Section 43A

1. Section 43A Cameron Stewart Version 2

2. Section 43A On completion of the contract for sale of land and before registration the purchaser has less rights than they would have under the old system as they only have an equitable interest which is subject to any earlier equitable interest (even though they may have taken the interest for value and without notice) – under old system they would have had the legal estate provided they took that estate without notice of earlier interests and for value. (c) Cameron Stewart 2005

3. Section 43A To remedy this defect in the RPA s43A bestows upon such a purchaser of Torrens land the same rights as they would have under old system – that is the section declares that they take a legal interest after sale but prior to registration. Therefore s 43A allows a purchaser of an interest in land, who takes for value and without notice, to get a legal estate – thus protecting him or her against earlier equitable interests (c) Cameron Stewart 2005

4. Wording • (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.

5. Section 43A and equity’s darling • Eg if A buys land from B for value and without any knowledge of the prior equitable interest of D, under s 43A A will take the legal estate and D’s interest will be defeated. If before registering his interest, A then executes a mortgage to C, C’s interest will still take priority over D’s, even if C had notice of D’s interest. (c) Cameron Stewart 2005

6. Section 43A and equity’s darling • IAC (Finance) Pty Ltd v Courtenay (1963) 110 CLR 550 • Courtney bought land off Mrs Austin for 15000 pounds. 3000 was paid as deposit and the rest was secured by a mortgage back to Mrs Austin. • The documents were not lodged for registration until seven months after settlement. Mrs Austin's solicitor had retained these documents to allow the mortgage to be registered. Later Mrs Austin and the Courtney's agree that Mrs Austin would buy the land back. The original transfer and mortgage had not been registered by this time. (c) Cameron Stewart 2005

7. Section 43A and equity’s darling • Before the second sale was registered Mrs Austin agree to sell the land to Denton Subdivisions Pty Ltd. She did this without the Courtney's knowledge. Mrs Austin's solicitor uplifted the original sale and mortgage documents from the RG. When the sale to Denton was being settled a question was asked about why these documents had been uplifted. Mrs Austin's solicitor lied and said it was part of a deal to finalise the resale back to Mrs Austin. A copy of the second contract for sale was produced as evidence. Denton's purchased was financed by IAC as mortgagee. The documents were lodged by IAC but before they were registered the Courtney's commenced their action (c) Cameron Stewart 2005

8. Section 43A and equity’s darling • Held: the Courtney's were entitled to registration. • Unregistered interests are equitable. The effect of s 43A is to confer a legal interest on an equitable interest, to put it into the position of protected received by a bona fide purchaser for value without notice. • Why did IAC fail? (c) Cameron Stewart 2005

9. Must have possession of the CT • Finlay & Ors v R & I Bank of Western Australia (1993) NSW ConvR 55-686 • A was a company and was registered proprietor of fee simple in a property at Taree; • The Commonwealth Bank was registered on title as charge holder and had the CT. • 1988 – A gave a charge over the land to the Bank of WA. Bank of WA did not register their charge on Torrens but did register it on the register of company charges maintained by ASIC. (c) Cameron Stewart 2005

10. Must have possession of the CT • A gave a charge to Finlay; Finlay had no notice of the existence of the Bank of WA’s charge and did not search the ASIC register – only the Torrens register. • Finlay reaches settlement and goes to register. While Finlay is getting the CT from the Commonwealth Bank, the Bank of WA lodges a caveat. • Two competing equitable interests. Finlay argues that they are protected by s 43A and therefore should be able to proceed to registration. To show that Finlay is protected by 43A Finlay had to show: • the purchaser has a "legal estate" • the purchaser has a "registrable dealing" • the purchaser is dealing with an RP (c) Cameron Stewart 2005

11. Must have possession of the CT • Does Finlay have a legal estate? Is Finlay without notice? WA Bank argued that registration of the charge on the company register was constructive notice so this denied Finlay the protection of 43A – Court rejected this argument as there is no conveyancing practice of checking the company register and this would be inimical to the clear meaning of the Torrens system that you just have to check the Torrens register: “it is likely that Mr Torrens would turn in his grave to think that any such search could possibly be thought to be necessary for land under the system devised by him” (per Windeyer J at 59,925). (c) Cameron Stewart 2005

