LAW 1506 Lecture Notes - Lecture 9: Equitable Interest, Normal School, Fide
23 May 2018
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Department
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Professor
SUMMARY OF PRIORITIES
Legal v legal
• Priority of time, s 57 RPA
Legal v equitable
• Exceptions to indefeasibility (previous
notes)
o Party to fraud > exception applies
> if they lack bona fides > they are
outside proviso > exception to
indefeasibility applies >
purchaser’s title is defeasible
o Not a party to fraud > bona fide >
inside proviso > outside the
exceptions > purchaser gets
immediate indefeasibility
Equitable v equitable
• Time + better equity Breskvar; Rice
EQUITABLE V EQUITABLE
• Issue= multiple unregistered interests over the
same piece of land- principles of rego/
indefeasibility not applicable- how are they
resolved?
STEP 1: state how the interest has arisen, and
describe each party’s involvement
• Equitable interest arises out of c*/ fraud/ trust/
unconscionability
• If relevant- determine if party has an
equitable interest of a ‘mere equity’
o Mere equity= personal right in relation
to property, binding on 3rd parties who
have notice or is a volunteer
▪ Gives right to approach court
for a remedy, but cannot be
transferred
o Equitable interest= property interest, is
transferable/ alienable
STEP 2: disputes between multiple unregistered
interests over land are resolved through the
normal principles of equity applied to the Torrens
system
1. According to Breskvar v Wall (1971) 126
CLR 376, courts should apply the principle
in Rice v Rice (1854) 61 ER 646 at 648-
that where the merits are equal, earlier
in time first equity in time prevails
STEP 3: However, Breskvar and later cases
warned of applying Rice mechanically, stating the
real tsk of the court was to determine where the
stronger/ better equity lies Latec Investsmens v
Hotel Terrigal Pty Ltd (1964-1965) 113 CLR 265
at 276 and Heid v Reliance Finance Corporation
Pty Ltd (1983) 154 CLR 326 at 333.
STEP 4: therefore, exceptions to the general
rule Rice have developed to ensure that where the
equities aren’t equal, the earlier equitable interest
will not prevail over the latter
Conduct of the interest holders
1. Fault or error of both parties
a. Abigail v Lapin- where you can’t find that
one party’s fault/ error is worse than the
fault/ error of another equities are equal as
no party has better merits
i. USE FACTS- state each party’s
misconduct – balance- then draw
analogy from Abigail
1. L give indicia of title to loan
provider
2. A didn’t search register and
ensure there was no prior
interest over the land
b. Therefore Rice v Rice applies according
to its normal operation (first in time
prevails)
2. Conduct of the second interest holder
a. Notice of prior interest IAC v Courtnay-
actual notice is always enough to ensure
and maintain the priority of the first
interest holder
b. To promote their equity, second interest
holder should
i. Act on suspicions + search title
3. Conduct of the first interest holder
To promote their equity, they should lodge a
caveat + create suspicion in the mind of others
Failure to lodge a caveat
state that the party failed to lodge a
caveat, which, under s 191 RPA would sit
in the Torrens Register to protect their
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Legal v legal: priority of time, s 57 rpa. Legal v equitable: exceptions to indefeasibility (previous notes, party to fraud > exception applies. Equitable v equitable: time + better equity breskvar; rice. Step 2: disputes between multiple unregistered interests over land are resolved through the normal principles of equity applied to the torrens system: according to breskvar v wall (1971) 126. Clr 376, courts should apply the principle in rice v rice (1854) 61 er 646 at 648- that where the merits are equal, earlier in time first equity in time prevails. Step 3: however, breskvar and later cases warned of applying rice mechanically, stating the real tsk of the court was to determine where the stronger/ better equity lies latec investsmens v. Hotel terrigal pty ltd (1964-1965) 113 clr 265 at 276 and heid v reliance finance corporation. Pty ltd (1983) 154 clr 326 at 333.
