Competing Equities

Question 1

Rice v Rice

Answer 1

If neither of the competing interests are registered then the interest first in time takes priority

Question 2

Emslie v Genuine Investments

Answer 2

Facts:
Emslie’s were caught up in scheme, transferred estate to Genuine but entered buy-back and tenancy agreement
Emslie’s first caveat lapsed, RS trust purchased the property and Emslie lodged another caveat to stop settlement
Held:
RS Trust had the better equity
Emslie was reckless in the original transfers and failed to lodge the caveat before the agreement was signed (not necessarily fatal)
RS Trust was not put on notice by the exitance of the caveat and did not know about the dispute so it was not reasonable for them to make inquiries

Question 3

Perkins v Purea

Answer 3

Facts:
Agreement between parents and daughter (J) to let her live in the house but continuing to pay the mortgage on the assurance that she would one day become the owner
June instructed solicitor to lodge a caveat but he failed to do so and her father sold the property quickly to Perkins
Prior to settlement, the caveat was lodged
Held:
June had an equitable interest (the condition of the sale was satisfied) which was given priority
Perkins was put on notice by the quick sale to inquire into competing interests
The fact that someone is in occupation may put someone on constructive notice
It was reasonable to assume that June’s lawyer had lodged the caveat

Question 4

Mercury Geotherm v McLauchlan

Answer 4

Facts:
M had lease and a first right of refusal of land owned by MGL (equitable interest)
Receivers were appointed who decided to sell the land to Contact Energy
Caveat was only lodged after the agreement for sale and purchase was signed
Held:
If a potential purchaser knows of facts that should put him on notice of the existence of another interest, they should take reasonable steps to verify if this exists (constructive knowledge)
Contact knew that M was in occupation, but this was not enough to put them on notice
M had not taken prudent measures to make interest known
The equities were balanced and Contact became the RO subject M’s lease

Question 5

Australian Guarantee Corporation v CFC Commercial Finance

Answer 5

Facts:
Dante had agreement to mortgage to AGC but did not take duplicate certificate of title
Dante later granted mortgage to CFC who saw there were no caveats
Afterwards, AGC made a caveat to stop CFC from registering
Held:
CFC had priority because although they were second in time, AGC’s failure to caveat and take the duplicate certificate was fatal
However, due to CFC’s delay of bringing proceedings it had to pay the first $55,000 of the land sale to AGC to cover the rest of their mortgage

Question 6

Frazer v Walker

Answer 6

Facts:
Mrs Frazer mortgaged the land to the Radomskis (registers) but forgered her husband’s signature
Mrs Frazer does not keep up with the payments and the Radomskis sell the land to the Walkers who try and get possession, alerting Mr Frazer to the problem
Held:
Confirmed immediate indefeasibility which protects against defects in the chain of title and forgery
The Walkers got indefeasible title
If you lose a registered interest under the Act you will get compensation through the LTA

Question 7

Gibbs v Messer

Answer 7

Facts:
Messer is the RO of freehold and leaves his affairs in the charge of his solicitor who is a rouge
The rouge forged Messer’s signature and transfers the land to a fictitious person
The solicitor then grants a mortgage through the fictitious person to the McIntyres
Held:
The court applied deferred indefeasibility and the McIntyres lost
S 51(4)(b) states that immediate indefeasibility applied even if the registered owner acquired the estate or interest from a fictitious person

Question 8

Limitations to Indefeasible Title

Answer 8

1) Fraud (s 52)
2) n personam claim (s 51)
3) Other enactments that override or limit the registered owner’s title (s 51)
4) Manifest injustice (s 55)

Question 9

Fraud (RO against Unregistered Interest)

Answer 9

s 6:
(2)(b) the owner of an unregistered interest, if the registered owner or registered owner’s agent, -
(i) in acquiring the estate or interest had actual knowledge of, or was wilfully blind to, the existence of the unregistered interest; and
(ii) intended at the time of registration of the estate or interest that the registration would defeat the unregistered interest

Question 10

Assets Co. Limited v Mere Roihi

Answer 10

For the fraud exception to apply, the RO must have been dishonest (willful will be sufficient but not the mere fact that if he had been more vigilant he would have discovered the fraud will not)

Question 11

Waimiha Sawmilling Co Ltd (In Liquidation) v Waione Timber Co Ltd

Answer 11

If the object of the transfer was to cheat a men of a known existing right, this is fraudulent
Fraud is established based on the specific facts of the case
The act must be dishonest, and dishonest must not be assumed solely by knowledge of an unregistered interest

Question 12

Burnmeister v O’Brian

Answer 12

Facts:
Burnmeister’s got caught in a scam, transferring ownership
Using forged signatures, the land was then sold to the O’Brian trust and ASB got a registered mortgage
Held:
The O’Brian trust knew that the Burnmeisters were being cheated out of their title and acted dishonestly to further this
Because of the mortgage (ASB was not fraudulent), the O’Brian trust would hold the property on constructive trust with the purpose of transferring it back after compensation under the LTA had discharged the mortgage

Question 13

Efstratiou

Answer 13

Facts:
E was the RO of the family home but the wife had contributed half the deposit (had an equitable right in the house)
The marriage broke down and E quickly sold the property for a lower price and within a few days
Held:
Willful blindness arose from the fact that they agreed to buy a property that they had not seen, at a discounted price and very quickly
And honest person would have made more inquiries
E had been dishonest and tried to defeat his wife’s unregistered interest
The purchaser was removed from the register and the wife was put on

