case_text: submitted that the mortgage was registered simultaneously with the transfer, with the result that the purchaser/mortgagor never obtained unencumbered title enabling the creation of a tenancy (referring to Abbey National Building Society v Cann [1991] 1 AC 56 at 93; Allsop v Marshall (1942) 59 WN (NSW) 159 at 161-162; Austin Construction Co (Australia) Ltd v Becketts Holdings Pty Ltd (1958) 75 WN (NSW) 444 at 447; Sogelease Australia Ltd v Boston Australia Ltd (1991) 26 NSWLR 1 at 5-8).


case_outcome: applied

case_title: Anderson v Weston (1840) 133 ER 117

case_text: I find as fact that the mortgages were entered into and created on, and intended to be effective from and on, the date which each mortgage document bears: Anderson v Weston (1840) 133 ER 117; Dillon v Gange (1941) 64 CLR 253. There was no other evidence which would indicate to the contrary, and the principal sums under the mortgage were in fact advanced by Perpetual on these dates.


case_outcome: cited

case_text: the case of Gainsford the creation of the lease and the mortgage occurred on the same day as settlement. There was no specific evidence of the exact time during that day when each transaction was entered into between the parties. However, at settlement, MFLPH then and there obtained possession of the property so was able to provide such to Gainsford pursuant to the agreement for lease previously entered into and the actual lease which was to commence on 9 December 2004, the settlement day. The intention of the parties as to commencement of the lease was clear; no presumption or prima facie position as to the commencement of the lease therefore need be applied (cf Forster v Jojodex Australia Pty Ltd (1972) 127 CLR 421 at 440-441 per Gibbs J, and Associated Beauty Aids Pty Ltd v Federal Commissioner of Taxation (1965) 113 CLR 662 at 668). The intention of the retirees and MFLPH was that upon the actual time of settlement, MFLPH would grant a tenancy in possession to the retirees, the retirees no longer being entitled to possession of the property. Of course, each retiree remained in actual possession throughout all the transactions, their actual possession never being disturbed.


case_title: Austin Construction Co (Australia) Ltd v Becketts Holdings Pty Ltd (1958) 75 WN (NSW) 444


case_text: the authorities show that it is very common to speak of an estate for life created in terms of a lease as a lease (see Australian Maritime Safety Authority v Quirk (1998) NSW ConvR 55-858 per Bryson J). If the lease is not void for uncertainty, one then needs to determine whether this interest of a life tenancy is one encompassed with the notion of tenancy in s 42(2)(e) and s 40(3)(d).


