Tabula in naufragio (‘plank in a shipwreck’)

• if later equitable interest was acquired for value and without notice of the earlier, and if the holder of later interest subsequently acquires the legal estate in the land, then that holder can ‘squeeze out’ the earlier equitable interest by ‘tacking’ the later equitable interest onto the legal estate, allowing equitable interest to invoke priority. Usually applies to mortgages.

• exceptions: does not apply where later equitable interest holder knows that the transaction by which he or she acquires legal estate constitutes breach of trust by holder of legal estate (Saunders v Dehew)

Priority by registration
Scope of legislative provisions
General Register of Deeds

• s184C CA 1919: Requires Registrar-General to maintain a General Register of Deeds, open to public inspection (s199)

• To register instrument, original and copy are delivered to Registrar-General, the R-G gives instrument a reference, registration copy is retained by R-G and becomes part of register (s184C).

What can be registered?

Under s184D of CA 1919 the R-G may register ‘any instrument whatever, whether affecting or relating to land or not’, instrument defined in s7(1) to include deeds, wills and Acts of Parliament. However instrument that does not affect land is effective for purposes of record only (Re Christie 1968) this legislation only applies to old system title.

184E- if you give original copy to R-G they will register it according to register identification number.

184G(1)- first one on register wins, even if they had later interest.

Relevance of registration

Registration for validity: Div 1 of Pt 23 of CA 1919 does not require instruments to be registered for validity, but other legislation may require certain instruments to be registered

Registration for priority:

• CA 1919, s184G(1): registration may give an interest priority over a competing interest. S184G(1): an interest that would have taken priority over another interest under the general principles above will generally lose that priority if that other interest is registered first.

• Competing instruments: an interest created without an instrument being brought into existence is not defeated by later registration of an instrument affecting the same land.

• Wills: wills may be registered under the Act. However, registration confers no priority on a will (s184G(1)).

• Bona fides and notice: instrument claiming priority by registration must have been ‘executed and made bona fide’ under s184G(1). Bona fides means more than mere personal integrity or honesty (Wilde v Spratt); it also means absence of notice (Scholes v Blunt). Notice received after instrument is executed but before it is registered does not preclude priority by registration (Burrows v Crimp).

• Contracts for sale of land: in contract for sale, by paying the deposit the purchaser acquires an equitable interest only,  until purchase price paid.

• Valuable consideration: s184G(1) confers priority only on instruments executed or made for ‘valuable consideration’ (which includes marriage, but not nominal consideration). Nominal consideration is consideration so low as to be manifestly illusory (Bullen v a’Beckett)  eg. Not in fact paid or payable (Midland Bank v Green).
 
• Effect of registration: registration confers on the latter instrument a retroactive operation as against the earlier, giving the latter an efficacy that it would not otherwise have (Doe d Peacock v King). There is a limit: only for the purposes of priority does registration give a registered instrument greater efficacy, registration does not render effective an instrument impugned for fraud, mistake etc.

• Registered v unregistered: registered instrument takes priority over competing unregistered instrument.

• Registration as notice: registration does not give ‘notice’ of that instrument to the rest of the world (Mills v Renwick).

Registration of company charges

• Ch2K of Corporations Act provides for registration of charges over ‘property of a company’. Priority generally determined by order of registration with ASIC.

Deeds, s38 CA 1919

Common law requirements
• ‘a deed is a writing i) on paper, vellum or parchment, ii)sealed and iii)delivered, whereby an interest, right, or property passes, or an obligation binding on some person is created, or which is in affirmance of some act whereby an interest, right or property has passed’ (Norton, Deeds. Applied in Scook v Premier Building Solutions).

Sealing
• Any mark or impression on the paper sufficed if made with the intention of affixing a seal (Re Sandilands 1871).

Statutory provisions
Execution of deeds by individuals

• Manner of execution: s38(1) CA 1919: ‘Every deed…shall be signed as well as sealed, and shall be attested at least one witness not being a party to the deed; but not particular form of words shall be requisite for the attestation’.

• Witnessing: signature of each must be attested by someone who is not party to deed (Mostyn v Mostyn) + must be present when deed is executed.

• Sealing: can be satisfied without any seal actually affixed, s38(3) deems instrument sealed if it is :
 i) signed and attested in accordance with s38; and
 ii) expressed to be an indenture( a deed with 2 or more parties) or a deed, or expressed to be sealed.

• Delegation: an agent may be given authority to execute a deed on behalf of the principal, at common law this authority must be given by deed (Steiglitz v Egginton) but there is exception where authority is conferred by using short-form power of attorney under Powers of Attorney Act 2003 (NSW).

Execution of deeds by corporations

Manner of execution

• Under Corporations Act 2001 (Cth) corporations may continue to execute deeds under common seal. Under common seal, s127(2) of Corporations Act provides that document should be countersigned by 2 directors, or a director and company secretary.

• Under s127(1) a corporation may execute a document without using a common seal if document is signed by 2 directors or director and company secretary.

Protection of third parties

• Common law: ‘indoor management rule’ (Royal British Bank v Turquand) says if person dealing with corporation receives document bearing common seal, then person can rely on document’s validity (Re County Life Assurance Co) as company adheres to its constitution.

