#7579 - The Register And Competing Interests Under A Torrens Regime - Property and Equity 2

Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd (1971) 124 CLR 73

Facts: The COT to land acquired by Bursill (B1) included the notification of an encumbrance in terms ‘Right of Way created by and more fully set out in ... Transfer 7922...”. Transfer 7922 was executed buy Guy, B1s predecessor, to Long, Berger’s (B2) predecessor and granted him as an extension of an existing right of way a right to all the buildings on the road and to pull down and rebuild them at a height no less than 12 feet.

B2 was in occupation of the building over the right of way and sought a declaration that it was entitled to retain the building to its own use, receive support of a building B1s land and to build on the right of way with the only restriction applying that the buildings be less than 12 feet. It was ruled in the court below that Transfer 7922 created an easement over the land which, since it was registered, was binding, but a declaration as to the ability to rebuild was not made.

Windeyer J:

Justice Windeyer was of the view that what was conveyed by transfer 7922 was something of a very different character to an easement – the fact of exclusive ownership made it very different from an easement. Even though it was a stratum interest – this was an interest that could effectively be notified on the register since it was an interest known to the law (‘the freeholder is the owner not only of the surface of the land...’)

• Given that such an interest existed the question becomes whether the interest was...’notified on the folium of the register book constituted by...the certificate of title’

Windeyer J was of the opinion that even though it said ‘extension of the right of way’ and didn’t refer to any further rights, that a prospective purchaser would have been ‘notified’ had they made “such searches as ought reasonably to have been made” on the basis of constructive notice:

• This was true even though he would have been surprised to find out what the search would have revealed – prudent persons would make inquiries as to what exactly the right of way entailed

• It would seem especially unlikely that a purchaser of land in such a built up area wouldn’t be aware of a building over the passage of way in whom someone was residing

Hence the RP of the land now holds it subject to this interest.

He then dealt with the question on the cross-appeal – whether or not there was a right to construct and reconstruct – answering this question in the negative:

• Berger contended that the right to any building over the right of way would give him the ability to knock down and build any other building on the way – this is untenable. The right to rebuild which Berger has is limited to erecting the same dimensions as that which the original building had

Appeal dismissed with Griffith CJ agreeing

Menzies J (in dissent):

Framed the question of notification thus “whether the transfer of the property interest was itself notified by the reference to an instrument which...created a right of way”

• The instrument as it accurately said created a right of way

• The only interest notified were that of a right of way and the description can’t be regarded as covering the transfer of an interest in land constituted by the actual transfer of the building

• It isn’t conducive to the purpose of the Act to establish indefeasibility to what is the notification of the creation of rights of way as going further and notifying an unmentioned transfer of land by reason of the reference to the instrument that effected the transfer and which only said that rights of way were created

• The transfer of land wasn’t notified

Barry v Heider (1914) 19 CLR 197

Facts (as set out in the judgement of Griffith CJ):

Barry (B) was the RP of land, a part of which was signed to Hector (H1) under a memorandum of transfer for 1200. An application was made to the R-G for a new COT but wasn’t issued when the transfer was executed. H1, through Messrs Gale & Gale (G) got a loan on security of the land from Heider (H2) for 800. H1 and his solicitor handed H2 the original transfer and a signed document authorizing the R-G to deliver the COT to G and on the faith of these documents the loan money was paid. Later Gale (G’) a member of G executed another mortgage for 400 in his favour on the land. None of these documents were registered due to issues with adjustments of boundaries.

The claim: B commenced action against S on the grounds that the land was obtained by a false and fraudulent representation for grossly inadequate consideration (he agreed to sell for 4000). He claimed an injunction against the registration of the transfer and a declaration that it was void. Before the judgement was drawn G found out about the suit and were entered as parties – they claimed equitable charges on the land and that B was estopped against them from disputing the validity of the transfer. In the courts below the injunction was granted and the transfer was declared void.

Griffith CJ:

Thought that the main contention was founded upon s2 (4) which states that all laws inconsistent with the Act were hereby repealed – he thought that this wasn’t apt to refer to the laws of the courts of equity. The further claim was that under s 41 no instrument until registered is effectual to pass any estate or interest in land; and that this was apt to refer to equitable interests.

• Griffith CJ then began to consider various provisions of the Act – particularly those dealing with the ability for trusts to be recognized and protected (s 82 requires the Registrar to lodge a caveat for all trusts declarations kept by him) ‘claims’ cognisable by a court of justice that is for ‘any estate or interest’ (s 72) and suits for specific performance (s 44) – all of which are clear protection of equitable rights

• “In my opinion equitable claims and interests are recognized in the Real Property Act

• Hence if there was a valid transfer between B and H1 it would confer an equitable right – and the transfer operated as a representation, as against B’s mere equity to have it set aside, of an assignable interest (that was now H1’s) as long as there is no notice of the equity from the person subsequently assigned the interest

• H2’s case rests not only on this representation but also the authorization of the COT to G – this gave H2 the power to register the transfer from B to H1 and then register H2’s mortgage to herself

• Hence B isn’t entitled to any relief against her except upon the terms of making good his representation

• As to G’s rights – they were subject to an unpaid vendor’s lien (an equitable right held by Barry) due to the existence of a caveat which was placed after the mortgage was made in favour of H2 but before that of G.

  • Though the caveat was withdrawn, because of G’s contact with the parties – he was obliged to inquire into whether or not B received the whole of the purchase price and the withdrawal of the caveat and the letter authorizing delivery was not a further representation that H1’s interest was not burdened by any other prior equitable interest

Result – Barry’s fee simple was subject to Heider’s mortgage; Gale was entitled to a mortgage subject to the unpaid vendor’s lien

Isaacs J:

His honour also agreed that s41 did not destroy equitable rights but on a different basis – first because it was opposed to accepted notions in Australia with regards to the Act as not destroying the fundamental doctrines of equity and secondly because the Act did not touch the form of contracts; by denying effects to instruments until registration, s 41 did not touch an rights that were behind it. These rights existed until statutory completion of the instrument as an instrument of title took place. Hence the question was to be considered under ordinary equitable principles.

• Isaacs J referred to the doctrines of estoppel and the innocent person doctrine (where if two innocent persons have to suffer for a third persons fraud then he who calls ‘an indiscretion’ has enabled the third person to commit the fraud and thus bears the loss)

  • He was of the opinion that this too was a form of estoppel – one who enables fraud is estopped by his conduct and precluded from asserting superior title

• Hence: Heider, lending her money to Hector believing and trusting the accuracy of Barry’s statements...