12. Finlay & Ors v R & I Bank of Western Australia (1993) NSW ConvR 55-686 • So, if Finlay got to settlement and had a registrable dealing, he’d have a legal estate as no notice. Does Finlay have a registrable dealing? • Court held no. At the time the caveat was lodged and notice was given, Finlay had not yet got the CT from the first mortgagee so was not ‘registrable’. (c) Cameron Stewart 2005

13. Section 43A and equity’s darling • Kitto J - the fact that the solicitor withdrew the registration without authority meant that s 43A did not give priority to IAC • Taylor J (similar to trial judge Hardie J) - The ordinary rules of priority apply. IAC had notice of the equitable interest of the Courtney's hence they could not satisfy the rule. • Dixon - an unauthorised withdrawal was not a withdrawal and was ineffective. Hence the conflict was between an early registrable interest and a later registrable interest. Section 43A meant that two registrable dealings would be determined by the first in time rule (c) Cameron Stewart 2005

14. Section 43A and equity’s darling • Taylor J’s interpretation was endorsed by a unanimous High Court in Meriton Apartments Pty Ltd v McLaurin & Tait (Developments) Pty Ltd (1976) 133 CLR 671; 10 ALR 296. (c) Cameron Stewart 2005

15. Immediately registrable? The interest purchased must had been effected by a “dealing registrable” that is you must be able to lodge the dealing for immediate registration (c) Cameron Stewart 2005

16. Immediately registrable? • Weller v Williams [2010] NSWSC 716 • The Williams family owned a property at Kurrajong • Weller was their solicitor. A charge was given to him concerning fees owed. A right to lodge a caveat was also given as part of the agreement • The property was subject to a registered to Permanent Mortgages Pty Ltd dated 6 March 2008 • In June 2009 the Williamses contracted to sell the land to the Xerri family and the property was settled on 21 September 2009. The Xerri agreed to mortgage the and to the Bank and the Bank received the CT, discharge of the Permanent Mortgage, transfer from W to X, and the Mortgage dealing from Z to the Bank. • Weller became aware of the agreement and Iodged a caveat on 29 September 2009 • On 6 October 2009 the bank tried and failed to register the documents • A lapsing notice was served

17. Immediately registrable? • Weller argued that the Xerries did not have an immediately registrable dealing • Ball J: • 18 In my opinion, this argument is a misapplication of the principles stated by Taylor J and HardieJ [in IAC Finance]. Mr and Mrs Xerri’s interest in the Property derives from the transfer executed by the first and second defendants as the registered proprietors. The transfer is immediately registrable because the interest that is sought to be registered is derived immediately from the person who is entitled to grant it. It is true that, if it is registered in that form without a discharge of the mortgage to Permanent Mortgages, then Mr and Mrs Xerri would take their interest subject to that mortgage. But that does not mean that the transfer is not immediately registrable. Nor does the fact that Mr and Mrs Xerri may not be prepared for the transfer to take place in those circumstances; or that a transfer in those circumstances may be a breach by the first and second defendants of their obligations under that mortgage. The requirement that the interest be in registrable form goes to the characteristics of the instrument, not whether or not the parties would want it to take effect in certain circumstances.

18. Immediately registrable? • Did the Bank have an immediately registrable interest? No • 19 The position is different in the case of the Bank. It takes its interest from Mr and Mrs Xerri, who are not the registered proprietors. Consequently, in accordance with the principles stated by Taylor J in IAC Finance v Courtenay[1963] HCA 64; (1963) 110 CLR 550, it is not entitled to the benefit of s 43A. However, I do not think that that conclusion assists the plaintiff. The plaintiff is not entitled to prevent the registration of the transfer to Mr and Mrs Xerri, since their interest takes priority over his. Immediately on registration of their interest, the Bank is entitled to register its mortgage. Mr and Mrs Xerri’s interest is an interest that will have the effect of extinguishing the plaintiff’s interest in the Property: see s 42 of the Act. It follows that the mortgage to the Bank cannot be subject to that interest either.

