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equitable interests, future, PROBLEMS IN ASSIGNMENT, present, Priorities,…

- - - - • Depends on the facts and nature of the claim
        • Court may order equitable compensation, not a proprietary interest.
        • Court will have discretion to refuse relief.
- - - - Property may be assigned by a gift under Milroy v Lord (1862) there are 2 limbs
        
        the donor must have done everything necessary to transfer the property
        
        The donor must have done everything neccessary to render the assignment binding on the donor (But what is considered 'everything' is addressed in=)
        
        Anning v Anning (1907) facts Several days before his death, William Anning executed a sealed deed gifting his wife and five children all his property (including bank accounts). Did nothing more. found to be intended as a presenet gift. Bank accounts= fixed deposits and current accounts were choses in action. notice had been given of assignment for it to be effective at law per conveyancing s 12. the notice could be given by assignor or assignee
        Q: how much the donor needs to do to make that gift binding in equity under Milroy v Lord
        what must be done:
        Griffith CJ: donor needs to do all the steps for a legal assignment that ONLY the donor could do. need not perform steps that could be performed bby anyone
        Issacs J: Donor needs to peform all the steps necessary to bring about a legal assignment
        Higgins J: Donor needs to peform all of the steps that the donor could peform. includes steps that could be peformed by anyone.
        
        Corin v Patton 1990 Facrs: Mr and Mrs Patton were joint tenants of Torrens land. She was terminally ill. Wanted to sever the joint tenancy and leave her share to her children. Mrs P executed a transfer of her interest to brother Mr corin, a trust deed by which mr Corin was made trustee of the property for Mrs P and a will in which her interest in the property was to go to her children in equal shares. The transfer was not registered and didnt arrange to have the bank produce the certificate of title before she died
        Q: had she made a gift of her interest and thefore severed the joint tenancy
        HC: Accepted test of Griifith J in Anning. the donor must complete all the steps that only they could do they do not need to complete the steps that could be done by anyone.
        gift not complete in equity because as the donor she had not taken the steps to produce the title certificate
        
        Costin v Costin 1997: Facts: a father owned a property in joint tenancy with younger of 2 sons he decided to gift his interest to his older son. Father executed a tranfer in registrable form but did not have certificate of title which was beiing held by family solicitors. Younger son instructed solicitors to not release it. Father chnaged mind and gifted interest to younger son who then acquired the certificate.
        The gift to older son was found to not be complete in equity. first limb was met as father had done everything he could but failed on second because the gift was not beyond his revocation because the certificate was not produces\d
- - - - Conveyancing act s 23C
        
        23C(1) Subject to the provisions of this Act with respect to the creation of interests in land by parole:
        a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by the person’s agent thereunto lawfully authorised in writing, or by will, or by operation of law,
        b) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by the person’s will,
        c) a disposition of an equitable interest or trust subsisting at the time of the disposition, must be in writing signed by the person disposing of the same or by the person’s will, or by the person’s agent thereunto lawfully authorised in writing
        (2) This section does not affect the creation or operation of resulting, implied or constructive trusts
        
        (A) and (b) only apply to interests in land, apply to both the creation and dispostion of interests.
        
        (C) applies to both land and personal property and applies only to the dispostion of subsisting equitable interest not the creation of new interests
        it does not apply if the assignor has both the legal and equitable interest (Commissioner of stamp duties v Livingston)
        
        dispositions includes assignments: Pt v Maradona pty Ltd no. 2 (1992)
        Also incldes per comptroller of stamps v howaard-smith:
        
        direction by a beneficary to a trustee
        
        directions by a beneficary to a trustee may be a direction to dispose of trust property or to hold it on trust for another person
        section 23C applies thus must be in writing
        If the direction is for a transfer of the entire interest in personal property than the section does not apply
        
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        contract to assign an equitable interest
        
        issue is a cotract for valuable consideration to assign an equitable interst - is writing required?- no need for writing for constructuve trust
        
        Neville v Wilson, [1997] Ch 144, CA of England – Adopted the view of Lord Ratcliff in Oughtred that a constructive trust was created by an enforceable agreement.
        
        If a constructive trust is imposed by an agreement to transfer, then there may be no disposition – only the terms on which the property is held changes. But note -- Radan and Stewart argue that this could be seen as a new trust carved out of the original equitable interest, and a declaration of trust is subject to s. 23C/requires writing.
        
        declarations of trust
        
        A “disposition” in the meaning of the Conveyancing Act s. 23C includes a declaration of trust.
        Occurs where a person who is the owner of property declares they hold the property beneficially for another person
        A trust is created with the settlor becoming the trustee, and the beneficial interest in the property being assigned to the beneficiary.
        
