TOPIC 1: FUNDAMENTALS OF LAND

Legal & Equitable Interests • Competing legal & equitable interests: Qui Prior Est Tempore Potior Est Jure – Where the equities are equal, the first in time will prevail. Where there is equal equity, preference will be given to a legal interest over an equitable interest • Competing legal interests: Nemo dat quod non habet - no one can pass a better than he himself has. • Competing equitable interests: The first in time prevails, unless the equities are unequal. (Heid v Reliance) • Earlier legal, later equitable – conduct of holder of earlier legal interest critical (Northern Counties Fire Insurance v Whipp) - the issue is whether it would be unconscionable for the holder of the legal interest to keep priority, having regard to his/her conduct. • Prior Equitable/Subsequent Legal - The subsequent legal interest will prevail where that legal interest has been acquired by a for value and without notice of the prior equitable interest. (Pilcher v Rawlins) • Equitable vs legal interest = BPFVWN doctrine • Earlier Legal v Later Equitable o Legal interest will usually prevail where merits of case are equal o But there are 6 categories where later equitable interest will trump legal 1. L holder was party to fraud that led to creation of E interest, regardless of whether fraudulent purpose intended was different to fraudulent purpose achieved (Northern Counties v Whipp) 2. L holder was grossly negligent in failing to obtain of title to land (Walker v Linom) – mere negligence is not sufficient, it must be gross (i.e. it is inequitable to award otherwise) 3. L holder entrusted title deeds to agent of limited authority and agent exceeded their authority 4. L holder has expressly created E interest 5. L holder is ‘estopped’ from asserting their legal title 6. Where title documents are not handed to agent but a similar document which on its face appears to entitle holder to beneficial interest in the land

Legal Interests • : Act 1919 (NSW) s 23B(1) • Certain short-term leases: s 23D(2)

Equitable Interests • Written & signed instrument: s 23C(1)(a) o But s 41 RPA 1900 (NSW) • for the sale of land or to grant an interest in land o Which are enforceable: s 54A(1), (2); and o In respect of which equity would decree specific performance o E.g. – Lysaght v Edwards; Walsh v Lonsdale – where we have for sale of land & that contract is enforceable & equity would decree specific performance of contract, the equitable interest contracted for arises – can only be invoked where contract is enforceable so need to satisfy s 54A • Declaration of trust: s 23C(1)(b) • Resulting or constructive trust: s 23C(2) • Vendor’s or purchaser’s • Equity of redemption on grant of a general mortgage

Postponement • Postponement only occurs when an earlier holder’s act or neglect contributed in some way to the later holder acquiring interest without notice of the earlier interest (Abigail v Lapin)

Notice • Notice = s 164 CA o Investigation of the title documents (investigation to good root of title at least 30 years old) (s 53(2) Conveyancing Act); o Imputed notice – Hunt v Luck • Constructive notice – searching land (Hunt v Luck) • Notice: Conveyancing Act s 164 – where holder of later interest has notice of earlier interest, earlier interest will have priority (narrow range of exemptions = caveat lodged giving notice of interest & then withdrawn suggesting interest no longer exists) o Actual – if you know about notice o Constructive – if you would have had actual notice if you made reasonable inquiries ⇒ “searches…inquires…& inspections….[that] ought reasonably to have been made by the purchaser” ⇒ Requires consideration of what inspections & inquiries a purchaser/or anyone taking an interest ought to have made w.r.t land ⇒ Search of the title documents: § For old system land, search of title deeds back to a good root of title at least 30 years old: Conveyancing Act s 53 § Inspection of the land to ascertain who is in possession (e.g. – a tenant) or who is using it (e.g. – holder of an ): rule in Hunt v Luck o Imputed – where your notice has actual/constructive notice of my interest

⇒ If I can claim protection as bona fide purchaser for value without notice, anyone claiming through me can also claim that protection (Wilkes v Spooner)