• S51A, CA 1919: S51A(1) protects a purchaser in good faith against the irregular execution of deeds by corporations. Deems a deed to have been duly executed by corporation if company’s seal has been affixed in presence of + attested by persons who purport to be company’s ‘clerk, secretary or other permanent officer…and a member of the board of directors…’

• Corporations Act, s129: this is like s51A but applies to all instruments and not solely deeds. S129(1) says person may assume that corporation’s constitution has been complied with. S129(6): person may assume that document has been duly executed by corporation if the corporation’s common seal appears fixed and fixing of common seal has been witnessed.

• Delegation: s126(1) read with s127(4) of Corporations Act permit a corporation to empower a person to execute deeds on its behalf, and a deed signed by that person on corporation’s behalf would bind corporation . under s51A(3) of CA 1919 a person authorised to assure property may assure property by executing deed (as provided by s38 CA), being as effective as if corporation had itself executed deed.

Delivery of deeds

• Deed only takes effect when ‘delivered’ (Styles v Wardle), which is any act/words showing that party executing deed regards it as a ‘presently binding’ (Xenos v Wickham), any act showing ‘an intention to be bound’ by the deed ( Vincent v Premo Enterprises).

Actual or constructive delivery

• Actual delivery: physically handing over the deed, being a question of whether grantor intended to part with dominion and vest that dominion and control in the grantee (Carson v Wilson).

• Constructive: without ever leaving executing party’s possession (Doe d Garnons v Knight).

Binding Effect

• Once delivered, party delivering cannot withdraw (Beesly v Hallwood Estates)
Date of deed.

• Where deed has date, presumed to operate from that date (Styles v Wardle).

• Where no date, presumed to operate from date of delivery (Glebe Administration Board v Tifan).

Conditional delivery: escrows

• A deed delivered unconditionally comes into effect immediately. Deed delivered conditionally-an ‘escrow’- does not come into effect until condition fulfilled.

• Condition need not be expressed in deed itself, can be imposed orally (Scook v Premier Building Solutions) or implied as where a deed of conveyance is delivered on implied condition purchase price be paid (Walker v The Ware).

• Where condition remains unfulfilled after a ‘reasonable time’, the appropriate remedy is to seek aid of equity to have deed delivered up to be cancelled (Federal Commissioner of Taxation v Taylor).

Delivery by agent

Deed may be delivered through agency of third person

Delivery by corporations

In recent decision, Bolton Metropolitan Borough Council v Torkington 2004, English Court of Appeal left question open as to whether sealing of deed by corporation prima facie imports delivery of the deed, but commented that by allowing seal to constitute delivery ‘may go too far’.

In NSW in Hooker Industrial Developments v Trustees of the Christian Brothers 1977 Helsham CJ in Eq held that s51A of CA merely protects purchasers against formal defects in the corporation’s constitution and that it neither dispenses need for delivery nor signifies that by sealing a deed a corporation delivers it, therefore this question of law remains a grey area.

Identifying documents as deeds

Whether instrument is deed depends on whether parties intended it to be a deed, seen from considering instrument’s form, substance and object as a whole. E.g. Whether document reflects phraseology + structure commonly found in deeds, and whether cast in most solemn form (Domb v Owler).

CASES

Walker (trust) v Linom
Early legal v later equitable

Walker sells property to trust. Beneficiaries were Walker for life then Mrs Walker. Solicitors acted for both Walker and the Walker trust. Solicitors took deeds from Walker but they didn’t get all of them. The last deed, the one that gave it to Walker, Walker kept it.
• Walker used the deed as security (which is not legal title being passed, it is not a contract for sale of land, just a security therefore equitable interest) to get loan. Loan was with Linom.
• Walker (early legal interest), Linom (later equitable interest)
- Legal wins unless there’s fraud, gross neg etc
- Fraud: did legal interest holder create fraud?  No because Walker trust didn’t commit fraud, Walker did (who was not current legal interest holder).
- Grossly negligent: Walker trust grossly negligent because they didn’t check for deeds
• Postponement awarded to Linom, equitable interest wins. 
• Even with agency, walker is still liable for actions of agent (i.e. solicitors)

Latec Investments v Hotel Terrigal

• Hotel Terrigal (mortgagor) have a loan with Latec Investments (mortgagee)
• Hotel defaulted on loan. Latec repossess and sell it (mortgagee sale). Sold it to Southern Hotels
• Latec broke the mortgagee sale rules. Held auction on wrong day, didn’t advertise properly, Latec sole owner of Southern Hotel and sold the property undervalue to Southern
• Southern then got a loan with MLC (mortgagee)
• Southern defaulted
• MLC wants to repossess
• Latec - don’t have legal interest, don’t have equitable interest
• Southern has legal title
• MLC has equitable interest (they have mortgage contract, not contract for sale of land, its just a security as there hasn’t been a title)
• Are MLC and Southern competing interests? No, because they are not in a competition, MLC should get property due to contract.
• MLC is later equitable
• Hotel Terrigal has no legal interest
• Terrigal have a right to sue (a chosen action in personum) Latec. It is not a proprietary right. Terrigal don’t have any proprietary interest (not legal or equitable)
• Hotel Terrigal, in mere equity, has been wronged by Latec. Right to sue in equity, but until you’ve actually sued and won in equity you cannot have equitable interest.
• MLC win, because there’s no competing interest.