable interest.
Bernie is a bona fide purchaser for value. Nothing in the facts suggests that he has or
could have actual, implied or constructive knowledge of Lucille’s interest. However, its
clear that Bernie had notice of Marjorie's interest before he acquired the legal interest in
“Hillside”. Therefore he takes the legal interest subject to Marjorie's Equitable Interest,
but not Lucille's. Marjorie's interest takes priority.
Part B
1) What is the Importance and Effect of the Registration of an Interest in Land
Under s.58 of the Transfer of Land Act?
It is impossible to gain a legal interest in land under Torrens System until the interest is
registered under s589.
This is because it's not a legal interest that gives rise to
registration, its registration that gives rise to a legal interest. The Torrens System “is not
7Above,
n 4.
v Rawlins (1872) LR 7 Ch 259, 269 (James LJ).
9Transfer of Land Act 1893 (WA) s58.
8Pilcher
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a system of registration of title but a system of title by registration... [its] the title which
registration itself has vested in the proprietor”10. The importance and effect is to gain a
legal, rather then equitable, interest.
2) What Kind of Interests do Marjorie and Lucille now have in “Hillside” and why?
Now that Marjorie has registered her interest she has a legal interest in “Hillside”. This is
because “a registered interest... is a legal interest”11.
Lucille holds only an unregistered interest. You cannot have an legal interest in Torrens
System land that's unregistered because only registration gives rise to a legal interest12.
Her interest is still only an equitable interest.
3) Whose Interest in “Hillside” now takes Priority and Why?
This is a dispute between a legal interest (Bernie's), a subsequent legal interest
(Marjorie's) and a prior unregistered equitable interest (Lucille's). The general rule is that
a registered interest takes priority over an unregistered interest 13 and between registered
interests, the interest registered first takes priority14.
Both Bernie and Marjorie take priority over Lucille as they are registered and she is not.
Lucille could leap over Marjorie by claiming she was grossly negligent in not taking
possession of the title deeds and letting Frederick represent himself as the legal owner 15.
However, there are insufficient facts to assess Marjorie's blameworthiness, certainly not
enough to conclude it was grossly negligent. Thus, Lucille's interest doesn't take priority.
10Breskvar
v Wall (1971) 126 CLR 376, 385-6 (Barwick CJ).
(Finance) Pty Ltd v Courtenay (1964) 110 CLR 550, 572 (Kitto J)
12Above, n 9.
13Id s68.
14Reliance Finance Corp Pty Ltd v Orwin [1964-65] NSWR 970, 973 (McLelland CJ).
15Barry v Heider (1914) 19 CLR 197.
11IAC
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As Bernie is the registered proprietor he has an indefeasible title subject to exceptions16
and, being the first registered interest, would take priority. One of these exceptions is
fraud. Marjorie could claim that Bernie has a defeasible title because of fraud in that he
had notice of a prior interest. However, notice of a prior interest does not amount to
Fraud17. The earliest registered interest takes priority18. Therefore, Bernie's interest takes
priority.
4) What Kind of Interests do Bernie and Jade have in “Coventry” and Why?
Jade
The Registered Proprietor has an indefeasible title subject to certain exceptions19. Jade is
the registered proprietor and thus has indefeasible title. Being registered means that Jade
has the legal interest in “Coventry”20.
Bernie
Bernie is not the registered proprietor. Though he may hold the title deeds he is not
registered. Under the Torrens System a person does not hold the legal interest until they
are registered21. As no transfer happened, Bernie cannot have a legal interest.
Bernie may have an equitable interest. From the facts we can assume that Bernie has a
valid contract for sale with Frederick. When there is a valid contract of sale the vendor
“becomes in equity a trustee for the purchaser”22. This means that the purchaser receives
an equitable interest from a valid contract of sale. Prima facie, Bernie holds an equitable
interest
16Above,
n 9, s68.
s134.
18Id s53(2).
19Id s68.
20Transfer of Land Act 1893 (WA) s58; Breskvar v Wall (1971) 126 CLR 376, 385-6 (Barwick CJ).
21Above, n 9, s85.
22Lysaght v Edwards (1876) 2 Ch D 499, 506 (Jessel, MR).
17Id
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He still might not have an interest. If the land was transferred to Jade after Bernie and
Frederick entered into their agreement then Bernie will hold an equitable interest in
“Coventry”. However, if the land was transferred to Jade before Bernie and Frederick
entered into their agreement then Frederick would have already disposed of both his legal
and equitable interests in “Coventry”. Bernie would receive no interest in “Coventry”
because of nemo dat quod non habet, i.e. “no one can transfer to another a better title than
[they have], and consequently a person who has no title at all can transfer none” 23.
However, there are insufficient facts to indicate when the contract was entered into and
when the land was transferred to Jade.
5) Whose interest in “Coventry” Prevails and Why?
If Bernie has no interest in “Coventry” as a result of nemo dat, then Jade will naturally
prevail. However, if Bernie has an interest he would have a priority dispute with Jade.
Jade, as the registered proprietor, has indefeasible title24. She will prevail unless Bernie
can successfully argue one of the exceptions to indefeasibility.
Based on the facts, there is no exception under section 6825 that he would be able to
successfully claim. Bernie could try to argue that Jade, as a volunteer, does not gain
indefeasible title. That is the law applicable in some Australian jurisdictions26. However,
it has not been followed elsewhere, including WA. In WA, volunteers get indefeasible
title27. Jade is registered, she has indefeasible title. She is not subject to an exception to
indefeasibility. Therefore Jade would prevail.
23Whelan
24Above,
Kartaway Pty Ltd v G & C Weatherburn Pty Ltd (in liq) [2002] NSWSC 677 at [27].
n 9, s68.
25Ibid.
26King
v Smail [1958] VR 273, 279 (Adam J).
v Registrar of Titles (2001) 24 WAR 299.
27Conlan
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