        Law is clear that s. 23C applies and therefore this must be in writing, although rational has been debated – see Radan and Stewart, chapter 6
- - - - Competing legal interests
        
        Types
        
        An earlier equitable interest v a later legal interest
        
        Later legal interest only takes free of the equitable interest if the holder is “equity’s darling”. A bona fide purchaser in good faith. Providing valuable consideration. Without notice.
        
        Later legal interest only takes free of the equitable interest if the holder is “equity’s darling”. A bona fide purchaser in good faith. Providing valuable consideration. Without notice.
        
        Notice
        
        Notice may be actual, constructive, or implied:
        Actual notice must come from a person with an interest in the property, not from a third party.
        Constructive notice – if the earlier equitable interest would have come to the purchaser’s attention if they had made the inquiries a reasonably prudent person would have made in the circumstances. Ie, by search of the register.
        Imputed notice – an agent of the purchaser has received actual notice or should have received constructive notice.
        Purchaser of Old System land will have constructive notice of interests that could have been discovered by physical inspection of the land and making inquiries of the occupants: Marsden v Campbell (1897) 18 LR (NSW)(Eq) 33.
        
        Timing
        
        Relevant time for notice (to be a BFPV) is when consideration is given. If notice is received after consideration is given, but before the legal interest is acquired, then the purchaser takes free if the equitable interest. Exception -- unless the holder of the equitable interest is the beneficiary of a trust. If the bona fide purchase for value without notice takes free of the equitable interest, they can pass the property to others free of the interest, even if the new owner does have notice: Wilkes v Spooner [1911] 2 KB 473
        
        An equitable interest v a later equitable interest
        
        Equitable v Equitable
        
        Notice
        
        Notice may be actual, constructive, or implied
        If the holder of the second interest does have notice of the existence of the first, two rules:
        The “notice” rule. If the holder of the second interest has notice of the first interest, then the first interest has priority. Narrow exception, if holder of first interest engaged in conduct leading holder of second to believe there was no prior interest.
        The “better equity” rule. Prima facie, if the second has notice of the first, the first has priority, but this may be displaced if the second has “better equity.” (The equities are not equal).
        
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        Trust Property
        
        Trust Property: If the holder of the first equitable interest is the beneficiary of a trust, then it is the behaviour of the beneficiary that is relevant to a priority dispute, not that of their trustee: Shropshire Union Railways and Canal Co v R (1875) LR 7 HL 495. But this rule does not apply if the trustee never acquires the property due to neglect – the beneficiary cannot gain more rights than the trustee if the trust is incomplete: Walker v Linom [1907] 2Ch 104.
        
        Equitable Interests v Mere Equities
        
        Some equitable rights do not attach to property at all. Called a personal equity or an equity = right to access the courts of equity. Mere equity = a right which, if successful, will entitle a person to an equitable interest in property. But requires the intervention of a court to become an equitable interest.
        
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        A mere equity, even if earlier in time, will not take precedence over an equitable interest.
        
        A Legal Interest v a later legal interest
        
        An earlier legal interest v a later equitable interest
        
        The general rule is that the legal interest takes priority. Example: a legal lease is created. The owner of the land subsequently creates an equitable lease by estoppel over the same land for the same period of time.
        
        4 exceptions
        
        Legal interest holder is a party to fraud, the fraud leads to creation of the equitable interest.
        Holder of the legal interest fails to obtain or keep possession of the title documents, allowing another person to hold self out as the owner. Requires gross negligence.
        Legal interest holder entrusts title documents to an agent for a limited purpose of raising money, agent acts fraudulently and outside authority to borrow more money than authorized.
        Holder of legal interest retains title documents, but gives another person a document that allows them an equitable interest or right to acquire a legal interest, allowing them to claim to have good title.
        
        General Rule: Rule: The interest which arose first takes priority.
        Example: a priority dispute between legal interests may arise where there is a legal leasehold and a subsequent transfer of the legal fee simple. T
        he legal fee simple will be subject to the legal leasehold as the leasehold arose first. A purported later legal interest may not be a legal interest at all, so dispute technically is not one of priority. “nemo dat quod non habet” – a person cannot convey an interest they do not have.
        For example, two purported transfers of the legal fee simple in the same land. If the first is valid, the second cannot be as the seller has no interest remaining to give.
        
        Examples:
        Property is subject to a resulting trust as two people contributed to the purchase price, but only one of them was reflected on title. The legal owner of the property contracts to sell the property under a specifically enforceable agreement, but the sale has not completed (ie is prevented by a caveat). Where the equities are equal, the first in time prevails: Latec Investments v Hotel Terrigal Pty Limited (1965) 113 CLR 265 Ie, if both h. lders are innocent of wrongdoing and the second has no notice of the existence of the first.
    - - These Rules may be modified by statute:
        The Personal Property Securities Act for interests in personal property.
        The General Registry of Deeds for old system interests in land.
        The Torrens System
        
        Registry of old system interests
        
        The Registrar-General maintains a General Register of Deeds: Conveyancing Act, s. 184C. This is separate from the Torrens registry. vRegistration does not guarantee title or cure defects in the registered documents. A forged document is void, and remains void after registration: Re Cooper (1882) 20 Ch D 611. Registration does affect priority: s. 184G(1) of the Conveyancing Act. A registered interest will take priority over an unregistered interest, displacing the common law rules. An interest created later but registered first will take priority over an earlier interest which would otherwise have priority. Registered interests under this section must have been a document executed bona fide, and the interest acquired for valuable consideration.
        