case_outcome: considered

case_text: some cross-examination occurred in the course of the trial, no issues of credit arose in relation to any witness and, in the main, the relevant sequence of events was documented. The scheme that was introduced and operated by Money for Living was described by Finkelstein J in Australian Securities & Investments Commission, in the matter of Money for Living (Aust) Pty Ltd (Administrators Appointed) v Money for Living (Aust) Pty Ltd (Administrators Appointed) (No 2) [2006] FCA 1285 , and I adopt that description which accords with the evidence before me. The nature of the interests claimed and the manner of their acquisition arise from the following circumstances in relation to the Gainsford claim and property: 12 May 1994 Elaine Gainsford registered as sole proprietor. 10 November 2004 Elaine and Edward Gainsford met with Stephen O'Neill, a representative of Money for Living, and discussed the Money for Living scheme. 16 November 2004 Money for Living sent a letter to Elaine Gainsford advising that: ... the Valuation of your property has come in at $240,000 ... We are prepared to pay you the amount of $30,000 payable in one up front lump sum with the balance being payable by 300 monthly instalments of $720. ... In addition to this offer, we are prepared to offer you a lease on the property at the rate of $1 P.A. from the date of settlement until your demise, or until you vacate the property permanently for a continuous period of six months or more, at a rate of $1 P.A. ... It is now appropriate that you consult with a solicitor, and as discussed, we have arranged Diakou Faigen to act on your behalf. They will now prepare the necessary contracts, which should be ready for you to sign on Thursday at 10.30 ... 18 November 2004 Elaine Gainsford executed Contract of Sale with MFLPH including the following terms: purchase price of $246,000 with a deposit of $30,000 payable 21 days from the day of sale or other such date as the parties may mutually agree; the balance of the purchase price was payable in instalments of $720.00 per calendar month commencing on the one month anniversary of the settlement date and payable calendar monthly thereafter; and the parties agreed that it was a condition of the contract that they enter into an irrevocable lease agreement prior to the settlement date. 18 November 2004 Elaine Gainsford executed Deed of Agreement with MFLPH. It contained the following terms: Recital B. The Company agreed to purchase the Property from the Vendor pursuant to the terms and conditions contained in the Contract of Sale of Real Estate dated ... ... ("the Contract of Sale"). Recital C. The Company has agreed to lease the Property to the Vendor at a rental of one dollar ($1.00) per annum until the Vendor's demise ("the Lease"). Clause 1.1 The Vendor hereby agrees to forgo the amount of six thousand dollars ($6,000.00) from the price which the Company would have paid under the Contract of Sale in consideration for the Company entering into the Lease at the request of the Vendor. Clause 1.2 The Parties hereby acknowledge that they have received a copy of the Lease and have had an opportunity to obtain legal advice in respect of the Lease and by executing this Deed, acknowledges that it understands the terms and conditions contained within the Lease and agrees to abide by those terms and conditions. Clause 1.9 The Company hereby undertake [sic] and agree [sic] to use their [sic] best endeavours to obtain the consent of any mortgagees to the Lease and the terms and conditions contained within this Deed. 18 November 2004 Elaine Gainsford and her husband Edward Gainsford executed an undated Residential Tenancy Agreement with MFLPH which contained the following terms: Clause 4. Period The period of the agreement commences on / / and ends on / / unless the Agreement terminates in accordance with the Residential Tenancies Act 1997 , the Agreement will continue as a periodic tenancy. OR The Agreement will commence on 9/12/04 and continue until terminated in accordance with the Residential Tenancies Act 1997 . ... Schedule B. Additional terms ... The parties agree that the intention of this lease is to allow the Tenants to remain in the property until their demise or until they both vacate the property for a period of greater than six months, whichever occurs earlier. 18 November 2004 Transfer of Land executed by Elaine Gainsford. 9 December 2004 Settlement took place. Mortgage entered into between Elaine Gainsford and Perpetual and principal amount advanced by Perpetual. 4 January 2005 Lodgement of Transfer of Land and Mortgage with Titles Office. Transfer of Land and Mortgage registered. 12 October 2005 Caveat dated 12 October 2005 lodged on behalf of MFLPH claiming 'an estate in fee simple ... as registered proprietor not in control of the duplicate certificate of title to prevent any unauthorised or fraudulent dealings with the land.' 13 December 2006 Caveat dated 11 December 2005 lodged on behalf of Elaine Gainsford and her husband Edward Gainsford claiming: Lease-hold estate for the life of Edward and Elaine Gainsford or until Edward and Elaine Gainsford vacate the land for a period greater than six (6) months ... [p]ursuant to a residential tenancy agreement between Edward and Elaine Gainsford and MFL Property Holdings Pty Ltd dated 9 December 2004. 13 December 2006 Caveat dated 11 December 2005 lodged on behalf of Elaine Gainsford claiming '[a]n equitable interest as a licensee ... [a]s an unpaid vendor pursuant to a Contract of Sale between Elaine Mavis Gainsford and MFL Property Holdings Pty Ltd dated 18 November 2004.' The nature of the interests claimed and the manner of their acquisition arise from the following circumstances in relation to the Smith claim and property: 24 May 1984 Estell Sylvia Smith and William Kenneth Smith (who later passed away on 31 March 2004) registered as sole proprietors. Estell Smith after 31 March 2004 becomes sole proprietor. At or about the end of November 2004 Estell Smith met with Stephen O'Neill, discussed the Money for Living scheme. 7 December 2004 Money for Living sent letter to Estell Smith advising that: ... the Valuation of your property has come in at $225,000 ... We are prepared to pay you the amount of $235,600 payable in one up front lump sum of $10,000, with the balance being payable by 240 monthly instalments of $940 ... In addition to this offer, we are prepared to offer you a lease on the property at the rate of $1 P.A. from the date of settlement until your demise. ... It is now appropriate that you consult with a solicitor, and as discussed, we have arranged Diakou Faigen to act on your behalf. They will now prepare the necessary contracts, which should be ready for you to sign on Thursday at 10.30... 9 December 2004 Estell Smith executed Contract of Sale with MFLPH, including the following terms: purchase price of $235,600 with a deposit of $40,000 was payable 21 days from the day of sale or other such date as the parties may mutually agree; the balance of the purchase price was payable in instalments of $668.00 per calendar month commencing on the one month anniversary of the settlement date and payable calendar monthly thereafter; and the parties agreed that it was a condition of the contract that they enter into an irrevocable lease agreement prior to the settlement date. 9 December 2004 Estell Smith executed Deed of Agreement with MFLPH. It contained the following terms: Recital B. The Company agreed to purchase the Property from the Vendor pursuant to the terms and conditions contained in the Contract of Sale of Real Estate dated 9 December 2004. Recital C. The Company has agreed to lease the Property to the Vendor at a rental of one dollar ($1.00) per annum until the Vendor's demise. Clause 1.1 The Vendor has agreed to be paid the Purchase Price under the Contract of Sale by way of instalments over two hundred and forty (240) months in consideration for the Company entering into the Lease. Clause 1.2 The Parties hereby acknowledge that they have received a copy of the Lease and have had an opportunity to obtain legal advice in respect of the Lease and by executing this Deed, acknowledges [sic] that it [sic] understands the terms and conditions contained within the Lease and agrees [sic] to abide by those terms and conditions. Clause 1.9 The Company hereby undertake [sic] and agree [sic] to use their [sic] best endeavours to obtain the consent of any mortgagees to the Lease and the terms and conditions contained within this Deed. 9 December 2004 Estell Smith executed an undated Residential Tenancy Agreement with MFLPH which contained the following terms: Clause 4. Period The period of the agreement commences on / / and ends on / / unless the Agreement terminates in accordance with the Residential Tenancies Act 1997 , the Agreement will continue as a periodic tenancy. OR The Agreement will commence on 10/12/04 and continue until terminated in accordance with the Residential Tenancies Act 1997 . ... Schedule B. Additional terms ... The parties agree that the intention of this lease is to allow the Tenant to remain in the property until her demise or until the Tenant vacates the Property for a period of greater than six months, whichever occurs earlier. 9 December 2004 Transfer of Land executed by Estell Smith. 10 December 2004 Settlement took place. 14 December 2004 Lodgement of Transfer of Land with Titles Office. Transfer of Land registered. 23 December 2004 Mortgage entered into between Estell Smith and Perpetual and principal amount advanced by Perpetual. 21 January 2005 Lodgement of Mortgage with Titles Office. Mortgage registered. 27 September 2005 Caveat undated lodged on behalf of Estell Smith claiming an '[e]state for life ... [p]ursuant to a Contract of Sale ... between MFL Property Holdings Ltd and Estell Sylvia Smith'. 13 October 2005 Caveat dated 12 October 2005 lodged on behalf of MFLPH claiming 'an estate in fee simple ... as registered proprietor not in control of the duplicate certificate of title to prevent any unauthorised or fraudulent dealings with the land.' 15 November 2006 Caveat dated 14 November 2006 lodged on behalf of Estell Smith claiming 'lease-hold estate for the life of Estell Sylvia Smith or until Estell Sylvia Smith vacates the land for a period of greater than six (6) months whichever occurs earlier ... [p]ursuant to a residential tenancy agreement between Estell Sylvia Smith and MFL Property Holdings Pty Ltd dated 10 December 2004'. 15 November 2006 Caveat dated 14 November 2006 lodged on behalf of Estell Smith claiming an '[e]xecutory or contingent interest in fee simple ... [a]s the grantee, and by virtue, of an option to purchase the land pursuant to an undated Deed of Agreement between Estell Sylvia Smith and MFL Property Holdings Pty Ltd.' Secondly, the question of the operation of s 42(2)(e) of the TLA has been considered previously in the context of the Money for Living scheme in Australian Securities & Investments Commission, in the matter of Money for Living (Aust) Pty Ltd (Administrators Appointed) v Money for Living (Aust) Pty Ltd (Administrators Appointed) (No 2) [2006] FCA 1285 , where Finkelstein J made the following comments (at [24] [25]): I base this conclusion on s 42(2)(e) of the Transfer of Land Act 1958 (Vic) and the equivalent provision in the Torrens legislation in other States. The effect of s 42(2)(e) is that the estate of a registered proprietor of land (including the proprietor of a mortgage) is subject to the rights of a tenant in possession. In this area the relevant principles are clearly established. The first is that the possession of a tenant is notice of any right of the tenant affecting the land: McMahon v Swan [1924] VLR 397 , 406. The second is that, as Dixon J confirmed in Burke v Dawes (1938) 59 CLR 1, 17-18, s 72 of the Transfer of Land Act 1928 (Vic) (which is the forerunner of s 42) was not intended to apply merely to a tenancy as commonly understood. See also Downie v Lockwood [1965] VR 257 , 259 where Smith J said "As appears from the cases the exception in s. 42 (2) (e) is to be widely construed; and it is to be treated as producing the result that "any person in actual occupation of the land obtains as against any inconsistent registered dealing protection and priority for any equitable interest to which his occupation is incident, provided that at law his occupation is referable to a tenancy of sort, whether at will or for years". Thus, for the purposes of the section a purchaser under a contract, who is given possession by the vendor and is only a tenant at will, is protected in respect of his equitable ownership: Robertson v Keith (1870) 1 VLR(E) 11. So, too, is a vendor who remains in possession until the purchase price is paid: he is a tenant "whatever might be the legal denomination of the tenancy": The Commercial Bank of Australia Limited v McCaskill (1897) 23 VLR 10 , 12. It has also been held that an equitable life estate will prevail over a subsequent registered interest: Black v Poole (1895) 16 ALT 155. These principles will protect the tenancies granted to the clients (who it must be assumed were always in possession of their homes) over subsequent dealings with the land. Put another way, the clients' life tenancies are secure, that is their tenancies are "guaranteed" to survive any adverse claims made by subsequent registered proprietors and mortgagees, provided they (the clients) continue to pay $1.00 per annum by way of rent and do not vacate their home. Finkelstein J focused upon the TLA. In my view, his Honour's analysis of the relevant principles of law and their application to the TLA was correct, although in light of submissions made by Perpetual, I will need to return to those principles and their application in this proceeding. I will also need to consider the terms of the LTA. The relevant wording of the LTA is materially different from the TLA and, in relation to the circumstances of Easterbrook and Gray, the question arises as to whether they have the interest of a tenant within the meaning of s 40(3)(d)(iii) or (iv) of the LTA. An issue arose as to whether any of the arrangements created a valid tenancy at all, because they were, it was argued by Perpetual, effectively void for uncertainty of duration. The focus of the parties was upon the tenancies being for life which, Perpetual submitted, created the fatal uncertainty.


