Be careful and very mindful of dates – e.g. VOI only came in September 2014, priority notices 2016.

Torrens system mortgage involves the mortgagee obtaining an equitable charge over the property.
This charge may be registered (s71(1A) TLA)

Mortgagees Rights under a Torrens System Mortgage

1) Mortgagee consent is required for creation of lease
- In order for a creation, variation or surrender to be ‘valid or binding’ against a mortgagee,
the mortgagee must in writing consent for: (s87C TLA)
a) The creation/variation or surrender of a lease
b) The creation/variation of an easement or restrictive covenant
- Otherwise, the lease is ‘not valid or binding against a mortgagee’

2) Implied Mortgage Covenants

Covenants to be implied in every mortgage (s75 TLA)
a) Mortgagor will repay the principal and interest on the day appointed by the contract;
b) Mortgagor will repair and keep in repair any 'all buildings or other improvements which
have been made or are erected or made upon the mortgaged land
c) Mortgagee may at all reasonable times until the mortgage is redeemed enter into and
upon the land enter the land…. and inspect the state of repair'
d) Mortgagor will insure the property

- Further, second mortgagees have a statutory right to the duplicate certificate of title such
that they can register (s86(a) TLA)
 When any instrument subsequent to a first mortgage is made by the registered
proprietor of any land and such proprietor or the person entitled to the benefit of
the subsequent instrument desires the registration of the subsequent instrument
the first mortgagee must—
(a) if the first mortgagee holds the certificate of title concerned,
on being requested by the registered proprietor or person entitled
to the benefit of the subsequent instrument and at the cost of the
person making the request, produce the certificate of title to the
Registrar;

3) Mortgagee Rights/Remedies available on default

Rights to sue on personal covenant/contractual right to repay

- Personal rights arising under the mortgage contract to sue for the principal sum and interest
 Relevant where mortgagee has sold mortgaged property but sale price doesn’t
cover whole mortgage debt
 i.e. sue for breach of contract
- Contracts covered by NCC must meet requirements below under power of sale before
enforcement proceedings can be taken to sue on the covenant (s88(2))

Right to enter into possession

- The mortgagee has a statutory right to enter into possession of the mortgaged land on
default (s78 TLA)

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  As the mortgagee has only a charge over the land, they do not have an
automatic/common law right to possession.
 ‘the mortgagee… upon default in payment of the principal sum or interest… or any
part thereof respectively at the due time (s78)
a) May enter into possession of the mortgaged… land… and
b) May bring an action of ejectment to recover the land
- Notice is not necessary for the exercise of this power (Zanzoul v Westpac Banking Corp)
 Mortgagee has same rights and remedies at law and in equity as he would have had
if the legal estate in the mortgaged land had been vested in him with a right in the
mortgagor of quiet enjoyment until default in payment of any principal or breach in
the performance or observance of some covenant (s81(1) TLA)
o Only applies to first mortgages

- Contracts covered by NCC must meet requirements below under power of sale before
possession may be entered into (s88(2))

Power of Sale
- Power is granted by statute but the requirements of a valid exercise depend on whether the
contract is covered by the NCC or not
- The NCC will apply to mortgagees if the mortgage is secured under a ‘credit contract’ (s7)
- The application of the NCC cannot be contracted out of (s191(1))

1) Does the NCC apply?

- The NCC will apply if: (s5)

 Credit has been provided such that it is a valid credit contract (s4)
o credit is provided if, under a contract: payment of a debt owed by one
person (the debtor) to another (the credit provider) is deferred; or one
person (the debtor) incurs a deferred debt to another (the credit provider)
(s3)
o the credit contract must be in the form of (s14(1))
a) a written contract document signed by the debtor and the credit
provider; or
b) a written contract document signed by the credit provider and
constituting an offer to the debtor that is accepted by the debtor in
accordance with the terms of the offer.
a) The debtor is a natural person or strata corporation; and
b) The purpose of the credit is predominately for:
i. domestic, personal or household use; or
 the predominant purpose for which credit is provided is the purpose
for which more than half of the credit is intended to be used or if
the credit is intended to be used to obtain goods or services for use
for different purposes, the purpose for which the goods or services
are intended to be most used.
ii. to purchase, renovate or improve residential property for investment
purposes; or
iii. or to refinance credit that has been provided for the purposes in (i) (ii)
c) A charge is or may be made for providing the credit; and
d) the credit provider provides the credit in the course of a business of providing
credit carried on in this jurisdiction or as part of any other business of the credit
provider carried on in this jurisdiction.

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  Musnt be excluded credit to which the code doesn’t apply (see s6 definitions)

2) Apply the relevant standard

- Where the NCC does not apply:

1. Default must prima facie go on 'for one month or such other period as in therein
expressly fixed… the mortgagee may serve on the mortgagor notice in writing to pay the
money owing or to perform and observe the covenants (s76(1)) TLA)
 However, contract can specify earlier notice period
 Default may be 'in payment of the principal sum interest or annuity… OR in the
performance or observance of any covenant express or implied' in the mortgage

2. Mortgagee must have provided notice of intent to sell

 Notice must:
o be in writing (s76(1) TLA)
o ‘provide a clear indication and thereby a warning of the course upon
which the mortgagee is embarking' (Whild v GE Mortgage Solutions
(2012))
- Notice must require the mortgagor to correct the default and
state a sale is to be effected if the default is continued

 Notices are not invalid because it demands more than is due (Campbell v
Commercial Banking Co (1881))
o A notice that contains a 'misstatement of an amount of principal or interest
otherwise due' is valid, however, a notice claiming 'payment of principal not
then' due is invalid (Websdale v S & JD Investments)
 Demanding more than is due (something is actually due) vs
demanding something that actually isnt even due
 ‘a notice that correctly identifies the event of default relied upon
but which overstates the amount owed is nevertheless valid’ (Whild
v GE Mortgage Solutions [2012])
 ‘a notice which requires the mortgagor to remedy a non existnec
default [is] defective’ (Wongala Holdings v Mulingelbar (1994))
 Notice that 'misstate the default which are said to have occurred' is
invalid, but 'provided the default is correctly identified' a notice that
doesn’t 'identify with particularity the precise amount outstanding
[is]… good so long as it identifies correctly the defaults which the
mortgagor is given the opportunity of remedying' (Websdale)

3. Mortgagee must give the debtor prima facie one month, or any such other period as
expressly fixed by the parties, to remedy the default (s77(1) TLA)
4. Mortgagee must sell the mortgaged or charged land or any part thereof (s77(1))
1) in good faith and
o SPECIFY THIS IS AN SUBJECTIVE TEST
o Imports subjective element of fairness honesty and lack of fraud
(Murphy J – AUTHORITY?)
o Mortgagee is entitled to give priority to his own interests (Henry Roach)
o 'To take reasonable precautions to obtain a proper price is 'but a part of
the duty to act in good faith' (Upton v Tasmanian Perpetual Trustees)

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 2) having regard to the interests of the mortgagor or other persons,
o Objective test - e.g. undervalued price (Latec)
o Only got one valuation – (AUTHORITY?_
o Failure to advertise will only be relevant where the price obtained was
unsatisfactory (Vasiliu v Westpac Banking Corporation)
 'if it [is] shown that the sale price was, nevertheless, not
insufficient, then the want of advertisement ceases to be of
significance' (Vasilou)
 Although mortgagee didn’t advertise he still obtained a high
price so no advertising wasn’t fatal
o Is advertising adequate; does it descrtibe the property in the best way it
could e.g. can be subdivided, is a refinery site (Henry Roach)
o Test is vendor must take reasonable steps to get the best price, (not a
proper price) (Goldcel)
o Have they consulted with the guarantor
o Reserve price shouldn’t be disclosed (Goldcel Nominees v Network
Finance)
o Mortgagee is not bound to sell at the ‘best time’ and may sell at any
time (Henry Roach)
o Avoid conflicts of interest
o Examples:
o Henry Roach v Credit House (1976)
- Advertised property as industrial site didn’t say about oil and
permits it had. Sold property for 350k. Plaintiff Roach argued the
value of the site couldn't be realised by treating it merely as an
industrial site.
- It was in fact an improved refinery site, more valuable and
should have been advertised as such. Would've been valued at
$12m
- Claim didn’t succeed as no one wanted to buy the site as a
refinery
o Goldcel Nominees v Network Finance
 Finance manager directly negotiated sale of property
 Put an unreasonable time limit of half a day to change offer so best
price wasn’t obtained (Goldecel, Murphy J)
 Had given undertaking they wouldn’t sell the property without
informing mortgagors solicitor but didn’t
o Guss v Geelong Building Society
 Breached power of sale
o Vasiliu v Westpac Banking Corporation
 Argued breach because they didn’t advertise. Breach both good
faith and interests of mortgagor
o MBF Investments v Nolan

- Where the NCC does apply, the credit provider can only bring enforcement proceedings
against a mortgagor, take possession of or sell the property subject to mortgage if: (s88(1))
a) The mortgagor is in default under the mortgage
b) The credit provider has given the mortgagor a default notice allowing the
mortgagor a period of at least 30 days from the date of the notice to remedy the
default; and (s88(1) NCC)

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 o Parties cannot specify a different amount of time otherwise unlike
TLA
 Notice must contain a prominent heading at its top stating it is a default
notice, and also specify: (s88(3))
a) the default
b) The action necessary to remedy the default
c) A period for remedying the default
d) The date afdter which enforcement proceedings in relation to the
default and potentially repossession may begin if the default has not
been remedied
e) That sale or repossession of mortgaged property may not extinugish
the debtor's liability
 Exception: Default notice not required if: (s88(5) NCC)
a) the credit provider reasonably believes it/he was induced by fraud
on the part of the debtor/mortgagor to enter into the credit
contract or mortgage; or
b) the credit provider has made reasonable attempts to locate the
debtor or mortgagor but without success; or
c) the court authorises the credit provider to begin the enforcement
proceedings

c) The default has not been remedied within that period

- NCC Requirements apply in addition to those of the TLA (s88(8) Schedule 1 NCC)
 ‘This section is in addition to any provision of any other law relating to the
enforcement of real property or other mortgages and does not prevent the issue of
notices to defaulting mortgagors under other legislation. Nothing in this section
prevents a notice to a defaulting mortgagor under other legislation being issued at
the same time, or in the same document, as the default notice under this section’

