IAC (Finance) Pty Ltd v Courtenay
110 CLR 550(Judgment by: Dixon CJ)
IAC (Finance) Pty Ltd
vCourtenay
Judges:
Dixon CJKitto J
Taylor J
Case References:
Abigail v Lapin - (1934) AC 491; (1934) 51 CLR 58
Baker's Creek Gold Mining Co v Hack - (1894) 15 LR (NSW) Eq 207
Barry v Heider - (1914) 19 CLR 197
Butler v Fairclough - (1917) 23 CLR 78
Cowell v Stacey - (1887) 13 VLR 80
Currey v Federal Building Society - (1929) 42 CLR 421
Dixon v Muckleston - (1872) LR 8 Ch 155
Great West Permanent Loan Co v Friesen - (1925) AC 208
Lapin v Abigail - (1930) 44 CLR 166; (1934) AC 491; (1934) 51 CLR 58
Oertel v Hordern - (1902) 2 SR (NSW) Eq 37
Phillips v Phillips - (1861) 4 De G F
&
J 208
Privy Council in Abigail v Lapin - (1934) AC 491; (1934) 51 CLR 58
Rayner v Preston - (1881) 18 Ch D 1
Ridout v Fowler - (1904) 1 Ch 658
Templeton v Leviathan Pty Ltd - (1921) 30 CLR 34
Wall v Bright - (1820) 1 Jac
&
W 494 (37 ER 456)
Walsh v Alexander - (1913) 16 CLR 293
Judgment date: 20 December 1963
Judgment by:
Dixon CJ
These are three appeals heard together from a decree of the Supreme Court of New South Wales in Equity. The decree was pronounced by Hardie J in a suit for the enforcement of rights depending upon a contract for the sale of land. The plaintiffs, who were the respondents in the appeals, consisted of three persons named Courtenay and one named Victor Butler. Mr Butler died and has been replaced as a party, if I understand the matter correctly, by Norma Mary Agnes Butler. (See affidavit by Norma Mary Agnes Butler sworn on 28th June 1962.) Among the defendants who were respondents to the appeals, Miss Thelma Valette Austin, a defendant, died on 6th February 1962. By an order dated 13th August 1962 Mr John Anthony Park Nelson was appointed to represent all persons interested in her estate in these appeals.
Miss Austin was entitled as registered proprietor to an estate in fee simple in the land sold. It consisted of fifty-two or fifty-three acres. It appears that on 24th February 1958 she executed a contract of sale of her land, which is the subject of these proceedings. The four plaintiffs (ie the three Courtenays and Victor Butler) were the purchasers. Some days before 24th February 1958 she had received a preliminary deposit of £ 100 on the sale. The purchase price named in the contract was £ 15,000 and the terms contained in the contract were that £ 3,000 should be paid as deposit, and that the balance of the purchase money would be payable within three years, bearing interest at six per cent. The purchasers would place in the hands of the agent a cheque for £ 3,000 by way of deposit and the balance was to be secured by mortgage back to the vendor. The contract said the mortgage should contain the usual terms and conditions and be prepared by the vendor's solicitor at the expense of the purchasers. It should be a mortgage for three years and of course interest was provided for. Endorsed on the contract is a receipt for payment of £ 3,000 in cash by Mr Hector Lewis Courtenay, one of the plaintiffs. W T Easton & Co were the vendor's firm of solicitors and Mr W T Morck was the purchasers' solicitor. A transfer was executed by the registered proprietor, Thelma Valette Austin, in consideration of £ 15,000 paid to her, the receipt whereof she thereby acknowledged. The transfer was to the four plaintiffs (three Courtenays and Victor Butler) of her whole estate and interest in the land. The transfer is expressed to be signed at Sydney on 23rd July 1958 by the transferor Thelma Valette Austin in the presence of W T Easton, solicitor, and it is accepted and verified as correct by Mr W T Morck, solicitor to the transferees. The evidence shows that Easton lodged the memorandum of transfer and the mortgage back for registration at the Lands Titles Office but that he withdrew them on 16th September 1959. On the day following the withdrawal, namely 17th September 1959, a contract of sale was made between the defendant appellant Denton Subdivision Pty Ltd and the vendor whose name though left blank in the particulars is given as T Austin, witnessed by W T Easton as her solicitor. The vendor's solicitors are given as W T Easton & Co The whole amount of the purchase money under this contract is given as £ 26,000, the deposit being £ 1,500.
In his reasons for judgment Hardie J says that the uplifting of the documents from the Registrar-General's office "was undoubtedly related to the negotiations for the sale of the same land by Miss Austin which were then in progress or had just been finalised. . . . On 28th September 1959, again without any reference to or consultation with the plaintiffs or their solicitor, Mr Easton forwarded a letter to the Registrar-General in these terms: 'Re Dealing Nos H194403-4. We refer to the aforementioned transfer and mortgage and confirm that same have been withdrawn from registration.' No explanation was forthcoming as to the circumstances under which Mr Easton came to write this letter." These documents were not relodged for registration and Easton, who was arrested in March 1960, appears to have retained them in his possession.