case_outcome: followed

case_text: significant point of contention at trial was whether, if the retirees' interests fall within the s 42(2)(e) or s 40(3)(d) exception, the retirees have proven their case or whether the section then requires a further step: a comparison of the two competing interests. Burke v Dawes (1937) 59 CLR 1 at 13, 18 and 25 and Barba v Gas & Fuel Corporation [1976] HCA 60 ; (1976) 136 CLR 120 at 140-141 were referred to by Perpetual in support of the proposition that a comparison of the competing interests is still required to be undertaken by the Court even if the retirees were tenants in possession. I do not consider that the difference in wording of s 40 and s 42(2)(e) affects my conclusion on this contention, and thus both the TLA and LTA can be dealt with together. It is convenient to deal with the competing interests issue by reference solely to the decision in Barba 136 CLR 120. In Barba , by an instrument dated 21 July 1975 C, the registered proprietor of certain land, gave G an option for easement over the land. The purpose of the easement was to enable G to construct a pipeline through the land. The consideration for the grant was expressed to be 'the sum of $10.00 now paid to the Grantor (the receipt whereof is hereby acknowledged)'. Clause 3 of the instrument read as follows: This option may be exercised by [G] in either of the following manners:— (a) by notice in writing that this option is exercised, signed on behalf of [G] by its Secretary or Substitute Secretary for the time being, which notice may be delivered to the Grantor by hand or forwarded to the Grantor at his address herein specified by ordinary prepaid letter at any time on or before but not after the option date: or (b) by commencing operations upon the said land for the laying of the pipeline before but not after the option date. The instrument provided by cl 1 that: ... The location and dimensions of the said strip of land upon the Grantor's said land are to be approximately in the position as located as a result of the above work or in such other position upon the Grantor's said land as [G] may with the prior consent of the Grantor determine .... Perpetual relied upon the above passage and the principle that s 42(2)(e) and s 40(3)(d) do not give a tenant in possession any greater protection than he or she would have had if the land were under the general law. My view is that if the retirees come within the terms of s 42(2)(e) or s 40(3)(d) , then no comparison of the competing interests is required of the type suggested by Perpetual. In Downie v Lockwood [1965] VR 257 , Smith J undertook no comparative examination of the equities, as submitted by Perpetual should occur in this proceeding. Barba , in reliance on comments in Burke v Dawes , merely decided that effect had to be given to special condition 8, and to that extent the application of the general law applied, and the person claiming to come under the exception to indefeasibility could have no greater rights than he or she would have under the general law. It will be recalled that special condition 8 made the sale subject to the easement to be granted, which special condition the High Court gave effect to by applying the general law. Another line of argument in certain of the retirees' cases arose because there was an option to repurchase the relevant property in the Deed of Agreement. This was, in the retirees' submission, an equitable interest in line with Barba [1976] HCA 60 ; 136 CLR 120 , where Gibbs J stated (at 137-138): ... it is clear that an option to purchase gives the grantee an equitable interest in the land. In London and South Western Railway Co. v Gomm (1882) 20 Ch.D. 562 , at p.581 Jessel M.R. said: The right to call for a conveyance of the land is an equitable interest or equitable estate. In the ordinary case of a contract for purchase there is no doubt about this, and an option for repurchase is not different in its nature. A person exercising the option has to do two things, he has to give notice of his intention to purchase, and to pay the purchase-money; but as far as the man who is liable to convey is concerned, his estate or interest is taken away from him without his consent, and the right to take it away being vested in another, the covenant giving the option must give that other an interest in the land. See also Wright v Dean [1948] Ch. 686 , at 693; In Re Button's Lease; Inman v. Button [1964] Ch. 263 , at p.271; and Commissioner of Taxes (Q.) v. Camphin [1937] HCA 30 ; (1937) 57 C.L.R. 127 , at pp.132-4. The equitable interest so created is a contingent interest which will become an absolute interest when the contingency is fulfilled: Griffith v. Pelton [1958] Ch. 205, at p.225; Du Sautoy v. Symes [1967] Ch. 1146 , at p.1163. It was held in Morland v. Hales and Somerville (1910) 30 N.Z.L.R. 201 , that the equitable interest which passes to the grantee when an option is granted prevails over the rights of a person who, after the grant of the option but before its exercise, has contracted to purchase the land without notice of the existence of the option. It may be assumed that the principles stated in those cases apply to the case of an option to acquire an easement. However, until the option is exercised the interest which it confers remains contingent and the grantee cannot call for a conveyance or demand to exercise any of those rights to which he is contingently entitled.


case_text: submitted that the cases upon which the retirees rely in an attempt to distinguish Abbey have no application in this case (referring to Koompahtoo Aboriginal Land Council v KLALC Property & Investment Pty Ltd [2006] NSWSC 856 ; Barclay's Bank plc v Zaroovabli [1997] Ch 321; HKCB Finance Limited v Yuen Yi Wan [2004] HKEC 1564).


case_text: turn to the nature of the interest of each retiree. In my view, each retiree had an equitable interest in the land by reason of the fact that each was entitled to specific performance of the Contract of Sale or Agreement for Sale of Real Estate or the Deed of Agreement to the possession of the property as a tenant immediately upon settlement. The extent of that interest is to be determined by the form in which specific performance would be granted by a court. The retirees were entitled as against MFLPH to an order requiring MFLPH to sign and deliver to the retirees upon settlement a lease of the property upon the terms agreed, relevantly for life, subject to the condition that the retiree stay in possession for a certain period and pay the nominal rent (see Downie v Lockwood [1965] VR 257; Craddock Bros v Hunt [1923] 2 Ch 136; Chan v Cresdon Pty Ltd (1989) 168 CLR 242; Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 at 332-333, [53]; Black v Garnock [2007] HCA 31 ; (2007) 230 CLR 438 at 449-450, [32] ). It is not necessary that specific performance be available at the time of the hearing: Bunny Industries Ltd v FSW Enterprises Pty Ltd [1982] Qd R 712. It is important to appreciate that the availability and the nature of specific performance is a precondition to the recognition of an equitable interest and the extent of that equitable interest in the property. Here, as I have said, a court, by reference to the terms of agreement between the retirees and MFLPH, would give each retiree possession of the land upon settlement by making an order that MFLPH sign and deliver a lease of the property to each retiree effective from the moment of settlement.