Consequences of an invalid exercise of power of sale

- ‘the title of the purchase shall not be impeachable on the ground that… the power was
improperly or irregularly exercised’ (s77(4) TLA)
- Any person thereby damnified shall have his remedy in damages against the person
exercising the power’ (s77(4) TLA)

Proceeds of Sale
- The proceeds of sale must be applied: (s77(3) TLA)
a) Firstly in payment of all costs charges and expense associated with the sale
b) Secondly in payment of the monies due or owing on the mortgage
c) Thirdly In payment of moneys owing under or in respect of subsequent mortgages in
order of their respective priorities
d) Fourthly, in payment of the residue if any to the mortgagor
 If there is a shortfall, it can be recovered from the mortgagor but the mortgagee is in the
same position as any unsecured creditor for the shortfall
1. In cases of fraud see ss87D,87E and 110(4)

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Clogs on the Equity of Redemption

- The equity of redemption is the right of a mortgagor to redeem his property once the debt
secured by the mortgage has been discharged
- ‘The equity of redemption may be enforced, notwithstanding a failure to redeem by the
repayment date, until the point in time when the mortgagee’s power of sale has been
exercised or a court has made an order fo foreclosure’ (Sun North Investments v Dale
[2014])
- Equity does not permit certain restrictions on the equity of redemption
 The time specified for discharge under the contract renders the right of redemption
illusory
o Last mortgage installment of 20 monthly installments was to be paid six
weeks before the expiration of the term of the lease, meaning if he were to
redeem he would only have six weeks of enjoyment of the property
(Fairclough v Swan Brewery [1912])

 The mortgagor purports to extinguish or give away the entirety of their equity of
redemption (Lift Capital Partners v Merrill Lynch International (2009)

o 'the client mortgagor, hacing paid off the secured moneys, will not receive
back the mortgaged property’ was invalid
o ‘a mortgagee can never provide at the time of making the loan for any event
or condition on which the equity of redemption shall be discharged, abnd
the conveyance absolute’ (Vernon v Bethell (1762))
 N.B Bradley v Carrit and Kreglinger v New Patagonia are seemingly completely
contradictory
 Whether a collateral advantage obtained is valid or not depends on whether the
advantage is ‘in all the circumstances either unfair or unconscionable’ (Westfield
Holdings v ACTV (1992))

Equitable interests arising by operation of the law

Resulting Trusts
- Resulting trust: settlor transfers legal title but retains equitable/beneficial title (Sidhu v Van
Dyke (2014))

There are two circumstances in which a presumption of a resulting trust arises:

Voluntary transfer resulting trusts

- Property is owned by A is transferred to B and B gives no consideration.
- Equity presumes that it is intended by A that B should hold the property on trust for A and
that A should retain the beneficial ownership

Purchase price resulting trusts

- Equity presumes the provider of the purchase price intends to hold a beneficial interest in
proportion to their contribution, even if they don't hold the legal title
 This presumption can be rebutted by evidence to the contrary (Bosanac)
- There is a presumption that in equity the property is held by the legal title holder on trust
for themselves and the other purchasers as equitable tenants in common in the
proportions in which they contributed the purchase money

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  A persons beneficial interest under a resulting trust is solely determined by his or
her direct financial contribution to the purchase price at the time the property is
purchased
 Significance of being a legal joint tenancy but an equitable tenancy in common is
that in the latter the co owners can hold different shares, e.g. 30-70% as opposed to
50-50
 The legal title is presumed to be held on trust for those, potentially including the
legal title holder, who provided the purchase price (Calverley v Green)
o E.g. A contributes 60% and B contributes 40%. B holds legal title. He holds
the entire legal title on trust for himself and A in proportion to their
contributions and thus equitable interests
 'it is presumed that a resulting trust arises in favour of the purchaser, in the
proportions in which he contributed the purchase money' (Calverley v Green (1984),
Gibbs CJ)
- Purchase price includes liability under mortgage but not mortgage repayments (Calverley v
Green)
 Mortgage repayments occur after the time of purchase and are not contributions to
the purchase price
 Hence husband who made mortgage repayments after purchase did not result in a
greater equitable interest
 Purchase price includes all you need to get to registration, including:
o stamp duty
o solicitor/conveyancing fees
o bank fees in setting up mortgage,
 E.g. you 'paid' for the property entirely with a mortgage loan, your contribution is
the liability of loan incurred/amount paid by the bank

Rebutting the Presumption

- B bears the onus of rebutting the presumption by adducing evidence that at the time of
purchase, A intended B to have beneficial ownership
 Intention can be express or inferred from words and conduct
 E.g. HC held wife and husband each held a 50% share in the property, rebutting the
presumption of resulting trusts based on payment contributions as wife had paid
76% (Trustee of the Property of Cummins v Cummins (2006))
 Building of the house contributed to purchase price…
 Cummins principle: only applies to married people. It was their family home. Title
was taken as joint tenants not tenants in common. 'In marriage situations it is often
fortuitous or accidental whether money of the husband or the wife is paid to the
vendor… One spouse may chose to pay for the property and the other to the
running expenses. The uneven contributions to the purchase price should not
necessarily be regarded as significant'
o So called cummins principle was rejected in Bosanac. They held it was the
evidence indicated intention for it to be 50-50%; wasn’t just because they
were married and matrimonial home
 Rebutted by intention of parties to hold as 50-50
o They were registered that way
o They later conducted themselves that way (he purported to transfer 50%
and she apparently paid consideration for that)
 S121 bankruptcy act

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Presumption of Advancement
- Presumption of advancement may apply to rebut the presumption of purchase price rsulting
trust such that a part-purchaser doesn’t obtain an equitable interest in proportion to their
contribution, but rather holds the discrepancy between their legal interest and what would
have been their equitable interest on trust for the wife
 Instead, PoA presumes the part purchaser is instead gifting their proportionate
equitable interest to the other purchaser
 E.g. M pays 60% and W pays 40%, but they are registered as JT’s at law. Discrepancy
between legal interest and would be equitable interest is 10%, so this is held on
trust for W and they share equitable ownership 50-50%
- PoA applies for transfers of assets from/purchases involving:
 husbands to wives,
o Authorities have denied that it arises where a wife makes a purchase in the
name of her husband (Mercier v Mercier (1903))
o Does not apply to de facto relationships (Calverley v Green)
 fiances to fiances and
 parent child
o even to adult children (Nelson v Nelson (1995))
o transfers from mother to children (Brown v Brown (1993))
 Doesn’t necessarily have to have made the larger contribution in order for the
presumption to apply
o E.g. wife and husband have 70-30% share respectively, husband may have
gifted his 30%

- This presumption itself can be rebutted by evidence to the contrary

 'The presumption of advancement may be readily rebutted by apparently slight
evidence' of contrary intention (Bosanac, Kiefel CJ and Gleeson J)
o Amount of loan was so significant it indicated he intended to have an
interest in the property
o The property was to be a matrimonial home
o Funds for purchase came from joint funds

 Fathers contribution to part of the purchase price can be evidence of rebuttal, and rather
that the father intended son to hold property on trust for half in proportion to his
contribution
 Illustrative examples:
 Purchase property $1m. Harley (husband) and Wren (Wife) are registered as JT but
harley contributed $600k and Wren $400k. Presumption of advancement is that the
$100k difference is held on trust by Harley for Wren, so they actually share equitable
ownership 50-50
o Resulting trust in proportion to their contributions is rebutted.
 Purchase property $1m. Harley and Wren are registered as JT but Wren contributed
$600k and Harley $400k. No presumption of advancement, hence presumption of
resulting trust applies. Harley has a beneficial interest of only 40% and Wren's is
60%...
 Mr and Ms Boasanc bought a property together but the property was placed in Ms
Bosanac's name only. Resulting trust presumption is that Ms Bosanac holds legal
title on trust for Mr Bosanac who has an equitable interest in proportion to his
contribution. However, PoA rebuts that presumption, and presumes Mr Bosanac did
intend to gift his equitable interest
Current Approach

8
That the presumptions should be used as a last resort where evidence of intent is weak or absent
(Bosanac v Commissioner of Taxation)
 ‘The presumptions are of practical significance only in rare cases where the totality
of the evidence is incapable of supporting the drawing of an inference, one way or
the other, on the balance of probabilities about what contributors and purchasers
actually intended when they participated in the purchase transaction' (Bosanac,
Gageler J)

Constructive Trusts
Common intention constructive trust
- In order to establish a CICT, it must be shown (Ogilvie v Ryan)
1. Actual common intention that the claimant was to have a beneficial interest in the
property
o Based on subjective common intention
o Need clear wording
o The intention must be clear (Muschinski)
 Conditional statements like ill give you an interest if/when indicate
no actual intention
o Conversations/negotiations that continue for years indicates lack of
intention/meeting of the minds (Baumgartner)
o Can be inferred from the conduct, actual words or statements
o Can occur before or after purchase, unlike resulting trust
2. Detrimental reliance
o Claimant must show that they acted to their detriment in reliance on the
common intention
 Spent years caring for him and didn’t buy her own property
o Detriment must be material but need not be financial (Oglivie)
3. Unconscionability
o It must be unconscionable in the circumstances for the legal owner to deny
the common intention and defeat the beneficial interest that was promised
Joint venture constructive trust
- 'Where a joint venture is frustrated, through no fault of the parties, and the contract has not
provided for this, equity can intervene to ensure that the parties receive a proportionate
repayment of their capital investment' (Muschinski v Dodds)
- It must be shown: (Baumgartner)
1. Existence of a joint venture, endeavour or relationship
 A joint aim to build material wealth together
 Or could be a relationship buying a family home together
2. Contributions made or resources pooled for the benefit of the JV/JR
3. Failure of joint venture, endeavour or relationship without attributable blame
4. Unconscionability

Estoppel

- Concerned with the prevention of detriment resulting from reliance (Pipikos v Trayans
[2018])
 Cf aim of contract law, which is with the enforcement of promises

1) What is the relevant type of Estoppel?

