2. Constructive Notice
•    Notice of things that would have come to your attention if you made the inquiries a prudent person in your position would have made
•    ‘Objective’ Test
•    A person who knows any person is occupying the property – whether or not a tenant, and whether or not the vendor is occupying the property – ought to enquire (of both the vendor and the occupant) what rights the occupant has in the property

A purchaser ought to seek out all occupants and users of the land and enquire of them (and of the vendor) what their rights are, on the pain of being fixed with notice of those rights
•    Clyne v Lowe
•    Sometimes called the rule in Hunt v Luck

Failure to seek out all occupants and users of land (as above Clyne) puts the purchaser on notice of the occupant’s rights, including rights to an equitable interest in the property
•    William & Glyn’s Bank v Boland

Overt use of a right of way puts a purchaser of the servient land of constructive notice of the dominant owner’s rights to use the way
•    Jensen v Hawksley

Applicable Statute Law regarding constructive notice:

•    Purchaser (anyone who acquires an interest in a property for valuable consideration) is not affected prejudicially by notice of any instrument, fact or thing unless it is within the purchaser’s own knowledge, or would have come to the purchaser’s knowledge had the purchaser made searches, inquiries and inspections as he or she ought reasonably to have made
o    Section 164 Conveyancing Act

•    Purchaser is not affected with notice of matters that would be discoverable by an investigation into the title earlier than the good root of title at least 30 years old, unless the purchaser actually makes such an investigation
o    Section 53(3) Conveyancing Act

3. Imputed Notice
•    Notice that an agent has received for their principal
•    Can be imputed to the principal regardless of whether the agent has actually passed it on
•    Also applies whether the agent has actual or constructive knowledge

Imputed notice for any instrument, fact or thing is precluded unless, in the same transaction in which the question of notice arises, knowledge of the instrument, fact or thing has come to the agent or would have come to the agent if the agent had made such searches, inquiries and inspections as he or she ought reasonably to have made
•    Section 164(1)(b) Conveyancing Act

Prior legal interest followed by equitable interest

Postponing Conduct

Legal interest prevails, except:
(i)    If legal mortgagee committed fraud which led to the creation of the equitable interest, the equitable interest prevails
    -    Northern Counties of England Fire Insurance Co v Whipp
(ii)    Where legal interest holder, although not fraudulent, was grossly negligent in failing to inquire after, obtain or retain possession of the title deeds to the land, thereby allowing another person to pose as the legal owner and create later interests in the land
    -    Walker v Linom
o    Mere carelessness is not sufficient to postpone:
    -    Negligence must be gross
•    Evans v Bicknall
    -    In the sense of being so culpable as to make it inequitable for the legal holder to rely upon the interest against an equitable interest that would not have been created but for the condict concerning the deeds
•    Walker v Linom
(iii)    If legal interest consents to later equitable interest prevailing
(iv)    Where legal interest holder handed another person a document appearing to give that other a beneficial interest in the land an that other purported to create an equitable interest in favour of a third person, who relied on the document
•    Walker v Linom

•    Background to cases (Cases next page):
o    Legal mortgage usually takes possession of title deed to protect themselves
o    Under old system, title deeds often included documents going back many years
    -    Therefore, often included hundreds of pages of material

•    Northern Counties of England Fire Insurance Co v Whipp (1884) 26 Ch D 482
o    FACTS
    -    Company manager borrowed money from company by way of mortgage (Company becoming legal mortgagee)
    -    Company took title deeds and locked them in a safe
    -    Manager removes deeds and used them to raise money on another mortgage (Which can only be equitable)
    -    Equitable mortgagee claimed legal mortgagee was negligent, and therefore legal mortgage should not be honoured before the equitable one
o    HELD
    -    Negligence and carelessness does not postpone the earlier legal mortgagee to the later equitable mortgagee
    -    Only gross negligence will suffice
•    Company negligent but not grossly negligent
•    Legal mortgagee not postponed

•    Walker v Linom [1907] 2 Ch 104
o    FACTS
    -    Person who had legal mortgage failed to get hold of all of the title deeds
    -    Owner used remnants to raise mortgage with third party
o    HELD
    -    Earlier legal mortgage was postponed to later equitable mortgage
•    Where legal mortgagee entrusted title deeds to agent with authority to raise small amount
of money by giving a security intended to bind legal interest, if agent created a security for a larger sum with a person who had not notice of the limitation
o    Legal interest bound by the interest created to its full extent
•    Where legal mortgagee does not part with title deeds, but gives another person a document appearing to give that other person a beneficial interest in the land, or the right to acquire the legal interest, and that other person purported to create an equitable interest in favour of a third person, who took on the faith of the document
 