case_title: Black v Poole (1895) 16 ALT 155

case_text: the question of the operation of s 42(2)(e) of the TLA has been considered previously in the context of the Money for Living scheme in Australian Securities & Investments Commission, in the matter of Money for Living (Aust) Pty Ltd (Administrators Appointed) v Money for Living (Aust) Pty Ltd (Administrators Appointed) (No 2) [2006] FCA 1285 , where Finkelstein J made the following comments (at [24] [25]): I base this conclusion on s 42(2)(e) of the Transfer of Land Act 1958 (Vic) and the equivalent provision in the Torrens legislation in other States. The effect of s 42(2)(e) is that the estate of a registered proprietor of land (including the proprietor of a mortgage) is subject to the rights of a tenant in possession. In this area the relevant principles are clearly established. The first is that the possession of a tenant is notice of any right of the tenant affecting the land: McMahon v Swan [1924] VLR 397 , 406. The second is that, as Dixon J confirmed in Burke v Dawes (1938) 59 CLR 1, 17-18, s 72 of the Transfer of Land Act 1928 (Vic) (which is the forerunner of s 42) was not intended to apply merely to a tenancy as commonly understood. See also Downie v Lockwood [1965] VR 257 , 259 where Smith J said "As appears from the cases the exception in s. 42 (2) (e) is to be widely construed; and it is to be treated as producing the result that "any person in actual occupation of the land obtains as against any inconsistent registered dealing protection and priority for any equitable interest to which his occupation is incident, provided that at law his occupation is referable to a tenancy of sort, whether at will or for years". Thus, for the purposes of the section a purchaser under a contract, who is given possession by the vendor and is only a tenant at will, is protected in respect of his equitable ownership: Robertson v Keith (1870) 1 VLR(E) 11. So, too, is a vendor who remains in possession until the purchase price is paid: he is a tenant "whatever might be the legal denomination of the tenancy": The Commercial Bank of Australia Limited v McCaskill (1897) 23 VLR 10 , 12. It has also been held that an equitable life estate will prevail over a subsequent registered interest: Black v Poole (1895) 16 ALT 155. These principles will protect the tenancies granted to the clients (who it must be assumed were always in possession of their homes) over subsequent dealings with the land. Put another way, the clients' life tenancies are secure, that is their tenancies are "guaranteed" to survive any adverse claims made by subsequent registered proprietors and mortgagees, provided they (the clients) continue to pay $1.00 per annum by way of rent and do not vacate their home. In my view, such an interest is one so encompassed, and one only needs to refer to the following passage of Dixon J in Burke v Dawes (1938) 59 CLR 1 at 17-18: In Victoria these words have received an interpretation and an application as a result of which any person in actual occupation of the land obtains as against any inconsistent registered dealing protection and priority for any equitable interest to which his occupation is incident, provided that at law his occupation is referable to a tenancy of some sort, whether at will or for years. Thus, a purchaser under a contract of sale, who at law is in possession as tenant at will of the vendor, has been held protected in respect of his equitable ownership as purchaser ( Robertson v. Keith ; Sandhurst Mutual Permanent Investment Building Society v. Gissing ), a lessee in respect of an option of purchase contained in his lease ( McMahon v. Swan ) and a wife in respect of an equitable life interest claimed under an unsigned separation agreement made with her husband ( Black v. Poole ). a'Beckett J. decided the last named case in deference to previous decisions and against his own opinion, which he stated to be that "those words were intended to refer to a tenancy as ordinarily understood arising out of an agreement under which the person in possession was allowed to occupy in consideration of some kind of rent or service of which the proprietor was to have the benefit." The cases are collected and criticised by the late Dr. Donald Kerr in his work on The Australian Lands Titles (Torrens) System (1927), at pp. 75 et seq. But the interpretation has stood for nearly seventy years, and it would, I think, be most undesirable now to undertake the re-examination of its correctness. This passage still remains applicable to the interpretation to be given to the TLA and LTA. I draw particular attention to the reference to Black v Poole as being an indication that the concept of tenant extends beyond that of a strict 'tenancy' to include the freehold interest of a life interest, obviously equitable or legal. Their Honours referred at various times in the judgment to Burke v Dawes , which they approved generally. Gibbs ACJ stated, at 140: In Burke v Dawes (1938) 59 CLR at 17 18; Dixon J discussed as follows the effect of an earlier Victorian statutory provision which corresponded to s 42(2)(e): In Victoria these words have received an interpretation and an application as a result of which any person in actual occupation of the land obtains as against any inconsistent registered dealing protection and priority for any equitable interest to which his occupation is incident, provided that at law his occupation is referable to a tenancy of some sort, whether at will or for years. Thus, a purchaser under a contract of sale, who at law is in possession as tenant at will of the vendor, has been held protected in respect of his equitable ownership as purchaser ( Robertson v Keith (1870) 1 V.R. (E.) 11 ; Sandhurst Mutual Permanent Investment Building Society v Gissing (1889) 15 VLR 329) , a lessee in respect of an option of purchase contained in his lease ( McMahon v Swan [1924] VLR 397) and a wife in respect of an equitable life interest claimed under an unsigned separation agreement made with her husband ( Black v Poole (1895) 16 ALT 155). a'Beckett J. decided the last named case in deference to previous decisions and against his own opinion, which he stated to be that 'those words were intended to refer to a tenancy as ordinarily understood arising out of an agreement under which the person in possession was allowed to occupy in consideration of some kind of rent or service of which the proprietor was to have the benefit'. The cases are collected and criticized by the late Dr Donald Kerr in his work on The Australian Lands Titles (Torrens) System (1927), at pp. 75 et seq. But the interpretation has stood for nearly seventy years, and it would, I think, be most undesirable now to undertake the re-examination of its correctness. Similar views were expressed by Latham C.J.(1938) 59 C.L.R. at p. 8 and by Evatt J. (1938) 59 C.L.R., at p. 24. McTiernan J. agreed with the remarks of Dixon J ((1938) 59 C.L.R., at p.27). The fifth member of the Court, Starke J., was perhaps not so definite in the expression of his opinion but he did not disagree with what the majority of the Court said on this point (1938) 59 C.L.R., at pp. 12-13. This question should therefore be regarded as settled. The interest of the appellants under the contract of sale from Craigie was within the protection given by s. 42(2)(e). However, it was decided in Burke v Dawes (1938) 59 C.L.R., at pp. 17-18 that s. 42(2)(e) does not give to a tenant in possession any greater protection than he would have had if the land were under the general law: see per Dixon J. (1938) 59 C.L.R., at p. 18, and per Starke J. (1938) 59 C.L.R., at p. 13. Evatt J., who dissented in the result, but whose views on this point were not in my opinion different from those accepted by the majority, said (1938) 59 C.L.R., at p. 25: In my opinion the effect of the exception in favour of every tenant of the land is to deprive the proprietor of the registered interest of the paramountcy which registration would normally confer. It follows that, in determining the competition between the tenant and the proprietor of the registered interest, the latter must be regarded as having been stripped of the benefit conferred by the fact of registration and as having been remitted to the position of holding an unregistered interest. In the present case the respondent is deprived by s. 42(2)(e) of the paramountcy which registration would otherwise have conferred. It then becomes necessary to consider whether, apart from registration, the interest of the respondent under the Creation of Easement will prevail over that which vested in the appellants by virtue of the contract of sale. This question depends on the effect of special condition 8 of the contract of sale. When an owner of land contracts to sell it to a purchaser there is no reason in principle why he should not reserve the right to grant an easement over the property sold or why he should not make the sale subject to the easement to be granted. If this is done effectively the easement when created will take priority over the equitable interest which was granted subject to it. Under the general law, apart from registration, the right of the owner of the easement will prevail over that of the purchaser, notwithstanding that he is in possession, and the provisions of s. 42(2)(e) will not give the purchaser any greater right. In Chesterfield v Pitisano [1964] V.R. 709 at p.713 , Smith J. said that a mortgage granted pursuant to a right reserved to the vendor by a contract of sale would take priority over the equitable interest of the purchaser, and that the rights of the mortgagee on registration would not be rendered subject by s. 42(2)(e) to the interest of the purchaser as a tenant in possession. I respectfully agree with his conclusion on this point. The question therefore is whether special condition 8 did make the sale subject to the easement to be granted. In my opinion the condition did have that effect. It is true that it did not in terms reserve the right to grant an easement, nor did it state that the sale was subject to the easement to be granted. However, the clause expressly stated that it was proposed to create an easement, and that the vendor should be entitled to the compensation paid when the easement was granted, and in my opinion these provisions plainly implied that the easement when granted was to be effective. The clause would be meaningless if the rights of the purchasers prevailed over the easement when it was created. In my opinion the effect of special condition 8 was that the Creation of Easement—not the option, as I have already explained—prevailed over the rights of the appellants. Section 42(2)(e) did not alter this position. It follows that the respondent became entitled to enter the subject land for the purpose of constructing the pipeline on 17 th December 1975 when the Creation of Easement was signed, but it was not entitled to enter for that purpose before that date. ...