9
 1. Future/Land = Equitable Estoppel: “the relevant type of estoppel is
promissory/proprietary estoppel because [represenator] induced in [relying party] an
assumption they would [do something (hold on to ring)] in the future/because matter
is concerning land”

• Proprietary (equitable) estoppel:

 where the relying party acts to his detriment on the faith of an assumption
that the relying party has or will be granted an interest in land
• Promissory (equitable) estoppel:
 any application of equitable estoppel that does not relate to an interest in
land
• The effect of these estoppels is that has a prima facie entitltement to have the relied
upon assumption made good (Giumelli v Giumelli)

2. Past Conduct = CL estoppel: The relevant type of estoppel is common law estoppel
because [represenator] induced in [relying party] an assumption of fact/past conduct
(they had done something)
• AKA Estoppel by representation, and Estoppel in pais
o Where one person leads another to adopt an assumption of [existing] fact,
and the relying party acts on that assumption in such a way that the relying
party will suffer detriment if the inducing party subsequently denies the
truth of the representation, the inducing party is ‘estopped’ from denying its
truth.
• The effect of the estoppel is that the rights of the parties are determined on the
basis of the assumed state of affairs

2) Have all the Elements of Estoppel been made out? (Walton Stores)

1. Assumption:

• Must have adopted two assumptions: (second is only for promissory + common law
estoppel) (Doueihi v Construction Technologies Australia [2016])

a. Assumption either of fact (in pais) or about future conduct (equitable)

o E.g. that X would hold onto the ring, that Y has signed the contract
(Empirnall)
o State what this is.

- STATE WHAT THE SPECIFIC ASSUMPTION WAS

b. Assumption of entering into a particular legal relationship between them,
and that the inducing party would not be free to withdraw from that
relationship (Walton Stores, Mobil)
o Cf W v G (1996) which says creating an assumption of promise to be
performed is enough.
o However, most likely not correct:
- this was SC, Mobil was NSWCA, and also Mobil is more recent,
so most likely Moil is correct

10
 - Mobil (1998): ‘ it is a necessary element of the principle that the
defendant has created or encouraged an assumption that ‘a
particular legal relationship would arise’

2. Inducement:
• The defendant must have ‘induced the plaintiff to adopt that assumption or
expectation’ (Walton Stores v Maher (1988)).
• The burden of proof at all times remains on the person claiming the benefit of
an estoppel (Sidhu v Van Dyke [2014])
• It is not necessary that the conduct was ‘the sole inducement operating on the
mind of the [relying] party’ in taking the detrimental action – it is sufficient if it
‘played a part’ (Sidhu v Van Dyke)
• The representation must be ‘clear, precise and unambiguous’ (Legione v
Hateley; Crown v Cosmopolitan Hotel, quote from Crown)
o The words by which the assumption was induced ‘must be capable of
misleading a reasonable person in the way that the person relying on
the estoppel claims he has been misled’ (Crown)
o certainty in Crown – ‘I’ll look after you come renewal time’.was held to
be insufficiently certain
• May be done through words or conduct (Crown v Cosmopolitan)
o E.g. in Walton, Walton’s silence was held to have induced Maher

3. Detrimental reliance:

• Comprises of two main parts: (Walton Stores)

1. The relying party must act or abstain from acting in reliance on the
assumption, and
• Must be in reliance on.
• Thus if X would’ve done the act anyway, this element is
unlikely to be made out

2. Such action or inaction will result in detriment to the relying party

if the assumption is not fulfilled

3. The detriment must also be ‘significant’ (Hawker Pacific v

Helicopter Charter (1991)) or substantial (Je Maintiendrai)

• Detriment need not be pecuniary (Commonwealth v Vargayen)

• Detriment is assessed at the time the inducing party seeks to resile/depart from
the relevant assumption (Je Maintiendrai)

4. Are there any Analogous Examples?

o Wasted expenditure of money
- e.g. expenditure on improvements to the inducing party’s land
(Dilwyn v Llewelyn (1862))
o Inactivity (by the relying party) which results in the loss of an
opportunity to obtain a benefit or avoid a loss (Empr

11
 o Giving up the opportunity of acquiring her own house under a divorce
settlement (as in Sidhu v Van Dyke)
o Having to pay the entire rent in one lump sum (is in Je Maintiendrai)

• ‘The very foundation of the estoppel is the change of position to the prejudice of
the party relying upon it (Dixon J, Thompson v Palmer (1933))

4. Knowledge of reliance or intention to induce reliance

• The inducing party must have known: (Walton Stores)
1. that the relying party was acting on the assumption or
2. intended him to do so (Walton Stores)
• It has been held that it is sufficient if the D ‘ought to have known’ that the
relying party would detrimentally act on the assumption (New Zealand Pelt
Export Company v Trade Indemnity New Zealand [2004] VSCA)

5. Departure or threatened departure: necessary as per Waltons

• The inducing party must have ‘failed to act to avoid [the] detriment whether by
[failing to] fulfil the assumption or expectation or otherwise’ (Walton Stores)
• There have however been cases in which estoppels have arisen without any
attempt by the IP to depart from the assumption (e.g. McNab v Graham [2017])
o However, no HC case…
• ‘So long as the assumption is adhered to, the party who altered his situation
upon the faith of it cannot complain’ (Dixon J, Grundt v Great Boulder Gold
Mines (1937))

6. Reasonableness: necessary as per (Crown Melbourne v Cosmopolitan Hotel [2016])

• Comprises of two elements: (Standard Chartered Bank Aus v Bank of China
(1991)

1. The relying party’s adoption [i.e. belief] of the assumption must have
reasonable, and

2. The relying party’s decision to take the detrimental action on the faith
of that assumption must have been reasonable

• N.B slight crossover between inducement, where the representation must

be clear precise and unambiguous

7. Unconscionability
• It must have been unconscionable for the IP to depart from the assumption
they induced into the RP (Walton Stores)
• Consider: (Walton Stores)
o The reasonableness of the RP’s actions
o The extent of the detrimental reliance
• It has however been referred to as ‘the underlying principle informing the
elements of estoppel, rather than a discrete ingredient which is additional to
those elements’ (Anaconda Nickel v Edensor Nominees [2004] VSCA)

3) What is the Effect of the successful estoppel claim?

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1. Generally, prima facie entitlement to have relied upon assumption made good (Giumelli)

- Estoppel in pais/CL
 The inducing party is prevented/estopped from asserting facts contrary to his own
representation (Avon City Council v Howlett [1983])
 The rights of the parties are then determined by reference to the
represented/assumed state of affairs

- Equitable Estoppel
 It has been held that the relying party has a prima facie entitlement to have the
relied upon assumption made good/entitlement to relief based on the assumed
state of affairs (Giumelli v Giumelli per Deane J, Vergayen.

2. Exception: would that be unjust/inequitably harsh?

- This presumption may be displaced if such relief would: (Giumelli)
• ‘exceed what could be justified by the requirements of conscientious conduct
and would be unjust to the estopped party’ (Giumelli v Giumelli [1999] per
Deane J,
• be ‘inequitably harsh’ (Deane J in Vergayen, quoted with approval in Giumelli)
• be ‘disproportionate to the harm that would be suffered by the relying party if
the inducing party were allowed to depart from the assumption’ (Deane J,
Vergayen
o (e.g. $37m loss vs $1.44b expected benefit as in ANC v Mutual Life
Assosciation [2008] VSCA)

- Whether it would be inequitably harsh should be determined ‘by reference to all the
circumstances of the case’. (Giumelli) including
• ‘the reasonableness of the conduct of the [relying] party in acting upon the
assumption’ and
• the nature and extent of the detriment he would suffer if departure from the
assumed state of affairs were permitted’

- It has been said that since Giumelli, the minimum equity principle is ‘probably no longer the
law in this country’ (Delaforce v Simpson-Cook [2010] NSWCA)
o However, note that it was referred to with approval by Mason CJ and Wilson
J in Walton Stores. This was before Giumelli either way

Co Ownership
- All forms of co-ownership recognized in Australia involve unity of posession which entitles
each co-owner the right to possession of each and every part of the land

Joint tenancy
- Involves undivided, equal shared ownership of the whole land
 One's demise means that interest passes to the other co owner
- Per my et per tout – by the half and by all

13
 - At common law, if the four unities are present and there are no words of severance, a joint
tenancy is presumed. (Cassegrain)
 Statutorily enshrined: where two or more persons are named in an instrument, they
shall be entitled jointly unless the contrary intention is expressed (s33(4) TLA)