19. Transfers by direction • Jonray (Sydney) Pty Ltd v Partridge Bros Pty Ltd (1969) 89 WN (NSW) Pt 1) 568 • M contracts to sell land to J. At the date of the contract M was not the registered proprietor but was a purchaser of the land in a contract from A. The land was subject to a mortgage to B. To settle the sale to J M intended to hand over the transfer of the land to J, executed by A at the direction of M, in conjunction with a discharge of mortgage executed by B. J was not happy with this arrangement and said that it wanted to receive the title from M. J wanted the mortgage discharged before the settlement. J sought to rescind the contract. However it had not lodged its objections within the time period for the making of objections to title. The issues were whether a purchaser could refuse a transfer by direction and whether it could require the title free from incumbrances. (c) Cameron Stewart 2005

20. Transfers by direction • The court found that the purchaser could not object to the sale by direction as it was still a sale from the registered proprietor. A purchaser received the same protection as a purchaser taking directly from a registered proprietor. • As for the objection to the discharge of mortgage, the court found that the purchaser could not object as uon registration it would receive indefeasible title. After completion or prior to registration the purchaser was protected by s 43A against any defects of which it had no notice. (c) Cameron Stewart 2005

21. Defects in the dealing • The instrument cannot be a forgery. Nor can a person who obtains an interest by fraud gain the protection offered by s 43A • Diemasters Pty Ltd v Meadowcorp Pty Ltd (2001) 52 NSWLR 572 (c) Cameron Stewart 2005

22. Defects in the dealing • In both Jonray (Sydney) Pty Ltd v Partridge Bros Pty Ltd (1969) 89 WN (NSW) Pt 1) 568 and Mayer v Coe (1968) 88 WN (NSW) (Pt 1) 549 it was suggested that if notice of a void instrument was received after completion of the transaction but before its registration, the true proprietor could prevent registration of it by obtaining an injunction to prevent registration. (c) Cameron Stewart 2005

23. Prompt lodgement • In Diemasters Pty Ltd v Meadowcorp Pty Ltd, at 581, Windeyer J said: • [Section 43A] envisages that a dealing will be lodged for registration. Its purpose is to assist a party who lodges a dealing for registration, not to assist one who makes no effort to get protection of registration. • In that case his Honour held that s 43A protection was not available to a person who had taken no steps to get registered within a period of fourteen months after settlement of the transaction. (c) Cameron Stewart 2005

24. Stamp duty? • The fact that the holder of an unregistered instrument has not, at the time of settlement of the transaction, paid the relevant stamp duty and had the instrument stamped by the Office of State Revenue does not mean that such a holder is not able to obtain the protection offered by s. 43A: Diemasters Pty Ltd v Meadowcorp Pty Ltd [2001] NSWSC 495 at para 22. • BUT – Duties Act 1997 s301, implies documents void ab initio • Westpac Banking Corporation v Ollis [2008] NSWSC 824 at [47], per Einstein J (c) Cameron Stewart 2005

25. Purchaser? • Westpac Banking Corporation v Ollis [2008] NSWSC 824 at [47], per Einstein J • Complicated litigation – numerous properties and fraud • One party, Docos Estate claimed a s43A interest • Einstein Jfound that s 43A did not apply

26. Purchaser? [49] Section 43A only applies where the registrable dealing is taken by the purchaser for value and without notice: Meriton Apartments Pty Ltd v McLaurin & Tait (Developments) Pty Ltd[1976] HCA 30; (1976) 133 CLR 671 per Barwick CJ, Mason & Jacobs JJ. The protection it extends prior to registration is therefore not the equivalent of the immediate indefeasibility provided upon registration by section 42, but it permits the purchaser to rely upon the common law doctrine of purchaser for value without notice which doctrine otherwise has little role to play with respect to Torrens land: see Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd[1998] 3 VR 133 at 151 per Tadgell JA, Winneke P agreeing; and Meagher, Heydon & Leeming, Meagher, Gummow & Lehane’s Equity, Doctrines & Remedies 4th edition, 2002, at [8-295]. • 50 Docos Estate has failed to adduce sufficient admissible evidence that it has paid anything to the vendor Mr Ollis such that it could be said to be a purchaser for value.

