The impact of Torrens on priorities

Unregistered interests

Torrens: a land title revolution

Statute works with common law

It must now be taken to be well settled that under the Australian system of registration of titles to land the Courts will recognize equitable estates and rights except so far as they are precluded from doing so by the Statutes. This recognition is, indeed, the foundation of the scheme of caveats which enable such rights to be temporarily protected in anticipation of legal proceedings.

Butler v Fairclough (1917) 23 CLR 78, 91

Equitable or unregistered interests are acknowledged by the Torrens system, so…priorities issues remain

Which interest will prevail?

What effect does Torrens have?

Priorities disputes in Torrens follow general law principles

Unregistered interests

are equitable interests

Competition b/w

unregistered interests = equity vs

equity

Resolve with

reference to conduct of parties

In dealing with such equitable rights the Courts in general act upon the principles which are applicable to equitable interests in land which is not subject to the Acts. In the case of a contest between two equitable claimants the first in time, all other things being equal, is entitled to priority. But all other things must be equal, and the claimant who is first in time may lose his priority by any act or omission which had or might have had the effect of inducing a claimant later in time to act to his prejudice. Thus, if an equitable mortgagee of lands allows the mortgagor to retain possession of the title deeds, a person dealing with the mortgagor on the faith of that possession is entitled to priority in the absence of special circumstancesto account for it.

Butler v Fairclough (1917) 23 CLR 78, 91

Statute and the common law work together to deal with rights and interests in

land

Competing interests in land

Common law rules

Legal Legal First in time prevails

Legal Equitable Registered takes free of unregistered interests

Equitable Legal Registered takes free of

unregistered interests, notice not relevant

Equitable Equitable Not resolved by the Act

Land Title Act rules

Revisiting old friends

• Rice v Rice• Breskvar v Wall• Abigail v Lapin• Heid v Reliance

Finance

How did the courts resolve the competing equities in these decisions?

In summary: What signal does the parties’ conduct send aboutthe state ofthe title?

A number of steps can be taken to protect an equitable interest: consider the parties’ conduct in its entirety including under the LTA

What steps might be taken to signal that an interest exists? (what does the Act provide?)

S178 LTA

S182 LTA

S141 LTA

S124 LTA

(s42 LTA)

EXAMPLES OF CONDUCTEffect of Torrens on competing equities

IAC v Courtenay

• Draw a timeline of the fact scenario in IAC v Courtenay

• Provide an outline of how the law is applied to the facts in this case, according to priorities– Identify the interests– Identify the nature of the competition– Apply the law to the circumstances– Reach a conclusion

IAC v Courtenay

Feb: contract to sell A to C

Sep lodge transfer

16 Sep withdrew t/f

17 Sep contract to sell

A to D

24 Sep contract to sell

C to A

Nov: completion

contract A to D

IAC v Courtenay

• Identify the interests– Courtenay - in writing, not registered:

equitable– Denton – in writing, not registered: equitable

• Competing equities: who has better eq?– Conduct of the parties

• Denton – searched the title; saw evidence of the transfer and its withdrawal; didn’t inquire further

• Courtenay - had not armed solicitor with power to go out into the world under false colours. ie: did not contribute to a belief in Denton that no interest existed

What role does notice play? Contrast s184 LTA; IAC v

Courtenay

Abigail v Lapin

• Draw a timeline of the fact scenario in this case

• Provide an outline of how the law is applied to the facts in this case, according to priorities– Identify the interests– Identify the nature of the competition– Apply the law to the circumstances– Reach a conclusion

Abigail v Lapin

Dec ’23: L gave over

signed t/f to H

H became registered proprietor

Sep ’25: H mtge to A

L lodged caveat

Feb ’26: A lodged mtge

for rego

Abigail v Lapin

• Parties’ interests– Lapin – right to recover land from mtgee;

not registered; eq– Abigail – writing; not registered; eq

• Who has the better equity? Look to conduct of parties– Abigail – no search of register BUT search

would show nothing untoward – Lapin – handed over indicia of title; without

these, A would never have lent money

Taleb v NAB

• Draw a timeline of the fact scenario in this case

• Provide an outline of how the law is applied to the facts in this case, according to priorities– Identify the interests– Identify the nature of the competition– Apply the law to the circumstances– Reach a conclusion

Taleb v NAB

T lent money; permitted to lodge caveat

Caveat not lodged

Borrower refinanced with NAB

NAB searched title: no caveat

NAB dithered, delaying its lodgment

T lodged caveat

Taleb v NAB

• Competing equities – why?• Neither party’s conduct was ‘prudent

or in its own interest’• How did the court sort out which

party’s interest prevailed?

Determining a priorities claim

Case Conduct Result

IAC v Courtenay

Abigail v Lapin

J & H Just Holdings

Platzer v CBA

Clark v Raymor

Taleb v NAB

Brunker v Perpetual Trustee

Creating an interest• ‘[The LTA] in denying effect

to an instrument until registration, does not touch whatever rights are behind it.’ Barry v Heider

Equity• Won’t assist a volunteer

No value means…• [form of] transfer alone

does not create equitable interest

Losing an interest

Did the Lapins, the Breskvars, Taleb have a right of recourse for losing their interests?

Was the Act sufficient to protect the Breskvars and Armour?

Challenges of statutory drafting

‘Compensation is available against a person…upon whose application the erroneous registration was made.’ s126(2)(b) Real Property Act 1900 (NSW)

Penrith transfer to

Armour

Armour mortgages; awaits issue

of CT

Mortgagee’s employee

forges Armour’s signature

New (innocent) owner is

registered

Features of Torrens

Creation legal title

Nature & quality of legal title

Possibility of equitable interests

Consequences on loss of interest