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Unregistered Interests In Torrens Land Problem Notes

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This is an extract of our Unregistered Interests In Torrens Land Problem document, which we sell as part of our Property B Notes collection written by the top tier of Monash University students.

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Unregistered interests in Torrens land (priority between unregistered interests) Caveat system Introduction Unregistered interests are recognised under the Torrens system (Barry v Heider) and may, in some cases, be caveated (TLA s 89). Note possibilities. Is/can there be a valid caveat?
Can ... lodge a caveat (or can a caveat be lodged for ...)?
Per TLA s 89(1), any person claiming an unregistered estate or interest in land may lodge a caveat.

1. There must be reasonable cause for its lodgement; if not, the caveator may be liable to compensate for loss caused by lodgment: TLA s 118 The Registrar may lodge caveats to prevent certain dealings, especially to prevent fraud on disabled persons.

Is the caveat in a valid form?

1. The caveat must be in the approved form (TLA s 89(1)) and set out the nature and extent of the interest claimed

2. The caveat may be absolute (forbidding registration of any new dealings), or conditional (specifying certain kinds of interests that may not be registered): TLA s 89(1). o

A conditional caveat is preferable; an absolute caveat may result in a failure on the second limb of the Pirishenko test.

o

Even adverse possession may be caveated against.

Is the interest claimed caveatable?
The caveator's interest must be a proprietary interest.

1. Though the case has been criticised, per Swanston Mortgage the RP must have an interest that is separate and distinct from his or her registered title in order to lodge a caveat

2. An interest does not have to arise under a registrable instrument or give rise to a right to compel the execution of a registrable instrument: Crampton v French Interests that are caveatableInterest as beneficiary under a trust (express or constructive), even if there are already family court proceedings on footInterest pursuant to an option to purchase 1

o

The caveatable interest will arise as soon as the option is granted, regardless of whether the caveator has chosen to exercise the option: Jacobs v Platt (obiter), BahrMortgage, lease, easement, chargeInterest of a purchaser under a K for sale (even a conditional K of sale) is caveatable if the court would protect it by injunction (Jessica Holdings v Anglican Property Trust) o

HCA has stated that parties should be caveating when they enter a K of sale straight away

Interests that are not caveatableNonproprietary interests (eg licence, personal or contractual rights relating to land) o

Swanston held that 'mere equities' are not proprietary rights and therefore not caveatable

o

The right of a mortgagor to set aside a transaction due to fraud or breach of the TLA s 77(4) power of sale by a mortgagee is a mere equity until a court makes an order setting aside a voidable sale and is therefore not caveatable (Swanston)

o

The holdings in Swanston have been heavily criticised ; however it remains binding in Victoria until the Full Bench of the Court of Appeal overrules it: VasiliouRelied on Latec, a case where, unlike Swanston, the purchaser had already become registered and which was not concerned with the question of caveatable interests; also all judges in Latec treated a mere equity as proprietary.Criticised by Pembroke J in Capital Finance v BaybluThe interest of an RP as RP without some separate interest (Swanston)If you have a claim under the Family Law Act, it will not be caveatable (though there may be a parallel interest relating to something else)First right of refusal to purchase a property is probably not caveatable

oOption to purchase is caveatable: the difference is the option to purchase presets the price. First refusal has a right to negotiate, can't just exercise it.

Agreement to share profits on resale of land (Simons v David Benge Motors)

What is the effect of the caveat in the circumstances?
Notification

1. The Registrar will notify the registered proprietor of the caveat: TLA s 89(3)

2. Once the caveat is lodged, it is noted on the folio of the register if the Registrar is satisfied with its form (TLA s 89(2)); this can act as a notice to the world (though this is not considered the purpose of a caveat: Jacobs v Platt).

Prevention of INCONSISTENT dealings lodged later

1. The caveat will prevent the registration (not the lodging) of any dealings inconsistent with the caveat (TLA s 91(1)). o

Dealings that are not inconsistent may still be registered, especially if:They are specified as acceptable in the caveat: TLA s 90(1)(e) 2

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they are expressed to be subject to the caveator's interest: TLA s 90(1)(d).the caveator consents in writing to the registration of the interest: TLA s 90(1)(b)

2. The caveat will not prevent registration of any dealing lodged prior to lodgement of the caveat: TLA s 91(2) Removal or lapse of caveat Once notified on the folio, a caveat will remain indefinitely until:

1. It is withdrawn by the caveator (this may be done at any time): TLA s 89(1)

2. An inconsistent dealing is lodged: TLA s 90

3. An application for removal is resolved in favour of the applicant o

via the Registrar (TLA s 89A)

o

via the courts (TLA s 90)

Here [note which course is applicable/should be taken on the facts]
Inconsistent dealing Here, ... [has/may have] lodged an inconsistent dealing. If an inconsistent dealing is lodged, the caveator is notified by the registrar: TLA s 90(1). The caveator has three options in such case:

1. to consent in writing to registration of the dealing: TLA s 90(1)(b).

2. to take court action within 30 days to prevent registration of the dealing. o

Must be within 30 days or caveat will lapse to the extent necessary to permit the dealing: TLA s 90(1)

o

On application to the court within 30 days of the notice (and after indemnifying the person seeking registration) the court may direct the Registrar to delay registration: TLA s 90(2).o

The court will hear the matter as an interlocutory proceeding that will determine if the caveat should stay in place until full trial. It is likely that the Pirishenko test will apply (see below and complete).

If the court upholds the caveat in the interlocutory proceeding, the matter can then proceed to full trial as a question of priority.

3. To allow the caveat to lapse. 30 days after notification, if the caveator does not take action, the caveat will lapse to the extent necessary to permit the dealing to be registered: TLA s 90(1). Application to Registrar for removal of caveat Under TLA s 89A(1), any person interested in the land can apply to the Registrar for the removal of the caveat. The applicant must specify the interest they hold and must provide a signed legal practitioner's certificate stating the opinion that the caveator does not have the interest claimed (TLA s 89(2)).

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