        Torrens priorities
        
        If there are two competing registered interests: Priority goes to the holder whose interest is registered first in time.
        If there is a registered interest and an unregistered interest: Unregistered interests may exist. Per RPA s. 41, an unregistered dealing does not create an interest in land. Barry v Heider (1914) 19 CLR 197: unregistered interests gain their status as equitable interests from the transaction behind the unregistered instrument or dealing.
        Generally, registered proprietor takes free of unregistered interests, even if the proprietor has notice of the unregistered interest: RPA ss 42 and 43. However, note exceptions to indefeasibility and in personam claims (ie Bahr v Nicolay).Priority disputes between unregistered interests are determined by old system priority rules. Unregistered interests may be legal. Relevant Old System priority rules (legal v legal, 1st legal v 2nd equitable, 1st equitable v 2nd legal) will apply.Most commonly, unregistered interests will be equitable.BUT must consider caveats and other features of Torrens
        
        CAVEATS
        
        RPA, s. 74F(1) RPA:“Any person who, by virtue of any unregistered dealing or by devolution of law or otherwise, claims to be entitled to a legal or equitable estate or interest in land under the provisions of this Act may lodge with the Registrar-General a caveat prohibiting the recording of any dealing affecting the estate or interest to which the person claims to be entitled.”
        
        Effects of a Caveat
        
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        REAL PROPERTY ACT S. 43 A
        
        Real Property Act S. 43A(1“For the purpose only of protection against notice, the estate or interest in land under the provisions of this Act, taken by a person under a dealing registrable, or which when appropriately signed by or on behalf of that person would be registrable under this Act shall, before registration of that dealing, be deemed to be a legal estate.”
        IAC (Finance) Pty Ltd v Courtenay (1963) 110 CLR 550. Taylor J: the purchaser of an interest in Torrens land who has reached settlement without notice of prior unregistered interests receives the same protections as the purchaser of a legal estate for value without notice would receive under the old system
        CT
        
        "A Dealing Registrable" \
        The purchaser must have “a dealing registrable” for the section to apply.
        Three requirements:
        The dealing must not be defective.
        The dealing must be accompanied by the certificate of title ; and
        The dealing must be executed by the person who is presently the registered proprietor.
        Minor defects such as the wrong colour of ink being used will not be interpreted as making a dealing not registrable: Zisti v Ryde Joinery Pty Ltd (1996) 7 BPR 15.
        
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        TIMING:
        The timing of notice is critical: If notice is received before settlement (when the registrable dealing is received)- s 43A does not apply. If notice is received between settlement and registration- s 43A applies. If notice is received at any time before registration, but person receiving notice then becomes registered- RPA s 43 applies and the purchaser receives the benefits of indefeasibility. If notice is received after registration, RPA s. 43/indefeasibility applies. The section is only relevant concerning notice of prior unregistered interests.
        
        SUCESSIVE EFFECT: A purchaser who takes from someone entitled to the benefit of s. 43A may also claim its benefit, even if they already have notice of the unregistered interest. Called a ‘successive effect.’ Based on the rule in Wilkes v Spooner: A bona fide purchaser in good faith without notice who takes free of an equitable interest can pass unencumbered title even if the new purchaser has notice. Example – A contracts to sell to B, B contracts (before registration) to sell to C. S. 43A not directly applicable, because C is not taking an interest from the RP. But they are taking an interest from someone in the position of a BFPV w/o notice of a legal estate, and gain the benefits of that.
        
        Jonray Pty Ltd v Partridge Bros Pty Ltd [1969] 1 NSWR 621: Facts: Jonray contracted to buy land from Partridge Bros. There was a registered mortgage on the land. Partridge Bros was not the registered proprietor of the land. They had an interest in the land under an uncompleted contract of sale. Partridge Bros proposed to give Jonray a discharge of mortgage by RP on settlement and a transfer from the RP (transfer by direction). Jonray objected to this, wanted vendors to be registered at settlement and to have the mortgage discharged at that time. Court found Jonray could not object to proposed form of settlement. Transfer by direction means Jonray took from RP and entitled to the benefits of s. 43A. Court also found that if it was successive transfer, Partridge Bros entitle to the benefit of s. 43A (taking from the RP), and Jonray could benefit from their priority.