The suit out of which this appeal arises was commenced by a statement of claim dated 3rd September 1960 and numbered in the Equity Court No 1341 of 1960. On 15th August 1960, however, a suit numbered 1154 had been commenced in the Equity Court based upon the contract between Miss Austin and the respondents, the Courtenays and Butler, for the sale of the land for £ 15,000, £ 3,000 being paid as deposit and £ 12,000 by a mortgage back. Apparently, after delivery of the statement of claim this suit was left in suspense while the question as to who was entitled to the land was fought out in suit No 1341 of 1960 brought by the three Courtenays and Victor Butler as plaintiffs against Denton Subdivisions Pty Ltd, IAC (Finance) Pty Ltd, Hermes Trading & Investment Pty Ltd and Miss Austin. IAC (Finance) Pty Ltd and Hermes Trading & Investment Pty. Ltd, a company misnamed in the testimonium of at least one of the documents, were mortgagees, while Denton Subdivisions Pty Ltd was a party to the contract with Miss Austin. We were not informed as to the details of the dealings with the moneys. It is enough to say that it is sufficiently evident that the money cannot be restored and there was mishandling of money. As has already been stated Easton was arrested about March 1960. The question in this suit therefore comes back to the priorities in relation to the dealings with the land whether by way of security or otherwise and substantially the question is whether the Courtenays, notwithstanding the withdrawal of the transfer to them, are to be preferred to Denton Subdivisions Pty Ltd and those who obtained securities under that company in recourse to the land.
A question of fact in the case is how the withdrawal of the transfer was related to the transaction with Denton Subdivisions Pty Ltd. Of course, looking at the transactions in a general way it is obvious that some dishonesty took place somewhere and it is taken for granted that it arose from the dishonesty of Easton. But let it be supposed that the transactions were all straightforward. On such a footing three courses were open to the parties. It would have been open to Miss Austin by agreement with the Courtenays and Butler to rescind the first contract. She then might have resold to Denton Subdivisions Pty Ltd Secondly, the Courtenays and Butler might have resold the land to her and she might then have sold it to Denton Subdivisions Pty Ltd. Thirdly, the Courtenays and Butler, leaving the purchase by them from her standing, might themselves have sold the land to Denton Subdivisions Pty Ltd Of course these transactions would have expressed considerations which by agreement of all parties distributed the money passing in accordance with the true intention they all possessed in common.
The transfer and mortgage which gave effect to the first transaction (ie the sale by Miss Austin to the Courtenays and Butler) were executed and placed in the hands of Easton on 23rd July 1958. Hardie J in his reasons said that he was satisfied that Easton was left with the custody of the transfer for the sole purpose of lodging it, together with the mortgage to Miss Austin, for registration. For some unexplained reason the two documents were not lodged at the Registrar-General's office until 22nd April 1959. It seems apparent that Easton's authority could not have extended to withdrawing the transfer the registration of which was essential to give title to the purchasers. However, it is conceivable that a rescission might have carried with it as a consequence authority for the withdrawal of the transfer as well of course as of the mortgage. On 28th September 1959, Easton wrote a letter to the Registrar-General confirming the fact that the transfer and mortgage had been withdrawn from registration. Had the transfer not been withdrawn it could hardly have been disputed that a subsequent dealing lodged subsequently could not take priority when the question was which should be registered first. Of course in the present case neither the transfer to the Courtenays and Butler nor the dealings with Denton Subdivisions Pty Ltd and the other two appellants have been registered. It seems obvious, however, that the withdrawal of the transfer was unauthorized in fact, and was not to be regarded as ostensibly authorized, whatever practice may have developed in the Lands Titles Office. The rights of the Courtenays and Butler -- the transferees -- could not be prejudiced by the actual but unwarranted withdrawal of the memorandum of transfer. An attempt was made to show that if otherwise under the legal order of priority the Courtenays and Butler might come first, such priority of the Courtenays and Butler as the first purchasers of the land who had completed their contract and lodged the transfer to them for registration had been lost. It was said to have been lost by conduct which on equitable principles would be regarded as postponing a claim in a conflict of interests under the general law. Hardie J went thoroughly into the facts and I see no reason again to discuss them. I agree that no conduct on the part of the Courtenays and Butler or their solicitor occurred which enabled Easton to defraud Denton Subdivisions Pty Ltd or mislead them into adopting any prejudicial step. But I am not disposed to think that under the Torrens system a priority giving a right to registration under the statute can be lost on equitable grounds of such a character.
This case raises no question of the priority which a registrable instrument may take as a dealing made bona fide on the state of the Register as against a prior unregistered dealing. Here the title prior in time existed in the form of a registrable instrument lodged for registration, and the competition is with a later registrable instrument made in pursuance of a later transaction.
Whatever be the meaning of s 43A, it cannot give priority to the later dealing over the earlier in circumstances like this.
I am therefore of opinion that Hardie J was right and I do not think Denton Subdivisions Pty Ltd and IAC (Finance) Pty Ltd and Hermes Trading & Investment Pty Ltd obtained any interest or interests in the land to which the interest of the Courtenays and Butler should be postponed or by which that interest could be defeated. I am therefore of opinion that the defendants in suit No 1341 fail.
I think the appeals should be dismissed with costs.