case_title: Bunny Industries Ltd v FSW Enterprises Pty Ltd [1982] Qd R 712


case_title: Burke v Dawes [1938] HCA 6 ; (1937) 59 CLR 1

case_text: the question of the operation of s 42(2)(e) of the TLA has been considered previously in the context of the Money for Living scheme in Australian Securities & Investments Commission, in the matter of Money for Living (Aust) Pty Ltd (Administrators Appointed) v Money for Living (Aust) Pty Ltd (Administrators Appointed) (No 2) [2006] FCA 1285 , where Finkelstein J made the following comments (at [24] [25]): I base this conclusion on s 42(2)(e) of the Transfer of Land Act 1958 (Vic) and the equivalent provision in the Torrens legislation in other States. The effect of s 42(2)(e) is that the estate of a registered proprietor of land (including the proprietor of a mortgage) is subject to the rights of a tenant in possession. In this area the relevant principles are clearly established. The first is that the possession of a tenant is notice of any right of the tenant affecting the land: McMahon v Swan [1924] VLR 397 , 406. The second is that, as Dixon J confirmed in Burke v Dawes (1938) 59 CLR 1, 17-18, s 72 of the Transfer of Land Act 1928 (Vic) (which is the forerunner of s 42) was not intended to apply merely to a tenancy as commonly understood. See also Downie v Lockwood [1965] VR 257 , 259 where Smith J said "As appears from the cases the exception in s. 42 (2) (e) is to be widely construed; and it is to be treated as producing the result that "any person in actual occupation of the land obtains as against any inconsistent registered dealing protection and priority for any equitable interest to which his occupation is incident, provided that at law his occupation is referable to a tenancy of sort, whether at will or for years". Thus, for the purposes of the section a purchaser under a contract, who is given possession by the vendor and is only a tenant at will, is protected in respect of his equitable ownership: Robertson v Keith (1870) 1 VLR(E) 11. So, too, is a vendor who remains in possession until the purchase price is paid: he is a tenant "whatever might be the legal denomination of the tenancy": The Commercial Bank of Australia Limited v McCaskill (1897) 23 VLR 10 , 12. It has also been held that an equitable life estate will prevail over a subsequent registered interest: Black v Poole (1895) 16 ALT 155. These principles will protect the tenancies granted to the clients (who it must be assumed were always in possession of their homes) over subsequent dealings with the land. Put another way, the clients' life tenancies are secure, that is their tenancies are "guaranteed" to survive any adverse claims made by subsequent registered proprietors and mortgagees, provided they (the clients) continue to pay $1.00 per annum by way of rent and do not vacate their home. In my view, such an interest is one so encompassed, and one only needs to refer to the following passage of Dixon J in Burke v Dawes (1938) 59 CLR 1 at 17-18: In Victoria these words have received an interpretation and an application as a result of which any person in actual occupation of the land obtains as against any inconsistent registered dealing protection and priority for any equitable interest to which his occupation is incident, provided that at law his occupation is referable to a tenancy of some sort, whether at will or for years. Thus, a purchaser under a contract of sale, who at law is in possession as tenant at will of the vendor, has been held protected in respect of his equitable ownership as purchaser ( Robertson v. Keith ; Sandhurst Mutual Permanent Investment Building Society v. Gissing ), a lessee in respect of an option of purchase contained in his lease ( McMahon v. Swan ) and a wife in respect of an equitable life interest claimed under an unsigned separation agreement made with her husband ( Black v. Poole ). a'Beckett J. decided the last named case in deference to previous decisions and against his own opinion, which he stated to be that "those words were intended to refer to a tenancy as ordinarily understood arising out of an agreement under which the person in possession was allowed to occupy in consideration of some kind of rent or service of which the proprietor was to have the benefit." The cases are collected and criticised by the late Dr. Donald Kerr in his work on The Australian Lands Titles (Torrens) System (1927), at pp. 75 et seq. But the interpretation has stood for nearly seventy years, and it would, I think, be most undesirable now to undertake the re-examination of its correctness. This passage still remains applicable to the interpretation to be given to the TLA and LTA. I draw particular attention to the reference to Black v Poole as being an indication that the concept of tenant extends beyond that of a strict 'tenancy' to include the freehold interest of a life interest, obviously equitable or legal. A significant point of contention at trial was whether, if the retirees' interests fall within the s 42(2)(e) or s 40(3)(d) exception, the retirees have proven their case or whether the section then requires a further step: a comparison of the two competing interests. Burke v Dawes (1937) 59 CLR 1 at 13, 18 and 25 and Barba v Gas & Fuel Corporation [1976] HCA 60 ; (1976) 136 CLR 120 at 140-141 were referred to by Perpetual in support of the proposition that a comparison of the competing interests is still required to be undertaken by the Court even if the retirees were tenants in possession. I do not consider that the difference in wording of s 40 and s 42(2)(e) affects my conclusion on this contention, and thus both the TLA and LTA can be dealt with together. Their Honours referred at various times in the judgment to Burke v Dawes , which they approved generally. Gibbs ACJ stated, at 140: In Burke v Dawes (1938) 59 CLR at 17 18; Dixon J discussed as follows the effect of an earlier Victorian statutory provision which corresponded to s 42(2)(e): In Victoria these words have received an interpretation and an application as a result of which any person in actual occupation of the land obtains as against any inconsistent registered dealing protection and priority for any equitable interest to which his occupation is incident, provided that at law his occupation is referable to a tenancy of some sort, whether at will or for years. Thus, a purchaser under a contract of sale, who at law is in possession as tenant at will of the vendor, has been held protected in respect of his equitable ownership as purchaser ( Robertson v Keith (1870) 1 V.R. (E.) 11 ; Sandhurst Mutual Permanent Investment Building Society v Gissing (1889) 15 VLR 329) , a lessee in respect of an option of purchase contained in his lease ( McMahon v Swan [1924] VLR 397) and a wife in respect of an equitable life interest claimed under an unsigned separation agreement made with her husband ( Black v Poole (1895) 16 ALT 155). a'Beckett J. decided the last named case in deference to previous decisions and against his own opinion, which he stated to be that 'those words were intended to refer to a tenancy as ordinarily understood arising out of an agreement under which the person in possession was allowed to occupy in consideration of some kind of rent or service of which the proprietor was to have the benefit'. The cases are collected and criticized by the late Dr Donald Kerr in his work on The Australian Lands Titles (Torrens) System (1927), at pp. 75 et seq. But the interpretation has stood for nearly seventy years, and it would, I think, be most undesirable now to undertake the re-examination of its correctness. Similar views were expressed by Latham C.J.(1938) 59 C.L.R. at p. 8 and by Evatt J. (1938) 59 C.L.R., at p. 24. McTiernan J. agreed with the remarks of Dixon J ((1938) 59 C.L.R., at p.27). The fifth member of the Court, Starke J., was perhaps not so definite in the expression of his opinion but he did not disagree with what the majority of the Court said on this point (1938) 59 C.L.R., at pp. 12-13. This question should therefore be regarded as settled. The interest of the appellants under the contract of sale from Craigie was within the protection given by s. 42(2)(e). However, it was decided in Burke v Dawes (1938) 59 C.L.R., at pp. 17-18 that s. 42(2)(e) does not give to a tenant in possession any greater protection than he would have had if the land were under the general law: see per Dixon J. (1938) 59 C.L.R., at p. 18, and per Starke J. (1938) 59 C.L.R., at p. 13. Evatt J., who dissented in the result, but whose views on this point were not in my opinion different from those accepted by the majority, said (1938) 59 C.L.R., at p. 25: In my opinion the effect of the exception in favour of every tenant of the land is to deprive the proprietor of the registered interest of the paramountcy which registration would normally confer. It follows that, in determining the competition between the tenant and the proprietor of the registered interest, the latter must be regarded as having been stripped of the benefit conferred by the fact of registration and as having been remitted to the position of holding an unregistered interest. In the present case the respondent is deprived by s. 42(2)(e) of the paramountcy which registration would otherwise have conferred. It then becomes necessary to consider whether, apart from registration, the interest of the respondent under the Creation of Easement will prevail over that which vested in the appellants by virtue of the contract of sale. This question depends on the effect of special condition 8 of the contract of sale. When an owner of land contracts to sell it to a purchaser there is no reason in principle why he should not reserve the right to grant an easement over the property sold or why he should not make the sale subject to the easement to be granted. If this is done effectively the easement when created will take priority over the equitable interest which was granted subject to it. Under the general law, apart from registration, the right of the owner of the easement will prevail over that of the purchaser, notwithstanding that he is in possession, and the provisions of s. 42(2)(e) will not give the purchaser any greater right. In Chesterfield v Pitisano [1964] V.R. 709 at p.713 , Smith J. said that a mortgage granted pursuant to a right reserved to the vendor by a contract of sale would take priority over the equitable interest of the purchaser, and that the rights of the mortgagee on registration would not be rendered subject by s. 42(2)(e) to the interest of the purchaser as a tenant in possession. I respectfully agree with his conclusion on this point. The question therefore is whether special condition 8 did make the sale subject to the easement to be granted. In my opinion the condition did have that effect. It is true that it did not in terms reserve the right to grant an easement, nor did it state that the sale was subject to the easement to be granted. However, the clause expressly stated that it was proposed to create an easement, and that the vendor should be entitled to the compensation paid when the easement was granted, and in my opinion these provisions plainly implied that the easement when granted was to be effective. The clause would be meaningless if the rights of the purchasers prevailed over the easement when it was created. In my opinion the effect of special condition 8 was that the Creation of Easement—not the option, as I have already explained—prevailed over the rights of the appellants. Section 42(2)(e) did not alter this position. It follows that the respondent became entitled to enter the subject land for the purpose of constructing the pipeline on 17 th December 1975 when the Creation of Easement was signed, but it was not entitled to enter for that purpose before that date. ... Perpetual relied upon the above passage and the principle that s 42(2)(e) and s 40(3)(d) do not give a tenant in possession any greater protection than he or she would have had if the land were under the general law. My view is that if the retirees come within the terms of s 42(2)(e) or s 40(3)(d) , then no comparison of the competing interests is required of the type suggested by Perpetual. In Downie v Lockwood [1965] VR 257 , Smith J undertook no comparative examination of the equities, as submitted by Perpetual should occur in this proceeding. Barba , in reliance on comments in Burke v Dawes , merely decided that effect had to be given to special condition 8, and to that extent the application of the general law applied, and the person claiming to come under the exception to indefeasibility could have no greater rights than he or she would have under the general law. It will be recalled that special condition 8 made the sale subject to the easement to be granted, which special condition the High Court gave effect to by applying the general law. In any event, I have come to the view that even if there is to be a comparison of the two competing interests as suggested by Perpetual, the interests of the retirees have priority. Even accepting that Perpetual took the mortgage at arm's length, in the normal course of its business and for valuable consideration, I have formed this view for the following reasons: (i) the earlier equitable interest in the property of the retirees I have generally regarded as a stronger claim than the later interest of Perpetual; (ii) fairness and justice does not require or indicate the earlier equitable interest of the retirees should be postponed (see Heid v Reliance Finance Corporation Pty Ltd (1983) 154 CLR 326 at 341 (per Mason and Deane JJ)); (iii) any lack of notice by Perpetual is only one aspect of the circumstances I have taken into account, which does not displace the earlier interest of the retirees; (iv) Perpetual knew by itself, or its agents, that the properties were occupied, or at the very least expected the properties would be tenanted, even if Perpetual did not know the exact terms of the Contract of Sale or Agreement for Sale of Real Estate or of the lease. If I am wrong in this regard as to knowledge or expectation, this would still not alter my view as to the competing position; (v) the retirees were in fact in possession of the property which I regard as significant, although not 'decisive' (cf Burke v Dawes [1938] HCA 6 ; 59 CLR 1 per Evatt J at 26); (vi) Perpetual had constructive notice of the retirees' rights and it took its interest subject to them, and this occurs even if the tenant is in possession pursuant to additional entitlements: Hunt v Luck (1902) 1 Ch 428; Lowe v Clyne [1968] 2 NSWR 292 ; Daniels v Davison (1809) 16 Ves 249; and Allen v Anthony (1816) 35 ER 679, and particularly McMahon v Swan [1924] VLR 397 at 405-406 and Burke v Dawes 59 CLR 1 at 26-27 per Evatt J; (vii) Perpetual in failing to investigate the interest of the retirees did so at its 'peril' (see Evatt J at 27 in Burke v Dawes [1938] HCA 6 ; 59 CLR 1 ; and Lowe v Clyne [1968] 2 NSWR 292) ; (viii) whilst the retirees did not lodge timely caveats, the failure of the retirees to lodge a caveat is explicable. They were in fact still registered proprietors. In any event, 'the exception in s 42(2)(e) makes the failure to lodge a caveat of no moment, because it takes away from the registered proprietor that paramountcy which actual registration confers; and the only purpose of a caveat is to prevent such registration' (see Burke v Dawes [1938] HCA 6 ; 59 CLR 1 at 25-26 per Evatt J); (ix) further, I do not regard the failure to lodge a timely caveat as sufficient to postpone the retirees' interests, particularly as there was no evidence that Perpetual relied on the registration or absence of caveat (see IGA Distribution Pty Ltd v King & Taylor Pty Ltd [2002] VSC 440 at [205] per Nettle J); and (x) no retiree consented to or ratified the mortgage to Perpetual. The interest, according to the retirees, was an ' equitable interest to which [the retirees'] occupation is incident', relying on Burke v Dawes 59 CLR 1 at 17. At the time the retirees entered into the sale contracts, or alternatively on settlement, it was contended that they acquired an equitable interest in the relevant properties by reason of an equitable lien. Specifically, they contended, the lien subsisted in respect of any unpaid portion of the purchase price after completion of a sale contract (together with default interest) as contemplated by conditions of the sale contracts. I should make some comments in relation to the argument relating to the vendor's lien. For the retirees to succeed on this point they must still rely upon the operation of s 42(2)(e) and s 40(3)(d), and be within the concept of tenants in possession as explained by the authorities. It was accepted by Perpetual that an interest as a tenant in possession includes 'every interest in the land of ... a tenant which grows out of, and is not disseverable from, his right to continue in occupation as a tenant ...': Sandhurst Mutual Permanent Investment Building Society v Gissing (1889) 15 VLR 329 at 331; Burke v Dawes 59 CLR 1 at 13 per Starke J, or 'any equitable interest to which his occupation is incident, provided that at law his occupation is referable to a tenancy of some sort ....': Burke v Dawes 59 CLR 1 at 17 per Dixon J (McTiernan J concurring).