Statutory regimes on priorities

•    Optional old register system after 1820s afforded priority for interests that were registered over interests that were not registered
o    Overturns common law method of prioritising
o    Now, first to register gets priority
    -    Under section 184G and applied in Goodwin v Fuller

Section 184G Conveyancing Act: The instrument registered first prevails subject to two requirements:
(i)    For ‘valuable consideration’
•    Consideration may be valuable despite being inadequate
    -    Gannon v Spinks
    -    Can even be grossly inadequate, as long as it is not so inadequate to be nominal only
o    Nominal consideration is consideration that is:
    -    So low as to be manifestly illusory
•    Bullen v a’Beckett
    -    Fictional in the sense of being declared by the instrument to be consideration but not in fact paid or payable
•    Midland Bank Trust v Green

(ii)    ‘Bona fide’ and without notice
o    Bona fide means ‘in good faith’
    -    Which in Australian law is ‘without notice’
o    Motives must not be fraud or deceit
o    Connotes more than mere personal integrity or honesty
    -    Wilde v Spratt
o    Not bona fide if person taking it had notice of the earlier interest over which priority is sought by registration
    -    For purposes of this section
o    Notice may be actual, constructed or imputed
    -    Scholes v Blunt
o    Eg purchaser who takes knowing that someone other than the vendor is in possession of the land, but fails to inquire into the possessor’s rights is fixed with notice of those rights, and cannot defeat them by registration
    -    Marsden v Campbell
o    Mortgagee who takes knowing that some portion of the land has been contracted to be sold to a purchaser, but fails to inquire which portion, cannot by registration defeat the purchaser’s rights
    -    Sydney and Suburban Mutual Building v Lyons
o    Notice received before an instrument is executed precludes the instrument from gaining priority by registration
    -    Jones v Collins
o    Notice received after the instrument is executed but before it is registered does not preclude it from gaining priority by registration
    -    Scholes v Blunt (1916) 17 SR (NSW) 36

Relevant time of knowledge is at time of conveyance
•    Scholes v Blunt (1916) 17 SR (NSW) 36
o    FACTS
    -    Unregistered right of way
    -    Purchaser had no notice of the arrangement when he signed a contract which, not being a proprietary agreement, only constituted an equitable exchange
    -    At time of legal conveyance of fee simple he had notice
    -    Issue whether this would allow registration to apply
o    HELD
    -    Did not allow registration, as at time of conveyance the purchaser knew of the interest

Limitations to the Conveyancing Act, Section 184G
Legislation only relevant when there are competing instruments
•    It is possible for two registered (or even one registered and one non-registered) interests to stand together

Instruments do not mean ‘interests’
•    You can have an interest without an interest
o    Eg mortgage on title deed without a signed document
    -    Equitable interest
o    Eg legal lease without an instrument that is less than 3 years old
    -   See section 23D of Conveyancing Act
•    Only applies to interests embodied in, or evidenced by instruments
o    Interest created without instrument is not defeated by the later registration of an instrument affecting the same land
    -    Ie legal instrument will not prevail over legal instrument as a consequence of registration
    -    Usual common law principles apply

Registration gives strict priority even to an equitable interest over a legal one
•    Eg if Owner grants legal interest to A, then later to B, who grants interest to C
o    If C is the first to register, he obtains the right over A
•    Moonking Gee v Tahos [1963] SR (NSW) 935
o    FACTS
    -    Tahos owned Old system titled property
    -    Sold to purchaser A and contract exchanged
    -    Tahos exchanged contracts to sell land with another purchaser
•    Conveyance officially completed, but never registered
    -    First purchaser found out about situation and rushed off and registered contract
o    HELD
    -    By registering the contract first, the equitable interest prevailed over the legal interest
    -    Second purchaser had to give up his legal interest
o    NOTE: Under Torren’s system, registration confers priority but it also goes further to validate interests that are otherwise invalid
    -    Even a forgery van be cured by registration
    -    This could never happen under the old system