 Two or more persons who are registered as joint proprietors of land shall be
deemed to be entitled thereto as joint tenants (s30(2) TLA)
- Joint tenants are not considered by the law as one person for the purposes of fraud
(Cassegrain v Gerald Cassegrain)
 Wifes title was not effected by her husbands fraud
- A joint tenancy has two requirements:
1. All four unities must be present, that is, unity of:
o Possession
o Interest
 The interest of each joint tenant must be the same in nature, extent
and duration
o A grant to A for life and to B for 50 years cannot create a
joint tenancy
o title and
 All the joint tenants should have derived their interest from the
same title; under the same document or by the same act of adverse
possession
o time
 The interests of each joint tenant must have vested (in interest or
possession) at the same time and by virtue of the same common
event
 If interests vest at different times, they take as tenants in common
and not joint tenants
 Exception: In a conveyance to a trustee for a beneficiary or a
disposition in a will, a joint tenancy may arise in the grantees even if
unity of time does not exist (Kenworthy v Ward (1853))
2. The right of survivorship must be present ('jus accrescendi') – ‘right of accretion by
survivorship’
o Each joint tenant is seised of the whole estate
 Consequently, one joint tenant cannot assign his interest by a
conveyance or will, as the joint tenant had nothing to convey as the
other co-owner was already seised of the whole
o The interest of a joint tenant cannot pass in his will or under an intestacy
(Carry-Glynn v Frearsons [1999])
o If there is no right of survivorship, there can be no joint tenancy (Re
Robertson (1943))
o 'if one joint tenant dies his interest is extinguished. He falls out, and the
interests of the surviving joint tenant or joint tenants is correspondingly
enlarged (Wright v Gibbons, Latham CJ)
o This is 'the most important incident of a joint tenancy, and unless the right
of survivorship exists, the tenancy is not joint' (Moore Grattan Griggs
Australian Property Law)
o See pla s28 for if a corporation can be a JT
o Where two or more persons have died in circumstances rendering it
uncertain which survived, such deaths shall be presumed to have occurred

14
 in order of seniority and the younger is deemed to have survived the elder
(s184 PLA)
o The registrar may upon the death of a JT register the survivor as the sole
registered proprietor (s50 TLA)

Tenancy in common
- Equity presumes a tenancy in common in the commercial context
- Payment of purchase money in unequal shares results in a presumed joint tenancy at law
but tenancy in common in equity (Mayalan Credit)
 'Where premises are held by two persons as joint tenants at law for their several
business purposes, it is improbable that they would intend to hold as joint tenants in
equity' (Malayan)
 Where the grantees hold the premises for their several individual business
purposes… equity may infer that the beneficial interest is intended to be held… as
tenants in common
- Where each party has a defined but undivided share in the land
 Undivided in the sense that the land itself is not divided physically and no one
tenant can claim any particular portion of the land as his own
 As each tenants share is fixed, it cannot be enlarged by the death of another tenant
is common so no right of survivorship exists for tenancy's in common

- 'Connotes that the owners have unity of possession but a distinct and several title to their
shares, which needn't be equal' (Dennis v Dennis (1971), Windeyer J)
- It is not uncommon for two or more people to hold as joint tenants at law on trust for
themselves as tenants in common in equity
 Imagine A and B. If A dies, the right of survivorship opereates at law, but in equity,
A's estate retains the equitable ownership

Creation
- Under common law, it is presumed that the co owners are joint tenants if the four unities
are present and there are no words of severance (Malayan Credit)
 CL prefers the certainty of there being only one title instead of multiple
 the concept of equal shares is inimical to the concept of a JT because the nature of
surviorship is that one tenant will get teh whole of the interest to the exclusion of
the estaet of the other (casebook, p516)
 However, it has been said that even ‘the slightest indication that a tenancy is
common was intended’ may be sufficient to create a tenancy in common (Williams v
Hensman (1861)
 Words of severance include
o Equally (Denn d Gaskin v Gaskin (1777)
o Between (Lashbrook v Cock (1816)
o Amongst (Richardson v Richardson (1845)
o To be divided between (Peat v Chapman (1750)
o In equal shares (Payne v Webb (1874))
o Share and share alike (Heathe v Heathe (1749))

 If contradictory expressions are used (e.g. 'to share and share alike as joint tenants'),
the first word prevails in a deed but the last word prevails in a will (Perkins v
Baynton (1781))

- Equity has however historically presumed a tenancy in common in the following situations:

15
  The unequal contribution to purchase price (Bull v Bull [1955])
 Each co owner holds that persons share in equity proportionate to the
contribution to the purchase price (Lake v Gibson (1792))
 Mortgagees (Morley v Bird (1798))
 Where two or more persons advanced money on the security of a
mortgage, whether in equal or unequal shares, equity presumes the
mortgagees to hold their interests as tenants in common even though they
might be joint tenants at law (Re Jackson (1887))
 Partnerships (Lake v Craddock (1732))
 Where premises are held by two persons as joint tenants at law for their several
business purposes (Malayan Credit v Jack Chia))
o Justificiation is that it would be unfair to permit the principle of survivorship
to operate in an undertaking deisgned to produce a profit, since the partner
who dies first would lose all his investment (Lake v Craddock (1732))

Rights of Co Owners Inter Se

Right to Possession

- In general a co owner who elects not to exercise his right of possession in not entitled to
claim compensation from the occupoying co owner.
- Occupation Rent is generally not payable under common law unless there has been an
outster (AUTHORITY).
- VCAT may make an order requiring a co-owner who has occupied the land to pay an
amount equivalent to rent to a co-owner who did not occupy the land if: (s233(3) PLA)
a) the co-owner who has occupied the land is seeking compensation, reimbursement
or an accounting for money expended by the co-owner who has occupied the land
in relation to the land
b) the co owner… has been excluded from occupation of the land
o Makes use of the common law rules of ouster
c) the co owner… has suffered a detriment because it was not practicable for that co
owner to occupy the land with the other co owner
o E.g. relationship breakups
o E.g. became physically difficult for her to stay there because one co owner
takes up all the space of the other
- See improvements to land for compensation principles

Improvements to Land
- VCAT may order compensation or reimbursement for improvements to the land (only
available as part of sale or division of property) (s233(1) PLA)
- In determining the quantum of all compensation, VCAT must take into account (s233(2) PLA)
a) Any amounts that a co owner has reasonably spent in improving the land
b) Any costs reasonably incurred by a co owner in the maintenance or insurance of the
land
c) The payment by a co owner of more than that co owners proportionate share of
rates, mortgage repayments, purchase money, instalements or other outgoigns in
respect of that land or goods for which all the co owners are liable
d) Damage caused by the unreasonable use of the land or goods by a co owner
e) in the case of land, whether or not a co-owner who has occupied the land should
pay an amount equivalent to rent to a co-owner who did not occupy the land;

16
Broad power to Account at any time for unfairness or injustice
- (1) A co-owner is liable, in respect of the receipt by him or her of more than his or her
just or proportionate share according to his or her interest in the property, to account to
any other co-owner of the property.
- Under this occupation rent may be payable during the time of the co ownership
- However, lecture says this is only relevant for receipts from third parties not other co
owners (see bottom of your equity notes)

Rents and Profits

- Although there is no common law right to share rents and profits, this position is remedied
by statute
 Initially with Statute of Anne 1705, now s28A PLA
- If a co owner is producing rents or profits from the land, they are liable to account to other
co owners for amounts over and beyond their just or proportionate share (s28A PLA)
 e.g. where one co owner receives money paid by a third party in respect of the land
(e.g. a lease)
 EXCEPTION: co owners need not account for profits they have gained through their
own capital or labour, where the other co owners did not contribute (Henderson v
Eason (1851))
o Co owner worked the land himself, sold all the produce and retained the
proceeds. Held he didn’t have to account to other co owner
o ‘there are many cases where profits are made… bu one co tenant and yet it
is impossible to say that he has received more than comes to hist just share’
(Henderson)
- Unlike with compensation/improvements/occupation rent, a claim can be brought either
upon sale or division of land or during the life of the co ownership (s234(2) PLA)

Right to Alienate and Encumber Land

- Co owners have a right to alienate or encumber their interest in the co owned property. Co
owners do not require the consent of other co owners to alienate their interest in the
property and do not require consent of co owners to encumber land
 However, the granted encumbrance must not interfere with the rights of the
others to possession of the land (Hedley v Roberts)

Right to ask VCAT to sell property

- A co-owner of land or goods may apply to VCAT for an order under this division to be made
in respect of land or goods (s225(1))
The application may request (s225(2)
(a) the sale of the lands and division of proceeds;
(b) or the physical division of the land;
(c) or a combination of both

Section 226: Sale does not need the CO consent as they will be paid subject to the party
Section 229(1): a sale and division of proceeds is to be preferred over physically dividing the land,
unless VCAT considers it would be more just and fair to make an order to divide the land or a
combination. Relevant factors in this determination (s 229(2)): o
(a): What use is being made of the land? (Residence or business?) o
(b): Can the land be divided practically? o

17
(c): Is there a unique, special value or attachment to the land?

Adverse Possession of a Co Owner

- A co owner may adversely protect the property to the detriment of the other owner (s14(4)
LAA)
 Intention to possess is deemed by statute where, for 15 years there is: (s14(4) TLA)
o Possession of loan by one co-owner to the exclusion of others
o Receipt by one co owner of an excess share of profits or rent in respect of
land

Severance of a JT
- Severance is effected by destruction of one of the unities, in practice either unity of title or
of interest (Harris v Goddard)

Severance by agreement between the JTs

- The JT may be severed by mutual agreement if there is 'a common intention to
immediately sever the joint tenancy' (Public Trustee v Pfeiffle)
 In the absence of agreement about shares, the co owners take equally (Abela v
Public Trustee [1983])
- Modern view is that agreement doesn’t have to be specifically enforceable in order to effect
severance (Abela v Public Trustee [1983])
 They will become tenants in common in equity but will remain JT’s at law until the
requisite statotyr formalities have been met (Saleeba v Wilke [2007])
- Agreement may be express or implied (Williams v Hensman)
- Severance may be effected by ‘any course of dealings sufficient to intimate that the interests
of all were mutually treated as constituting a tenancy in common’ (Williams v Hensman)
 In this case, the agreement to sever is inferred (Deane J, Corin)
 Documents executed by the co owners indicated their shares were to be treated as
separate because the manner of payment for each was different/inconsistent
(Williams)
 Payment of proceeds of sale of a joint tenancy into separate bank accounts
represent a course of dealing sufficient to sever (Abela v Public Trustee [1983])
-