case_text: turn to the nature of the interest of each retiree. In my view, each retiree had an equitable interest in the land by reason of the fact that each was entitled to specific performance of the Contract of Sale or Agreement for Sale of Real Estate or the Deed of Agreement to the possession of the property as a tenant immediately upon settlement. The extent of that interest is to be determined by the form in which specific performance would be granted by a court. The retirees were entitled as against MFLPH to an order requiring MFLPH to sign and deliver to the retirees upon settlement a lease of the property upon the terms agreed, relevantly for life, subject to the condition that the retiree stay in possession for a certain period and pay the nominal rent (see Downie v Lockwood [1965] VR 257; Craddock Bros v Hunt [1923] 2 Ch 136; Chan v Cresdon Pty Ltd (1989) 168 CLR 242; Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 at 332-333, [53]; Black v Garnock [2007] HCA 31 ; (2007) 230 CLR 438 at 449-450, [32] ). It is not necessary that specific performance be available at the time of the hearing: Bunny Industries Ltd v FSW Enterprises Pty Ltd [1982] Qd R 712. It is important to appreciate that the availability and the nature of specific performance is a precondition to the recognition of an equitable interest and the extent of that equitable interest in the property. Here, as I have said, a court, by reference to the terms of agreement between the retirees and MFLPH, would give each retiree possession of the land upon settlement by making an order that MFLPH sign and deliver a lease of the property to each retiree effective from the moment of settlement. First, the retirees argued that their entering into possession pursuant to an agreement to grant a lease and paying rent will give rise to a common law tenancy, citing Chan v Cresdon Pty Ltd [1989] HCA 63 ; (1989) 168 CLR 242. In that case, Mason CJ, Brennan, Deane and McHugh JJ stated (at 248): It is well settled that entry into occupation followed by payment of rent under an agreement for a future lease brings into existence a common law tenancy from year to year, so long as the payment of rent is referable to a yearly tenancy, as where it is for an aliquot part of a year...


case_text: accept Perpetual's argument that MFLPH was unable to grant a future lease, whether registered or not registered, after the creation of the mortgage without Perpetual's consent (see Independent Order of Odd Fellows of Victoria Friendly Society v Telford (1991) V ConvR 54-419 per Gobbo J; Commonwealth Bank of Australia v Baranyay [1993] 1 VR 589 at 599 per Hayne J; Rancho Holdings Pty Ltd v Impact Developments (Wodonga) Pty Ltd (1994) V ConvR 54-509 per Batt J; Maher v Commonwealth Bank of Australia [2004] FCA 248 at [24] ; ss 66 and 77 of the TLA (and the equivalent provisions of the LTA); and cl 8 of the common provisions of the mortgage). The time of the creation of the mortgage is the time the mortgages are entered into, not registered. Once the mortgage is registered, it would take priority over any tenancy, but necessarily only a tenancy entered into after the mortgage was created. I should say something more about this conclusion I have reached as to the relevant time for considering the competing claims and the creation of the mortgage. It is important to keep in mind that in this proceeding we are concerned with a competition between a lease and a mortgage, which necessarily brings into operation the principles discussed in Baranyay [1993] 1 VR 589, cl 8 of the common provisions of the mortgage, and the provisions of the TLA and LTA dealing with mortgages and leases. If one were dealing with a competition between a lease and, say, a registered proprietor of the property, the relevant time to consider may be the time of lodgement or registration of the relevant interest. This is because the registered proprietor would not be able to rely upon cl 8 of the common provisions, and the statutory provisions relating to mortgages and leases and their priority, and the focus would be only upon the operation of s 42(2)(e) of the TLA and s 40(3)(d) of the LTA. In this proceeding, the sequence of events in relation to the creation of the lease and mortgage, other than in the case of Gainsford, can be easily resolved, because the leases were clearly entered into prior to the creation of the mortgages. In the case of Smith this is apparent, even accepting the arguments of Perpetual relating to the sequence of events. In the case of Easterbrook and Gray, this is so because there was an agreement for lease from the date of the Agreement for Sale of Real Estate, or upon settlement at which time Easterbrook and Gray were entitled to possession pursuant to an actual lease (which events occurred before the mortgage was created and the principal sum was advanced by Perpetual), or because, contrary to the argument of Perpetual (to be dealt with later), there was no simultaneous lodgement or registration of the transfer of land and mortgage.


case_title: Craddock Bros v Hunt [1923] 2 Ch 136


case_title: Daniels v Davison (1809) 16 Ves 249

case_text: any event, I have come to the view that even if there is to be a comparison of the two competing interests as suggested by Perpetual, the interests of the retirees have priority. Even accepting that Perpetual took the mortgage at arm's length, in the normal course of its business and for valuable consideration, I have formed this view for the following reasons: (i) the earlier equitable interest in the property of the retirees I have generally regarded as a stronger claim than the later interest of Perpetual; (ii) fairness and justice does not require or indicate the earlier equitable interest of the retirees should be postponed (see Heid v Reliance Finance Corporation Pty Ltd (1983) 154 CLR 326 at 341 (per Mason and Deane JJ)); (iii) any lack of notice by Perpetual is only one aspect of the circumstances I have taken into account, which does not displace the earlier interest of the retirees; (iv) Perpetual knew by itself, or its agents, that the properties were occupied, or at the very least expected the properties would be tenanted, even if Perpetual did not know the exact terms of the Contract of Sale or Agreement for Sale of Real Estate or of the lease. If I am wrong in this regard as to knowledge or expectation, this would still not alter my view as to the competing position; (v) the retirees were in fact in possession of the property which I regard as significant, although not 'decisive' (cf Burke v Dawes [1938] HCA 6 ; 59 CLR 1 per Evatt J at 26); (vi) Perpetual had constructive notice of the retirees' rights and it took its interest subject to them, and this occurs even if the tenant is in possession pursuant to additional entitlements: Hunt v Luck (1902) 1 Ch 428; Lowe v Clyne [1968] 2 NSWR 292 ; Daniels v Davison (1809) 16 Ves 249; and Allen v Anthony (1816) 35 ER 679, and particularly McMahon v Swan [1924] VLR 397 at 405-406 and Burke v Dawes 59 CLR 1 at 26-27 per Evatt J; (vii) Perpetual in failing to investigate the interest of the retirees did so at its 'peril' (see Evatt J at 27 in Burke v Dawes [1938] HCA 6 ; 59 CLR 1 ; and Lowe v Clyne [1968] 2 NSWR 292) ; (viii) whilst the retirees did not lodge timely caveats, the failure of the retirees to lodge a caveat is explicable. They were in fact still registered proprietors. In any event, 'the exception in s 42(2)(e) makes the failure to lodge a caveat of no moment, because it takes away from the registered proprietor that paramountcy which actual registration confers; and the only purpose of a caveat is to prevent such registration' (see Burke v Dawes [1938] HCA 6 ; 59 CLR 1 at 25-26 per Evatt J); (ix) further, I do not regard the failure to lodge a timely caveat as sufficient to postpone the retirees' interests, particularly as there was no evidence that Perpetual relied on the registration or absence of caveat (see IGA Distribution Pty Ltd v King & Taylor Pty Ltd [2002] VSC 440 at [205] per Nettle J); and (x) no retiree consented to or ratified the mortgage to Perpetual.