27. Notice? • Finlay & Ors v R & I Bank of Western Australia (1993) NSW ConvR 55-686 • Does Finlay have a legal estate? Is Finlay without notice? WA Bank argued that registration of the charge on the company register was constructive notice so this denied Finlay the protection of 43A – Court rejected this argument as there is no conveyancing practice of checking the company register and this would be inimical to the clear meaning of the Torrens system that you just have to check the Torrens register: “it is likely that Mr Torrens would turn in his grave to think that any such search could possibly be thought to be necessary for land under the system devised by him” (per Windeyer J at 59,925). (c) Cameron Stewart 2005

28. Notice? • Section 43A • (2)  No person contracting or dealing in respect of an estate or interest in land under the provisions of this Act shall be affected by notice of any instrument, fact, or thing merely by omission to search in a register not kept under this Act. (c) Cameron Stewart 2005

29. The successive effect Successive effect – recall priority rule earlier equitable v later legal – bona fide purchaser for value without notice and the extension on that principle – egWilkes v Spooner - later purchasers who buy the original purchaser’s interest with notice are protected by the original purchaser’s title – to allow the purchaser the full right to deal with the property as he or she wishes (c) Cameron Stewart 2005

30. The successive effect • Eg A buys an estate of B, for value and without notice of C’s earlier equitable interest in the property – A takes priority – if a then sells to D and D knows of C’s interest he can still take priority over C • So too does s 43A have this “successive effect” (c) Cameron Stewart 2005

31. Black v Garnock (2007) 230 CLR 438 • Creditors obtained a judgment in the District Court of New South Wales for a money sum against the judgment debtor • The judgment debtor was the registered proprietor of some farming land comprised in three folios • Some months after the judgment creditors obtained judgment against the judgment debtor, but before the issue of any writ of execution, the judgment debtor agreed to sell the land to the first to fourth-named respondents ("the purchasers"). • The contract of sale was completed at about 2.00 pm on 24 August 2005. The purchasers paid the balance of the purchase price to or at the direction of the vendor of the land, the judgment debtor. The judgment debtor, as vendor, gave the purchasers: • memorandums of transfer, • discharges of mortgages, and • Surrender of current lease (c) Cameron Stewart 2005

32. Black v Garnock (2007) 230 CLR 438 • At about 9.00 am on settlement day, the purchasers' solicitors obtained a title search with respect to the land. • No unexpected encumbrance. • 30 mins after that search was made, the solicitor for the judgment creditors notified the purchasers' solicitors that the judgment creditors had an unsatisfied judgment against the • A charging order had been obtained a in respect of the deposit that had been paid under the contract of sale. (c) Cameron Stewart 2005

33. Black v Garnock (2007) 230 CLR 438 • At about 11.53 am on that day (2 hours before the settlement) a writ of execution, issued out of the District Court of New South Wales was recorded in the Register • Sec 105(2) of the RP Act permitted the Registrar-General to "record a writ in the Register pursuant to an application in the approved form". Section 105(1) provided that "[a] writ, whether or not it is recorded in the Register, does not create any interest in land under the provisions of this Act". • Transfers could not be registered (c) Cameron Stewart 2005

34. Black v Garnock (2007) 230 CLR 438 • Gummow and Hayne JJ held that s 43A ‘confers upon a purchaser who has received a registrable instrument and paid the purchase money the same protection against notice of an earlier unregistered interest as that achieved by a purchaser who acquires the legal estate at common law’. (c) Cameron Stewart 2005

35. Black v Garnock (2007) 230 CLR 438 • The effect of the registration of the writ of execution overrides the interests held by the purchaser. At [33] • Furthermore, to speak of the purchasers' rights as having "priority" over the writ or the rights of the judgment creditors imposes upon the debate an assumption, contrary to the explicit terms of the Act, that there is some competition between the holders of different interests in land. Section 105 of the RP Act makes plain that a writ, whether or not recorded in the Register, does not create any interest in land. Hence counsel placed no reliance upon s 43A of the RP Act[24]. As interpreted in Meriton Apartments Pty Ltd v McLaurin & Tait (Developments) Pty Ltd[25], the section confers upon a purchaser who has received a registrable instrument and paid the purchase money the same protection against notice of an earlier unregistered interest as that achieved by a purchaser who acquires the legal estate at common law. In the present case, there is no competition between unregistered interests and the unregistered interest of the purchasers cannot defeat the statutory consequence of the earlier recording of the writ. (c) Cameron Stewart 2005

36. What if s 43A doesn’t apply? • The go back to competing equities • HeggiesBulkhaul v Shirlaw[2004] NSWSC 805