Severance by an Act of only one Co Owner

Alienation of Property
- Severance may be effected by the alienation of the interest by one party
 This destroys unity of title and thus the joint tenancy
 A joint tenant can severe the joint tenancy and simultaneously retain legal and
equitable ownership by conveying the property to himself (s72(3) PLA Vic
 Although one may not acquire any joint tenancy interest from only one joint
tenant, a joint tenant can alienate his own joint tenancy interest and in so doing,
convert it into a tenancy in common
- ‘Each [co owner] is at liberty to dispose of his own interest in such manner as to sever it
from the joint fund – losing of course at the same time his own right of survivorship’
(Williams v Hensman (1861))
- Consequences of an alienation

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  Where the alienation is to:
o a stranger:
 the JT converts to a tenancy in common
1) 'no joint tenant can alienate to a stranger so as to make
that person joint tenant with his co tenants, but he can
alienate so as to make that person a tenant in common
with his co tenants' (Wright v Gibbons)
2) 'The stranger… could not be a joint tenant with the other
original joint tenants' for unity of time and title are not
present (Wright)
o to one of two other JT's (where there are three in total):
 the grantee acquires a 1/3 interest as tenant in common, and holds
the other 1/3 as joint tenant
o to oneself
 the joint tenancy is severed, and legal and equitable ownership is
retained by the 'grantor'
 'a person may convey land to or vest land in himself' (s72(3) PLA)
Acquisition of a greater interest
- If one of the joint tenants subsequently acquires a greater interest in the land than the other
joint tenants, the joint tenancy is severed (Morgan's Case (1590))
 Subsequent acquisition destroys unity of interest
 If A and B are joint tenants for life and A subsequently acquires the fee simple
remainder, the joint tenancy is severed
o Unity of time is breached
 However, if the original grant is to A and B for life as joint tenants and then to A in
fee simple in remainder (i.e. grant occurs at the same time, the joint tenancy
between A and B is valid and operative as unity of interest exists
o As soon as A actually acquires the remainder, severance is effected
- The estate acquired must differ from the estate held in joint tenancy
 If A B and C are joint tenants in fee simple and A conveys his interest to B, B holds
the one third share as a tenant in common and B and C hold the remaining two
thirds as joint tenants

Creation of an Encumbrance vs alienation of an estate

- The grant of anything else that destroys one of the unities, such as of an estate, by a joint
tenant effects a severance (unity of title and interest are thus destroyed)
 Estate in land: an interest in real property that is or may become possessory
 Grant of a life estate: effects severance
 Grant of a legal mortgage of general law land: does effect severance as unity of
interest is destroyed (legal interest is transferred to mortgagee) (Lyons v Lyons
[1967])
 Grant of a legal mortgage of Torrens Land: does not effect severance (Lyons v Lyons
[1967])
 Grant of a lease effects a severance pro tem/temporarily during the term of the
lease (Frieze v Unger [1960])
o In equity: The lessee is a tenant in common in equity with the non leasing
original co owner.
 the lessee and the other non leasing co owner have unity of
possession and so the two have a de facto co ownership.

19
  If leasing co owner dies during lease, the lessees rights are not
extinguished/the lease remains on foot (Frieze v Unger [1960])
o At law: both original co owners remain JT's at law (Frieze v Unger)
o The lease cannot however exclude other joint tenants who have not jointed
in the grant of the lease from entering into occupation of the premises along
with the lessee (Catanzariti v Whitehouse (1981))
- Grant of an encumbrance by a joint tenant does not do so (Hedley v Roberts [1977])
 Grant of a legal mortgage of Torrens Land: does not effect severance (Lyons v Lyons
[1967])
o Interest is merely an equitable charge
o a JT can only bind his own share in the land, hence mortgage by one JT will
not be enforceable as against the other (Lyons)
 unless the JT is purporting to bind the interest of the other JT as well
e.g. by that other JT signing it – then it will bind both JTs (Lyons)
o one JT can bind the other fraudulently by purporting to bind
the whole of the land

 Without evidence of fraud/intent to bind the other, presume he is

only binding his own interest

 Grant of an easement does not effect a severance so long as ‘the encumbrance does
not interfere with the right of [the other] co owner… to possession of the land and
his other rights with respect to the land’ (Hedley v Roberts)
o In this case easement granted to erect and use a toilet didn’t interfere with
these rights as the portion of the land on which the toilet was erected was
already subject to drainage and sewerage easements
 N.B An encumbrance granted by a joint tenant, like a mortgage interest, ceases on
the death of the JT and so doesn’t run with the grantor's interest (Hedley)
o Cf If leasing co owner dies during lease, the lessees rights are not
extinguished/the lease remains on foot (Frieze v Unger [1960])
o What happens to rent??

Homicide of one co owner by the other

- The principle of equity that a wrongdoer should not be entitled to benefit from his wrong
prevents the wrongdoer from taking by survivorship in equity.
- The survivor holds the whole interest at law but holds a half interest on constructive trust
for deceased joint tenant (Rasmanis v Jurewitsch [1968])

Severance by Final court order

- ‘a judicial decree or order that one joint tenant transfer his share to his co tenants operates
to sever the jointure’ (Guthrie v ANZ Banking Group (1991))
- Similarly, a court order declaring a joint tenant bankrupt severs the joint tenancy.
 The joint tenants interest is vested in the Official Trustee in Bankruptcy

The Principle of Indefeasibility of Title

- Primarily conferred by s42(1) TLA:
 ‘Notwithstanding the existence in any other person of any estate or interest
(whether derived by grant from His Majesty or otherwise) which but for this Act
might be held to be paramount or to have priority, the registered proprietor of land
shall, except in case of fraud, hold such land subject to such encumbrances as are

20
 recorded on the relevant folio of the Register but absolutely free from all other
encumbrances whatsoever’
- Means that EARLIER INTERESTS THAT WERE NOT CREATED BY THE NEW REGISTERED
PROPRIETOR ARE NOT ENFORCEABLE AGAINST THAT NEW RP EXCEPT ON THE BASIS OF AN
EXCEPTION TO INDEFEASIBILITY.
 Thus, A grants an unregistered mortgage to B. A transfers her land to C (presume for
value). C obtains indefeasibility, such that B’s unregistered mortgage is not
enforceable against C. B Can still sue on the personal covenant against A however it
will be unsecured.
 A grants an unregistered lease to B. A transfers her land to C for value. C obtains
indefeasibility, such that prima facie B’s leasehold interest is not enforceable against
C. HOWEVER, the exception of s42(2)(e) applies. Thus C is stripped of indefeasibility
and it is resolved as a priority dispute between two equitable interest holders
(Perpetual v Smith)

Exceptions to indefeasibility of Title

Note: Where an excepotion applies to indefasibility, the RP is stripped of indefeasibility so he is
notionally only an equitable interest holder. Now we deal with it as a priority dispute between two
equitable interests. (Perpetual v Smith)

Fraud

1) Is there fraud?
- Plaintiff has the onus of establishing fraud (Lam v Lam [2016])
- Fraud may be made out by showing: (Assets Co)
 Actual fraud
o Fraud 'means dishonesty - a wilful and conscious disregard and violation of
the rights of other persons' (Waimiha Sawmilling case, Salmond J)
 'Fraud 'imports something in the nature of "personal dishonesty" or
"moral turpitude"' (Wicks v Bennett)
 It is 'something more than mere disregard of rights of which the
person sought to be affected had notice' (Wicks)
 E.g. purchaser promised the vendor that they would not disturb the
possession of Loke Yew, who had an unregistered interest in the
land, and this induced vendor to sell. Company became registered
and asserted it was entitled to the whole of the land. Court held
fraud (Loke Yew v Port Swettenham Rubber Co Ltd [1913])
o This was more than mere knowledge of the interest, a
dishonest promise had been made
o The purchaser 'was aware that he could not obtain the
execution of a transfer in that form otherwise than by
fraudulently representing that there was not intention to
use it until the plaintiff company… acquired Loke Yews sub
grants by purchase.' (Loke Yew)
 'the statement was false and fraudulently made for
the purpose of inducing [the vendor] to execute a
conveyance… and but for such fraudulent statement
that conveyance would not have been executed'
(Loke Yew)
o

21
  The fraud here is the promise with the intention to never abide by
it, not to reneg on it later
 'a registered proprietor who has undertaken that his transfer should
be subject to an unregistered interest and who repudiates the
unregistered interest when his transfer is registered is… acting
fraudulently' (Brennan CJ, Bahr)
o See Loke Yew for same result. Cf Wamiha Sawmilling where
despite the purchaser being aware of the unregistered
interest, no such undertaking was given
o 'A purchaser who has undertaken… to hold his title subject
to a third party's right to purchase remains bound by his
undertaking after registration of his transfer' (Bahr, Brennan
CJ))
o Can be shown through:
 'a forgery is regarded as a fraud' (Schultz v Corwill)
o In fact, 'forgery is more than fraud' (Assets Co)
o However, 'a person who presents for registration a
document which is forged or has been fraudulently
obtained, is not guilty of "fraud" if he honestly believes it to
be a genuine document which can be properly acted upon
(Grgic v ANZ Banking Group)

 showing that 'a false statement has been made without belief in
its truth, or recklessly, careless whether it be true or false' (Derry v
Peek (1889)) - technically called fraudulent misrepresentation
 'If the designed object if a transfer be to cheat a man of a known
existing right, that is fraudulent' (Waimiha Sawmilling Co v Waione
Timber)

 Actual knowledge of someone else's fraud

o Knowledge of fraud 'by persons from whom he claims' constitutes the fraud
being 'brought home' to the RP, meaning his title will be defeasible (Assets
Co)
 'Such knowledge in the registered proprietor, if existing in him prior
to the consummation of the transaction, is squarely within the
exception of fraud in s42' (Schultz)