case_title: Davies v Littlejohn (1923) 34 CLR 174

case_text: Perpetual submitted that the interest of an unpaid vendor does not arise out of, and is not an incident of, or referable to, any right of occupation or tenancy because a vendor's lien, like other equitable liens, is a species of equitable charge, not dependent upon possession (referring to Hewett v Court 149 CLR 639 at 645 per Gibbs CJ and at 663 per Deane J). The vendor's lien arises because the unpaid vendor has parted with the legal title by way of conveyance. It is 'created by equity as part of a scheme of equitable adjustment of mutual rights and obligations applying ... to every ordinary contract for the sale of land': Davies v Littlejohn (1923) 34 CLR 174 at 185 per Isaacs J, and as part of the broader scheme whereby the equitable interest in land passes to the purchaser upon execution of the contract of sale: Tyler, Young and Croft, Fisher & Lightwood's Law of Mortgage (2 nd Aust. ed, 2005) at [2.24]. Perpetual submitted that any vendor's lien flows from a separate document to that creating the right of occupation (alternatively, from a severable provision of the same document). The two rights are entirely severable, as each is capable of standing without the other. In each case, if the lease was terminated, the vendor's lien (if it then existed) would stand. Perpetual contended then that the right of occupation and the vendor's lien are not referable to or incident upon the other.


case_title: Dillon v Gange (1941) 64 CLR 253


case_title: Downie v Lockwood (1965) VR 257

case_text: the question of the operation of s 42(2)(e) of the TLA has been considered previously in the context of the Money for Living scheme in Australian Securities & Investments Commission, in the matter of Money for Living (Aust) Pty Ltd (Administrators Appointed) v Money for Living (Aust) Pty Ltd (Administrators Appointed) (No 2) [2006] FCA 1285 , where Finkelstein J made the following comments (at [24] [25]): I base this conclusion on s 42(2)(e) of the Transfer of Land Act 1958 (Vic) and the equivalent provision in the Torrens legislation in other States. The effect of s 42(2)(e) is that the estate of a registered proprietor of land (including the proprietor of a mortgage) is subject to the rights of a tenant in possession. In this area the relevant principles are clearly established. The first is that the possession of a tenant is notice of any right of the tenant affecting the land: McMahon v Swan [1924] VLR 397 , 406. The second is that, as Dixon J confirmed in Burke v Dawes (1938) 59 CLR 1, 17-18, s 72 of the Transfer of Land Act 1928 (Vic) (which is the forerunner of s 42) was not intended to apply merely to a tenancy as commonly understood. See also Downie v Lockwood [1965] VR 257 , 259 where Smith J said "As appears from the cases the exception in s. 42 (2) (e) is to be widely construed; and it is to be treated as producing the result that "any person in actual occupation of the land obtains as against any inconsistent registered dealing protection and priority for any equitable interest to which his occupation is incident, provided that at law his occupation is referable to a tenancy of sort, whether at will or for years". Thus, for the purposes of the section a purchaser under a contract, who is given possession by the vendor and is only a tenant at will, is protected in respect of his equitable ownership: Robertson v Keith (1870) 1 VLR(E) 11. So, too, is a vendor who remains in possession until the purchase price is paid: he is a tenant "whatever might be the legal denomination of the tenancy": The Commercial Bank of Australia Limited v McCaskill (1897) 23 VLR 10 , 12. It has also been held that an equitable life estate will prevail over a subsequent registered interest: Black v Poole (1895) 16 ALT 155. These principles will protect the tenancies granted to the clients (who it must be assumed were always in possession of their homes) over subsequent dealings with the land. Put another way, the clients' life tenancies are secure, that is their tenancies are "guaranteed" to survive any adverse claims made by subsequent registered proprietors and mortgagees, provided they (the clients) continue to pay $1.00 per annum by way of rent and do not vacate their home. I turn to the nature of the interest of each retiree. In my view, each retiree had an equitable interest in the land by reason of the fact that each was entitled to specific performance of the Contract of Sale or Agreement for Sale of Real Estate or the Deed of Agreement to the possession of the property as a tenant immediately upon settlement. The extent of that interest is to be determined by the form in which specific performance would be granted by a court. The retirees were entitled as against MFLPH to an order requiring MFLPH to sign and deliver to the retirees upon settlement a lease of the property upon the terms agreed, relevantly for life, subject to the condition that the retiree stay in possession for a certain period and pay the nominal rent (see Downie v Lockwood [1965] VR 257; Craddock Bros v Hunt [1923] 2 Ch 136; Chan v Cresdon Pty Ltd (1989) 168 CLR 242; Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 at 332-333, [53]; Black v Garnock [2007] HCA 31 ; (2007) 230 CLR 438 at 449-450, [32] ). It is not necessary that specific performance be available at the time of the hearing: Bunny Industries Ltd v FSW Enterprises Pty Ltd [1982] Qd R 712. It is important to appreciate that the availability and the nature of specific performance is a precondition to the recognition of an equitable interest and the extent of that equitable interest in the property. Here, as I have said, a court, by reference to the terms of agreement between the retirees and MFLPH, would give each retiree possession of the land upon settlement by making an order that MFLPH sign and deliver a lease of the property to each retiree effective from the moment of settlement. Perpetual relied upon the above passage and the principle that s 42(2)(e) and s 40(3)(d) do not give a tenant in possession any greater protection than he or she would have had if the land were under the general law. My view is that if the retirees come within the terms of s 42(2)(e) or s 40(3)(d) , then no comparison of the competing interests is required of the type suggested by Perpetual. In Downie v Lockwood [1965] VR 257 , Smith J undertook no comparative examination of the equities, as submitted by Perpetual should occur in this proceeding. Barba , in reliance on comments in Burke v Dawes , merely decided that effect had to be given to special condition 8, and to that extent the application of the general law applied, and the person claiming to come under the exception to indefeasibility could have no greater rights than he or she would have under the general law. It will be recalled that special condition 8 made the sale subject to the easement to be granted, which special condition the High Court gave effect to by applying the general law.


case_title: Forster v Jojodex Australia Pty Ltd (1972) 127 CLR 421


case_text: Perpetual then contended that the exception to indefeasibility created by s 40(3)(d)(iii) of the LTA was subject to an exception of its own. An equitable lease does not dislodge the indefeasibility of a 'bona fide' purchaser for value without notice of the lease who has lodged a transfer for registration. For the purposes of the LTA, 'transfer' means 'the passing of any estate or interest in land under this Act, whether for valuable consideration or otherwise'. It was contended that the word 'purchaser' must be read in its context and in light of the customary common law usage of the phrase 'bona fide purchaser for value without notice' as extending to the taker of any legal interest in property, not just a transferee. Reference was made to Butt, Land Law (5 th ed, 2007 Lawbook Co); Goodright d Humphreys v Moses [1746] EngR 208 ; (1774) 96 ER 599 at 600, and Pearce and Geddes, Statutory Interpretation in Australia (6 th ed, 2006, LexisNexis) at [4.17]. That interpretation was said to be supported by the use of 'transfer' in s 40(3)(d)(iii); if 'purchaser' meant 'purchaser of the fee simple estate', a word other than 'transfer' (which by the s 3 definition, connotes 'the passing of any estate or interest') would have been used, such as 'assignment'. It was contended that the exception does not elevate the interest of a tenant under an equitable lease above those of all others who hold a registered interest in the land; it merely makes clear that a bona fide purchaser without knowledge has priority over a tenant in all circumstances. It was then contended by Perpetual that the result of the provisions in the LTA is either that: (a) if Perpetual's mortgage was registered simultaneously with or before the transfer to MFLPH, Perpetual was not bound by the alleged tenancy; or (b) if Perpetual's mortgage was registered after the transfer to MFLPH, it was only bound by the alleged tenancy if the Court found that Perpetual did not act bona fide or give good consideration for the mortgage, or it had knowledge of the tenancy at the time of registration. In the case of Easterbrook and Gray, the mortgage was created on 22 March 2005, well after the creation of any equitable lease, and after settlement when Easterbrook and Gray would have been entitled to possession pursuant to their agreement with MFLPH. The Transfer of Land and Mortgage were lodged for registration on the same day, and were each registered the day after. As discussed previously, the Mortgage was registered after the Transfer of Land. Therefore, Perpetual would be bound by the interests of Easterbrook and Gray, unless the exception found in s 40(3)(d)(iii) applied.