Question 14

Satnam Investments

Answer 14

Facts:
Satnam has a lease and first right of refusal
RO decided to sell, triggering right of first refusal, but they sold to the Worgers
After settlement but prior to registration the Worgers found about about the ROFR but there was not caveat
Satnam lodged a caveat but this lapsed and the Worger’s believed the conflict between Satnam and the original RO had ended to they registered
Held:
This was not LTA fraud because they were entitled to take the veiw that Satnam was no longer pursuing the issue (legal advice) and through their registration they were not seeking to deprive Satnam of their interest

Question 15

Bunt v Hallinan

Answer 15

Facts:
Hallinan was purchasing land and knew that the Bunts had some sort of agreement to lease over the shed
Their solicitor said there was no caveat and they could settle (the solicitor did not believe this was fraud)
Held:
Majority concluded that Hallinan was okay to rely on their solicitor’s advice so there was no LTA fraud
Just because someone gets legal advice, does not mean they can ignore their own knowledge that points to an unregistered interest

Question 16

Tuscany v Gill

Answer 16

Facts:
Gill had a lease with a demolition clause that could not be used for 6 years
The building was sold to Tuscany who was aware about the delay of the demolition clause
Tuscany argued that because the lease needed to be renewed, the delay clause had terminated and he could demolish the building
Held:
Tuscany had committed LTA fraud
Tuscany knew about the delay clause and was under a duty as an honest person to honour his assurance that the plaintiff would demolish the building for 6 years
Tuscany’s representation to Gill that he would not act against the demolition clause gave rise to estoppel (Gill had relied on this)
This was sufficient for an in personam claim

Question 17

Elements of In Personam Claim

Answer 17

1) Must not undermine the objectives of the Act/Torrens System
2) Must involve unconscionable conduct of the current RO
3) Is available only for known causes of action (legal or equitable)

Question 18

Potts v Anderson

Answer 18

Facts:
Potts sells water reservoir to Andersons but the Andersons grant Potts access to the water
This was too informal to be an equitable interest
Anderson’s transferred the land to their trust and claimed because there were new ROs who obtained the title without fraud
Held:
The in personam claim was upheld as the Andersons had taken on an obligation to grant the equitable easement and had sold the land without the intention of going through with it
There was no evidence to suggest that this grant would interfere with the trust

Question 19

Smith v Hugh Watt Society Inc

Answer 19

Facts:
Members of the Labour Party were the ROs of a hall and created the Hugh Watt Society to be the ROs of the hall
Solicitors were worried that the Hugh Watt Society would no longer use the hall for be benefit of the local members (they did not)
Held:
The change of rules by the Hugh Watt Society was a breach of the oridinaly trust
Courts used an in personam claims to impose an obligation on the Hugh Watt society to recognise the original trust

Question 20

CN & NZ Davis Ltd v Laughton

Answer 20

Facts:
Son owned debt to Davis so the son’s parents granted a mortgage over their house
Son’s business gets into trouble and Davis wants to enforce the mortgage but the second document was registered with an unauthorised variation
Held:
This was unconscionable conduct as an honest person would not have registered the mortgage with the unauthorised variation
The court used the in personam claim to preclude davis from using the power of sale (injunction granted)

Question 21

Dollars & Sense Finance v Nathan

Answer 21

Facts:
Son gets loan from Dollars and Sense and grants security over his parents house
He gets his fathers signature bute forges his mothers
Held:
An in personam claim must not undermine objectives of the LTA system (there can’t just be fraud, there must be unconscionable conduct)

Question 22

TTWMA

Answer 22

Non-compliance with TTWMA is rarely an exception to indefeasibility

The indefeasibility provisions of the LTA are necessarily overridden by the relevant provisions of the Te Ture Whenua Act
However, the LTA is still the key Act because Parliament had not indicated that the other Act should take precedent and it would have major implications for the LTA

Question 23

Mercury NZ Ltd v Māori Land Court

Answer 23

Facts:
A claim over parts of the Waikato River as Māori Customary land which was owned by Mercury
Held:
It was arguable that Te Ture Whenua overrides the LTA in regards to Māori customary land (higher protection then the freehold)

Question 24

Barrow v Phillips

Answer 24

Facts:
Phillips transferred (gifted) a block of Māori freehold land to a Society but this was challenged on the basis that it should have first been offered to the preferred class of alienees
Held:
Non-compliance with the TTWMA is not itself an exception to indefeasible and there was no fraud

Question 25

Manifest Injustice

Answer 25

s 54: Application to court for order for alteration of register
(1) This section and sections 55 to 57 apply to a person (person A) who-
(a) has been deprived of an estate or interest in land by the registration under a void or voidable instrument of another person (person B) as the owner of the estate or interest in the land; or
(b) being the owner of an estate or interest in land, suffers loss or damage by the registration under a void or voidable instrument of another person (person B) as the owner of an estate or interest in the land

Question 26

Mau Whenua Incorporated v Shelly Bay Investments ltd

Answer 26

Facts:
Seeking to uphold a caveat against the new RO
Held:
The RO had registered without fraud causing their interest to be destroyed
S 54 only applies when the instrument is void or voidable (the instrument was valid in this case)

Question 27

Scott v Rawenata

Answer 27

Facts:
There was an error causing the land to be transferred wrongly to another person
Held:
The instrument does not need to be void or voidable, just the transaction be a mistaken registration