 Wilful blindness
o In order for a failure to make relevant inquiries to constitute fraud, there
must be 'willful blindness' which connotes 'a form of designed or
calculated ignorance' (Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd
(1998))
 The expression 'connotes a concealment, deliberately and by
pretence, from oneself' (Macquarie Bank)

o 'If it be shown [the registered proprietors] suspicions were aroused, and

that he abstained from making inquiries for fear of learning the truth… fraud
may be properly ascribed to him' (Assets Co)
o Must be 'reckless indifference' as opposed to 'mere carelessness'/negligence
(Pyramid Building Society)

22
 o However, it is not sufficient that 'had [the defendant] made further
enquiries, [even] enquiries which it should have made, it would have
discovered that the mortgage was not properly executed' (Pyramid Building
Society v Scorpion Hotels)
 'he should have made more enquiries than he did but…. he [did not]
refrain from making those enquiries for fear of what he might find
out' (Pyramid Building Society)

2) The fraud must be brought home to the registered proprietor (or

his agent) (Assets Co)

- Relates only to fraud by the current registered proprietor or his agent (Assets Co v Mere
Roihi [1905])
 'The fraud… must be brought home to the person whose registered title is
impeached or to his agents' (Assets Co)
o In the case of mortgage, fraud must be brought home to mortgagee

Fraud and Mortgages

- Where a person fraudulently acquires a mortgage over someone elses land, the fraud must
be brought home to the mortgagee in order to be invalidated, and not merely the loanee
- E.g. becoming the loanee to a loan secured by a mortgage over that land,

Fraud by agents and employees

- To determine if the fraud of the agent is the fraud of the principal, the ordinary agency
'principle of respondeat superior… is applicable' (Schultz)
 If the agent acted within the scope of his actual or apparent authority, then the
fraud of the agent becomes the fraud of the principal
 'the mere fact that the principal… gives the agent the opportunity to steal or
otherwise behave fraudulently does not without more make him liable: the agent
must be acting within the scope of his actual or apparent authority for the principal
to be responsible' (Schultz)
 If the agent’s fraudulent act so connected with the authorised acts that it can be
regarded as a mode of performing them, fraud is present (Dollars & Sense)

- Where an agent has express knowledge of fraud, 'an irrebuttable presumption arises that
the agent communicated the matter to the principal' (Schultz)
 This is because 'when a man employs agents to transact his business, he holds them
out to the world as being identical… with his own person'
 However, where fraud is committed by the agent himself, this is not the case, for
'the supposition that the agent communicated his own fraud to the principal is too
improbable to be entertained even by a court of equity' (Schultz)
o The question tends on whether it was within the scope of their authority
Fraud and Joint Tenancies
- Where one joint tenant is fraudulent, and the other isn't, the innocent owners title won't be
impeachable, because 'the fraud must be brought home to the person whose title is
impeached' (Cassegrain v Gerard Cassegrain)

23
Fraud and False Attestation
- Attestation must be accompanied by a wilful and conscious regard and violation of the rights
of other persons (Russo)
- Must show they are aware of the consequences of falsity, e.g. that: (Russo)
 a person would be deprived of interest or
 that the Registrar would be misled
o Consider the D’s occupation, seniority, experience
Fraud against the Registrar
- A person who attempts to registered a forged or fraudulently obtained document is not
guilty of fraud is he honestly believes it was a genuine document that can be properly acted
upon (Grgic)
 Cf where the D knows the document is false and attests anyway, there is fraud (De
Jager)

3) The Fraud must be Operative

- Fraud 'must operate on the mind of the person said to have been defrauded and to have
induced detrimental action by that person' (Bank of SA v Ferguson (1998))
 The fraud must 'have the effect of harming, cheating, or otherwise being dishonest
to' the plaintiff (Bank of SA)
o In this case, the forgery was 'designed to speed up the process within the
bank' and didn’t have the above effect - he didn’t suffer any detriment.
o SoP was not inaccurate, even though it was amended/forged, and it was not
prepared or used for the purpose or effect of harming, cheatring or
otherwise being dishonest to Ferguson. It did not alter his rights or
oblgiations. It didn’t change anything under the mortgage itself. Even
though forgery was fraudulent, it didn’t operate. It didn’t operate to grant
him a mortgage he didn’t want. The valuation didn’t increase his liability or
change his legal obligations. Nothing turned on it; it was merely an internal
document. Ferguson got what he asked for and nothing turned on the fact
of these alterations at all.

4) The Fraud must have occurred prior to registration

- Most authority provides that only fraud in the period prior to registration is capable of falling
within the fraud exception (Loke Yew, Wilson and Toohey JJ Bahr),
 'the fraud to which [the exception] refers is fraud committed in the act of acquiring a
registered title' (Wilson and Toohey JJ, Bahr)
 however Mason CJ and Dawson J think otherwise (Bahr)
o 'The exception embrace[s] fraudulent conduct arising from the repudiation
of a prior interest which the registered proprietor has acknowledged or has
agreed to recognise as a basis for obtaining title, as well as fraudulent
conduct which enables to him to obtain title or registration' (Bahr)

24
Relief in Personam
- The concept of indefeasibility of title does not affect the personal obligations of the
registered proprietor (Frazer v Walker [1967])
 Rights in personam are enforceable against the registered proprietor (Frazer)
 i.e. 'a claim to an estate or interest in land against a RP arising out of the acts of the
RP himself' (Bahr v Nicolay)
o 'these may have as their terminal point orders binding the registered
proprietor to divest himself wholly or partly of the estate or interest vested
in him by registration' (Breskvar v Wall, Barwick CJ)
 S42(1) 'do[es] not protect a registered proprietor from the consequences of his own
actions where those actions give rise to a personal equity in another' (Bahr, Wilson
and Toohey JJ)
o Result of bahr was a trust in favour of the unregistered party (constructive -
per Wilson and Toohey JJ, express, per Mason CJ and Dawson J)
- Known causes of action include:
 Breach of contract
 Breach of trust (Bahr)
o It would be said that there was an express trust (Mason and Dawson in
Bahr) which was evidenced by the clause between WDP & B, as that
expressly stated B’s undertaking. Alternatively P could say there’s a
constructive trust (CT) which arose from the parties’ common intention (CI)
that P would be able to repurchase (Wilson, Toohey & Brennan).
 Equity of redemption (Gosper, per Kirby J)
 Breach of statutory duties (Grgic)
o Including misleading and deceptive conduct

 Equitable vitiating factors, like undue influence/unconscionable dealing

 Breach of fiduciary obligations as a custodian of certificate of title (Gosper)
1) D must use title deed in BoFD by using CoT without authority to facilitate
registration of a forged document (
2) There must be more than a bare forgery; the claim must arise from the acts of
the new interest holder (Vassos) (e.g. breach of profits rule)

- A registered proprietor is subject to contracts he has entered into and also to trusts over the
property
 If a registered proprietor enters into a contract to sell the land, the purchaser can
seek specific performance of the contract if the registered proprietor refuses to
complete.
- NOT APPLICABLE FOR NEGLIGENCE (PYRAMID)
- The enforceable personal obligations may arise pursuant to actions of the RP before or after
he has become registered (Bahr v Nicolay (No 2) (1988))
- In order for the 'exception' to apply, there must be some legal or equitable cause of action
enforceable against the RP (Grgic v ANZ Banking Group (1994))
 'the expressions "personal equity" and "right in personam" encompass only known
legal causes of action or equitable causes of action' (Grgic)
 This includes misleading and deceptive conduct under s18 ACL (Grgic)
 Conduct giving rise to a claim at law for deceit would constitute a legal cause of
action giving rise to the in personam exception (Garafano v Reliance Finance
Corporation (1992))
 Includes breach of statutory duty (Grgic)

25
 - Both proprietary and non proprietary rights are protected under this exception (Langford,
The In Personam Exception to Indefeasbility of Title)
- Conduct giving rise to a claim at law for deceit would constitute a legal cause of action giving
rise to the in personam exception (Garafano v Reliance Finance Corporation (1992))
- Some cases of equitable fraud that do not constitue fraud under the Torrens system may fall
within the in personam exception
- if he should repudiate the third party's right to purchase, equity imposes a CT so that the
registered proprietor holds his title on trust for the third party to the extent of the third
party's interest (Brennan CJ, Bahr)
 Exception to jus quaesitum tertio i.e. privity of contract

Paramount Interests
- Listed under S42(2), including:
a) the reservations exceptions conditions and powers (if any) contained in the Crown
grant of the land;
b) any rights subsisting under any adverse possession of the land;
c) any public rights of way;
d) any easements howsoever acquired subsisting over or upon or affecting the land;
e) the interest (but excluding any option to purchase) of a tenant in possession of the
land
o E.g. prior lease and subsequent registered mortgage, regisered mortgage is
stripped of indefeasibility and the competition between interests is decided
by the application of principles as if between two unregistered interestsd.
o Must be in actual possession
o Includes interest of a purchaser under a K who is in possession (Downie)

f) any unpaid land tax, and also any unpaid rates and other charges

Failure to Verify Identity

- a mortgagee must take reasonable steps to verify the authority and identity of a
mortgagor to ensure that the person executing the mortgage, or on whose behalf the
mortgage is executed, as mortgagor is the same person who is, or is to become, the
registered proprietor of the land that is security for the payment of the debt to which the
mortgage relates (s87A(1)) PLA)

- otherwise, (s87A(3) the registrar may refuse to register the mortgage (a) or remove the
mortgage from the register (b), rendering the mortgage void (s87A(5)(b)).

- Mortgagee is deemed to have taken reasonable steps if they comply with the registrar’s
participation rules (s87A(2)(b). The participation rules may be complied with by:

 Apply the VOI Standard; or

 Verify the identity of a Person in some other way that constitutes the taking of
reasonable steps

1) Is the VOI Standard satisfsied?

The VOI must be conducted in a face to face in person interview between the person verifying the
identity and the person being identigfieed (schedule 8, 2.1)

26
Where documents containing phographs are produced, the identity verifier must be satisfied that
the person being identified is a reasonable likeness to the person depicted in those photographs
(sch 8, 2.2)

The identity verifier must ensure that the person being identified produces original Documents in
one of the categories in the following table (sch 8, 3.1)

 The IV must be reasonably satisfied that a prior Category cannot be met before using a
subsequent category (3.2)

 The documents must be current, except for an expired Australian Passport which has not
been cancelled and was current within the preceding two years (3.4)

 The original documents must be cited and copies retained (3.3)

Disregard change of name/marriage certificate requirement

27
Quasi Exceptions
Inconsistent legislation
- Since we are dealing with state legislation, the provisions of the Torrens statute are capable
of being overridden or repealed, either impliedly or expressly, by a later statute (South
eastern Drainage Board v Savings Bank of SA (1939))
- May occur in the form of legisation that creates an unregistered interest that takes priority
over registered interests or otherwise invalidates a registered interest
- E.g. Pratten v Warringah Shire Council [1969]
 An unregistered interest of the council, a drainage reserve, created pursuant to a
later Act took priroity over the title of the registered proprietor of the land
- Strong presumption that parliament does not intend to contradict itself (Horvath v CBA)
- Ambiguity is likely resolved in favour of interpretation that avoids inconsistency (Horvath)
- Subject matter is very important. Look at the language used. do both pieces of legislation
deal with the same subject matter? Can they operate in their own sphere (Breskvar v Wall)
 Vesting land in the same property to a public and private person was clearly of the
same subject matter and so there was inconsistency (Calabro)
- Public rights generally prevail over private rights (Calabro v Bayside City Council)
- E.g.
 E.g. that ‘a certain transaction is void’ has to do with underlying transaction, the TLA
has to do with registration of those interests (analogous to Breskvar wherein certain
transactions were to be void, but court held registration was effective
 Either way, registration cures the defect in the instruments (Breskvar)

Volunteer

- Rasmussen VSC – affirmed earlier precedent of king v snail, was better decision
 Under this approach, the new RP will be subject to whatever earlier interests
bound the transferor
- Cf Bogdanovic in NSWCA, dicta from the HC in Farah, and dicta in Zerky VSCA, that stated
volunteers do get indefeasibility EXCEPT if they have notice.
- Thus, notice of a volunteer under either approach means their title is defeasible

Compensation
1) Do the compensation principles apply?

This section applies to a registered proprietor of land if— (s87D(1))

(a) the land has been mortgaged fraudulently; and
(b) the registered proprietor is not a party to that fraud; and
(c) the registered proprietor is entitled to be indemnified under this Act because of that fraud.

This section applies if— (s87E(1) - titled amounts recoverable by mortgagee under s77 in case of
fraudulent mortgage
(a) land has been mortgaged fraudulently; and
(b) the registered proprietor of the land is not a party to that fraud; and
(c) the registered proprietor is entitled to be indemnified under this Act because of that fraud; and
(d) the land has been sold under a mortgage or charge in accordance with section 77.
 i.e. as per the mortgagees power of sale

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 2) What limb are we arguing?
- 'any person sustaining loss or damage (whether by deprivation of land or otherwise)… shall
be entitled to be indemnified, [provided the loss was caused] by reason of: (s110(1) TLA)
a) the bringing of any land under this Act under Division 2 of Part II or by the creation
of a provisional folio under Division 3 of Part II; .
aa) a legal practitioner's failure to disclose in a legal practitioner's certificate
a defect in title or the existence of an estate or interest in land;

b) any amendment of the Register;

c) any error omission or misdescription in the Register or the registration of any other
person as proprietor;
 Omission means 'not there', it does not connote that the Registrar has failed
to make an entry which should have been made (Cirino v Registrar-General
(1993))

d) any payment or consideration given to any other person on the faith of any
recording in the Register;
 Seemingly a very broad limb

e) the loss or destruction of any document lodged at the Office of Titles for inspection
or safe custody or any error in any official search;
f) any omission mistake or misfeasance of the Registrar or any officer in the execution
of his duties;
g) the exercise by the Registrar of any of the powers conferred on him in any case
where the person sustaining loss or damage has not been a party or privy to the
application or dealing in connexion with which such power was exercised—

Exceptions
The Consolidated Fund shall not under any circumstances be liable—
(a) for any loss damage or deprivation occasioned by the breach of any trust, whether express
implied or constructive;
(b) in any case in which the same land has been included in two or more Crown grants;
(c) in any case in which any loss damage or deprivation has been occasioned by any land being
included in the same folio of the Register with other land through misdescription of boundaries or
parcels of any land, unless it is proved that the person liable for compensation or damages is dead or
has absconded or has been adjudged bankrupt or the sheriff certifies that such person is unable to
pay the full amount awarded in any action for recovery of such compensation and damages;

No indemnity shall be payable under this Act— (s110(3))

(a) where the claimant, his legal practitioner, conveyancer or agent caused or substantially
contributed to the loss by fraud neglect or wilful default or derives title (otherwise than under a
disposition for valuable consideration which is registered in the Register) from a person who or
whose legal practitioner, conveyancer or agent has been guilty of such fraud neglect or wilful default
(and the onus shall rest upon the applicant of negativing any such fraud, neglect or wilful default);

- Defrauded party must contribute in a ‘considerable, large or big way’ (Fairless)

In Victoria the action must be commenced within six years of the date of the deprivation (s5(1)(d)
LAA)

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Registrar’s Power to Correct Register
In any proceeding in a court relating to any land or any instrument or dealing in respect thereof if
the court directs the Registrar to make any amendments to the Register or otherwise to do any act
or make any recordings necessary to give effect to any judgment decree or order of the court the
Registrar shall obey such direction (s103(3) TLA)

Unregistered interests

Caveating

1. Can a caveat be lodged?

A person claiming an estate or interest in land may lodge a caveat prohibiting the registration of
either all or specifically named dealings in the land which would affect the interest protected by the
caveat (s89(1) TLA Vic)

- Caveats may only be lodged to protect proprietary interests in land that are recognized
(McMahon v McMahon [1979])
 Merely personal or contractual rights assosciated with/interests in land are not
caveatable (Bacon v O-Dea (1989))
o License to occupy land is not caveatable (La Martina v Penney [1968])

- Settled caveatable interests include:

 The claim of a beneficiary under a trust (Costa & Duppe Properties Pty Ltd v Duppe
[1986])
 The interest of an optionee under an option to purchase, that being an equitable
interest (Laybutt v Amoco Australia Pty Ltd (1974)
 The rights under an agreement for:
o a mortgage or a charge (Re Elliott (1886))
o for a lease (Antar v Fairchild Development Pty Ltd [2008])
o an easement or (Deanshaw v Marshall (1978))
o profit a prendre (Permanent Trustee Australia v Shand (1992))
 The interest of a purchaser of a registered interest under a contract for sale (Kuper v
Keywest Constructions Pty Ltd (1990))
- It is not necessary that the interest be capable of registration (Crampton v French).
- Registered proprietor's rights are not sufficient to support a caveat as per Swanston
Mortgage VSC
 Cf heavy critism of this in Capital Finance Australia v Bayblu NSWSC

2. Has it lapsed?

- Caveats remain until:

 It is withdrawn by the caveator (s89(1))
 It lapses as a result of an adverse claim and caveator has failed to demonstrate
validity of his interest (s90(1) TLA Vic)
o When a dealing is lodged for registration, the caveator is given notice of this
fact, and has 30 days in which to consent to registration or to take action to
demonstrate the validity of his interest and thus show cause why the dealing
should not be registered (s90(1) TLA Vic)

30
  A person proves their case for an interim injunction and the court orders it removed
(s90(3))
o Any person who is adversely affected by any such caveat may bring
proceedings in a court against the caveator for the removal of the caveat
and the court may make such order as the court thinks fit.

- Interim injunctions are intended to preserve the status quo until the hearing of the main
action (Jones v Pacaya [1911])
 Status quo meaning the state of affairs in the period immediately before the issue of
the writ seeking a permanent injunction (Garden Cottage Foods v Milk Marketing
Board [1984])

- The court addresses three inquiries

1. Whether there is a legal or equitable right to be protected or asserted
which it has jurisdiction to enforce by final judgement (Lenah) –
• e.g. the existence of an underlying cause of action

2. Whether the plaintiff has made out a prima facie case: that being,
• whether 'there is a probability that at trial the plaintiff will be
held entitled to relief'. –
• ‘whether there is a serious question to be tried'
- "How strong the probability needs to be depends upon
the nature of the rights the plaintiff asserts and the
practical consequences likely to flow from the order he
seeks." (Beecham)
- E.g. where injunctive relief is sought to interfere with
the decisions of the executive branch, a high threshold
applies (Castlemaine Tooheys Ltd v SA (1986))
• It does not need to be more probable than not that the plaintiff
would succeed at trial (Kitto J, Beecham)

3. The Balance of Convenience

• Does the "inconvenience or injury which the plaintiff would
likely suffer if an injunction were refused outweigh… the injury
which the defendant would suffer if an injunction were
granted?" (Beecham Group Ltd v Bristol)
- E.g. may suffer business repercussions,
• BoC will only decide interlocutory injunctions, not final
o

- Once removed cannot be removed by same person regarding the same interest (s91(4) TLA)

Priority notices
- Temporarily prevent the registration of any other dealing over the cited property/folio
 However, does not prevent recordings/lodgements, like caveats, warrants and land
tax charges (s91F TLA).
- They lapse after 60 days and 90 if it has been extended (s91FA TLA)
- Provisions effective 9/12/2016

31
 1. Can a PN be lodged?
- Can only be lodged for registrable instruments (unlike caveats)

2. Has it lapsed?

- They lapse after 60 days and 90 if it has been extended (s91FA TLA)

Priorities as between competing equitable/unregistered interests

All unregistered mortgages are equitable

1) Notice Test
- The prior interest holder will always prevail over a subsequent interest if the holder of the
later interest had notice of the earlier interest (Moffett v Dillon [1999])
 Notice may be actual or constructive (Moffet)
 Notice 'is fatal to the contention that the later equitable interest should prevail over
the earlier' (Moffet)
o 'a person taking with notice of an equity takes subject to it, since his
conscience is affected by the equity of which he had notice' (Moffet)
o Equitable mortgage which was created subsequent to and with notice of, an
equitable charge, was subject to that charge

- If there is no notice, continue on to the Merits Test

- If a later equitable interest is acquired for value without notice, that beats an equity

2) Merits Test

Prima facie first in time approach (Abigail, per Dixon J)

- SEEMINGLY BETTER APPROACH
- 'Prima facie priority in time will decide the matter', unless there is postponing conduct of
the prior equitable owner 'as to make it inequitable as between him and the subsequent
equitable owner that he should retain his initial priority' (Abigail, per Dixon J)
- 'The burden rests on the holder of the later equitable interest to show that the interest
should be preferred over the interest created first in time' (Moffett)
- Theoretical bases for the postponement rule (Heid)
 N.B Specify which of the two is more appropriate on the facts
 Estoppel (Gibbs CJ)
o ‘Heid clothed Connell with apparent ownership by trnasferring property to it
and acknowledging consideration had ben paid. Heid istherefore estopped
from asserting his title as against a person to who Connell disposed of the
property and who took the interest INGFFVWN'
o responses to the argument that there is no representation
 representation doesn’t have to be directly from Heid. The act of
allowing Gibby to have all those documents armed Gibby's employer
with means of dealing with land as absolute legal and beneficial
owner

32
  Another is that lack of representation by Heid can be explained
through agency - Connell was essentially Heid's agent. Person who
hands title deds to agent with authority to deal with property in a
restricted manner cannot rely on these restrictions as agiainst third
party who had no notice of it
 Negligence (Mason and Deane JJ)
o If it is 'reasonably forseeable that a later interest will be created and that
the holder of that later interest will assume the non existence of the
earlier interest', there will be postponing conduct (Mason and Deane)
o It only has to be forseeable, not that it likely will happen
o You can have arming conduct that is not reasonably forseeable either e.g.
(Jacobs) and so no postponement
o 'He will be bound by the natural and forseeable consequences of his act'

- Good quotes
 the test for ascertaining which incumbrancer has the better equity must be whether
either has been guilty of some act or default which prejudices his claim' (Abigail v
Lapin)
 'before a person can be deprived of the priority which priority in time gave, it must
be proved that the person has done something or is guilty of some omission which
would render it equitable that he should be deprived of that priority' (General
Finance Agency and Guarantee Co v Perpetual Executors and Trustees Asossciation
of Australia (1902))
- Postponing conduct includes:
 Where the prior owner has armed another party to hold themselves out as the
owner, enabling the third party to deal with the property, including to create
interests in it,
o Arming conduct is conduct that 'voluntarily arm[s] the purchaser with the
means of dealing with the estate as the absolute legal and equitable
owner, free from every shadow of incumbrance or adverse equity' (Rice v
Rice)
§ 'if the owner of property clothes a third person with the apparent
ownership and right of disposition thereof, not merely by
transferring it to him but also by acknowledging that the transferee
has paid him the consideration for it, he is estopped from asserting
his title as against a person to whom such third party has disposed
of the property, and who took it in good faith and for value'
(Rimmer v Webster [1902])
§ 'when… one person arms another with a symbol of property, he
should be the sufferer, and not the person who gives credit to the
operation and is misled by it' (Vickers v Hertz [1871])

o In practice, arming conduct includes:

§ Giving over the duplicate certificate of title (Abigail)
§ Giving purchaser a document acknowledging full receipt of
purchase monies where money in fact remains outstanding (Heid)
§ Giving instrument of transfer such that registration can occur (Heid)
§ Transferring the property intended only as security while not
specifying the transfer is not supposed to be absolute (Abigail)

33
  Postponing conduct can also be shown by a failure to caveat, which itself may go
hand in hand with other arming conduct
o Factors to consider include:
 Where they had already taken sufficient steps to protect their
interest e.g. through retaining title deeds (as in J & H Just Holdings)
o Since 'registration of a second or subsequent mortgage
cannot ordinarily be procured without production of the
duplicate certificate of title', caveat would be unnecessary
as they should be already protected by retaining the title
deeds (Avco Financial Services v Fishman [1993])
o Failure to lodge a caveat for a first equitable mortgage will
ordinarily not postpone (in favour of a second mortgage)
because retaining possession of title deeds is sufficient
enough reasonable steps to protect its interest (J H & Just
Holdings)
o Cf Where lodging a caveat was the only means of protecting
their interest, failure to caveat will be very relevant
o Because e.g. it was a second equitable mortgage and they
didn’t have title deeds
 Whether it was reasonably forseeable that failure to caveat could
lead to the creation of a second interest/where the failure was not
through negligence (Jacobs)
o Given her parents were the directors of the vendor
company, it was not negligent for her not to forsee them
doing her in
o Jacobs had no reason to believe a later sale would be made
given her mothers support and the father had even in fact
accepted Jacob’s exercise of her option
 Where caveating would have the effect of disarming the new RP
from being able to go into the world under false pretences ‘free
from every shadow of encumbrance or adverse equity’ (Abigail v
Lapin)

o Failure to caveat alone is not decisive (J & H Just Holdings)

o 'before a person can be deprived of the priority which priority in time gave,
it must be proved that the person has done something or is guilty of some
omission which would render it equitable that he should be deprived of
that priority' (General Finance Agency and Guarantee Co v Perpetual
Executors and Trustees Asossciation of Australia (1902)
§ In the present case, the respondents on the one hand enabled the
Heaveners to represent themselves as legal owners in fee simple,
while on the other hand it cannot be said that Abigail did or omitted
to do anything which he should have done'
o 'wherever one of two innocent persons must suffer by the acts of a third, he
who has enabled such third person to occasion the loss must sustain it'
(Lickbarrow v Mason (1787))

o It is common practice to lodge a caveat in the circumstances and the owner

failed to do so (IAC (Finance) v Courtenay (1963))

34
 § In Victoria, it is common conveyancing practice to immediately
lodge a caveat in relation to the purchaser's interest under a
contract of sale (Jacobs v Platt Nominees

 Relief may be established on the basis of an in personam claim for breach of trust
like in Bahr v Nicolay
o New RP took with notice and expressly acknowledged the interest of option
purchaser. Express acknowledgement may it unconscionable so constructive
trust and express trust as per others arose in favour of option holder which
would be breached by failing to comply

- Cf Rice v Rice: Only if the interests are in all respects equal that the prior interest holder
then takes priority.
 The court considers three matters to determine whether the equities are equal:
(Rice v Rice (1853))
o The nature and condition of the respective equitable interests
§ Where 'the merits are equal, priority in time of creation is
considered to give the better equity' (Heid v Reliance Finance Corp,
Gibbs CJ)
o The circumstances and manner of acquisition;
o The whole conduct of the parties
 Seemingly rejected in Abigail where it was conclusively said 'the opinion has not
been approved in so far as he says that priotiy in time is only taken as the test where
the equities are otherwise equal'
-

Between a Prior Equity and Subsequent Equitable Interest

- A personal equity is ‘a claim to have an equitable interest which can only be enforced by
succeeding in some claim to a Court for equitable relief' (Double Day Newspapers, Bryson J)
 Examples of equities include:
o Equity to set aside a contract for fraud
o Equity arising as a result of undue influence, unconscionable dealing
o Equity of rectification
 i.e. right to have a written agreement rectified to correct a mistake
or reflect alterations orally agreed to but not incorporated in writing

 Prior personal equities do not bind a later party traking a legal or equitable interest
in the subject property, even with notice

- A subsequent equitable interest acquired without notice and for value will defeat a mere
prior equity (Latec)
 However, if they did have notice, or the later equitable interest holder didn’t
provide consideration, the prior mere equity will beat the later equitable interest
(Latec)
 A ‘legal estate is not required in order that a defence of purchaser for value without
notice may succeed’ (Latec, held as early as Malden v Menill (1737))
- A mere equity arises out of a dealing involving the plaintiff with particular property and the
relief claimed will be an adjustment of the rights of the plaintiff thereto (Meagher Gummow
Lehane)

35
  Purchasers with notice are subject to this mere equity
 Includes:
o Equity arising out of estoppel
 Mere equities ‘have a procedural flavor’ as opposed to being actural rights in
property like equitable interests (Snell’s Principles of Equity)
 Are rights in personam

- Equitable interests:
 includes:
o Equity to set aside fraudulent transaction ((Breskvar and Taylor J in Latec
 c.f. Kitto and Menzies JJ in Latec who said this was a mere equity)
o Beneficairies interest under a trust
o Equity of redemption under a mortgage (Crampton)
o
o Option to purchase (Jacobs)
 Option to purchase itself needs consideration in order to be
enforceable – when it is signed you have a contingent equitable
interest (which is still good), sufficient to support a caveat. When it
is exercised it is a full equitable interest.

 Are rights in rem

36
Indefeasibility of mortgage covenants upon registration

37
Provisions of a regisrtered mortgage are indefeasible depends on whether it is a traditional
mortgage, or an all monies mortgage, and whether the mortgage is affected by fraud.
A traditional mortgage document indicates the scope of the interest and secures a fixed sum. It
includes a statement of principal sum lent, an acknowledgement that money is lent and received,
and a personal covenant to repay the loan.
An all moneys mortgage does not contain a covenant to repay a particular amont

In NSW, registration of a fraudulent moretgage is effective to charge the land with the debt but does
not make the regisrtered owner personally liable for the shortfall (Grgic)
In Vic, registration of a fraudulent mortgage validates the covenant to pay and makes the landowner
personally liable (Pyramid).

38