case_title: Greco v Swinburne Ltd [1991] 1 VR 304

case_text: see no reason to depart from the views expressed by Gobbo J in Greco v Swinburne Ltd [1991] 1 VR 304 that a lease for life or lives is not void for uncertainty. Whilst the essential characteristic of a fixed term lease is that it must be of a specified maximum duration, this rule may not apply to periodic leases or leases for life (see Re Midland Railway Company Agreement v British Railways Board [1971] Ch 725 at 731-2; Bradbrook, MacCallum & Moore, Australian Real Property Law (4 th ed, Lawbook Co, 2007) at [14.100]; and Foa's General Law of Landland and Tenant (8 th ed, Thames Bank Publishing Co, 1957) at [150]-[154] although see Prudential Assurance Co Ltd v London Residuary Body [1991] UKHL 10 ; [1992] 3 WLR 279 and Peter Sparkes, Certainty of Leasehold Terms (1993) 109 LQR 93).


case_text: retirees alternatively submitted that equity comes to the relief of a plaintiff who has acted to its detriment on the basis of a fundamental assumption, the adoption of which the defendant has played such a part that it would be unfair or unjust if the defendant were left free to ignore it - equity intervening on the footing that it would be unconscionable for the defendant to deny the assumption (see Grundt v Great Boulder Proprietary Gold Mines Limited [1937] HCA 58 ; (1937) 59 CLR 641 at 675; Thompson v Palmer [1933] HCA 61 ; (1933) 49 CLR 507 at 547; and Waltons Stores (Interstate) Limited v Maher [1988] HCA 7 ; (1988) 164 CLR 387 and 404 (per Mason CJ and Wilson J)).


case_title: Heid v Reliance Finance Corporation Pty Ltd (1983) 154 CLR 326 at 341


case_title: Hedley v Roberts (1977) VR 282

case_text: contrary to my analysis and the tenancy by estoppel principles are applicable and relevant, then on the basis of the sequence of events I have found occurred, the estoppel would be fed prior to the grant of the mortgage. This is either because the mortgage was registered after the transfer of land, or because upon registration of the transfer of land, the title feeds the estoppel, so that the earlier grant of the lease operates retrospectively as if MFLPH had legal title (if that was required) at the time of the earlier grant of the lease or entry into the agreement for lease (see Hedley v Roberts (1977) VR 282 at 285 per Harris J (and the references mentioned therein)).


case_text: the retirees' submitted, a vendor is entitled to an equitable lien to the extent of the non-payment of the purchase money after completion of a contract of sale, referring to Hewett v Court [1983] HCA 7 ; (1983) 149 CLR 639 , per Gibbs CJ at 645: Equitable lien does not depend either upon contract or upon possession. It arises by operation of law, under a doctrine of equity "as part of a scheme of equitable adjustment of mutual rights and obligations" ... A vendor's lien for unpaid purchase money has been said to be founded on the principle that "a person, having got the estate of another, shall not, as between them, keep it, and not pay the consideration." The retirees claimed to be entitled to an equitable interest in their property by reason of an equitable lien to the extent of the non-payment of the purchase price after completion of their respective sale contracts and as contemplated by a special condition in those contracts. By way of example, Gainsford's contract stated: The balance of the Purchase Price is payable by the Purchaser to the Vendor in instalments of $720.00 per calendar month commencing on the one month anniversary of the Settlement Date and payable calendar monthly thereafter ... It was argued that the lien is a form of charge over the land and may, in general, be enforced in the same way as any other equitable charge, namely by sale in pursuance of court order (see Hewett v Court [1983] HCA 7 ; 149 CLR 639 at 663 per Deane J). However, Perpetual submitted that the interest of an unpaid vendor does not arise out of, and is not an incident of, or referable to, any right of occupation or tenancy because a vendor's lien, like other equitable liens, is a species of equitable charge, not dependent upon possession (referring to Hewett v Court 149 CLR 639 at 645 per Gibbs CJ and at 663 per Deane J). The vendor's lien arises because the unpaid vendor has parted with the legal title by way of conveyance. It is 'created by equity as part of a scheme of equitable adjustment of mutual rights and obligations applying ... to every ordinary contract for the sale of land': Davies v Littlejohn (1923) 34 CLR 174 at 185 per Isaacs J, and as part of the broader scheme whereby the equitable interest in land passes to the purchaser upon execution of the contract of sale: Tyler, Young and Croft, Fisher & Lightwood's Law of Mortgage (2 nd Aust. ed, 2005) at [2.24]. Perpetual submitted that any vendor's lien flows from a separate document to that creating the right of occupation (alternatively, from a severable provision of the same document). The two rights are entirely severable, as each is capable of standing without the other. In each case, if the lease was terminated, the vendor's lien (if it then existed) would stand. Perpetual contended then that the right of occupation and the vendor's lien are not referable to or incident upon the other.


case_text: submitted that the cases upon which the retirees rely in an attempt to distinguish Abbey have no application in this case (referring to Koompahtoo Aboriginal Land Council v KLALC Property & Investment Pty Ltd [2006] NSWSC 856 ; Barclay's Bank plc v Zaroovabli [1997] Ch 321; HKCB Finance Limited v Yuen Yi Wan [2004] HKEC 1564). In my view, everything will depend upon the facts of each case, and Abbey is not setting down any inflexible rule or principle (see eg Koompahtoo Aboriginal Land Council v KLALC Property & Investment Pty Ltd [2006] NSWSC 856 ; HKCB Finance Limited v Yuen Yi Wan [2004] HKEC 1564 at [61]). The nature of the transactions, their sequence, and the Money for Living scheme indicate that the transactions the subject of the registration of the transfer and mortgage were not indissolubly bound together, and the mortgage should be regarded as a separate and distinct transaction from the transfer and grant of lease, which transactions did occur simultaneously, and prior to the creation of the mortgages in the case of each retiree.


case_title: Hunt v Luck (1902) 1 Ch 428


case_title: IGA Distribution Pty Ltd v King & Taylor Pty Ltd [2002] VSC 440


case_text: accept Perpetual's argument that MFLPH was unable to grant a future lease, whether registered or not registered, after the creation of the mortgage without Perpetual's consent (see Independent Order of Odd Fellows of Victoria Friendly Society v Telford (1991) V ConvR 54-419 per Gobbo J; Commonwealth Bank of Australia v Baranyay [1993] 1 VR 589 at 599 per Hayne J; Rancho Holdings Pty Ltd v Impact Developments (Wodonga) Pty Ltd (1994) V ConvR 54-509 per Batt J; Maher v Commonwealth Bank of Australia [2004] FCA 248 at [24] ; ss 66 and 77 of the TLA (and the equivalent provisions of the LTA); and cl 8 of the common provisions of the mortgage). The time of the creation of the mortgage is the time the mortgages are entered into, not registered. Once the mortgage is registered, it would take priority over any tenancy, but necessarily only a tenancy entered into after the mortgage was created.


case_title: Koompahtoo Aboriginal Land Council v KLALC Property & Investment Pty Ltd [2006] NSWSC 856


case_outcome: distinguished

case_title: Lace v Chantler [1944] KB 368

case_text: whether this be the correct position or not, unlike the position in Lace v Chantler [1944] KB 368 , which was relied upon by Perpetual, in this proceeding the tenancy agreement can be construed as though it were a grant of a freehold life tenancy. The tenancy agreements in this proceeding are very similar to the agreement in Zimbler v Abrahams [1903] 1 KB 577, where the agreement was construed as a lease for life. Zimbler was treated as being correctly decided by Lord Greene MR in Lace . In fact, Lord Greene MR said in discussing Zimbler that if the contract was construed as an agreement to grant a lease for life, one could understand it being so treated and specifically enforceable (at 372).


case_title: Lowe v Clyne [1968] 2 NSWR 292


case_title: Maher v Commonwealth Bank of Australia [2004] FCA 248


case_title: McMahon v Swan [1924] VLR 397

case_text: the question of the operation of s 42(2)(e) of the TLA has been considered previously in the context of the Money for Living scheme in Australian Securities & Investments Commission, in the matter of Money for Living (Aust) Pty Ltd (Administrators Appointed) v Money for Living (Aust) Pty Ltd (Administrators Appointed) (No 2) [2006] FCA 1285 , where Finkelstein J made the following comments (at [24] [25]): I base this conclusion on s 42(2)(e) of the Transfer of Land Act 1958 (Vic) and the equivalent provision in the Torrens legislation in other States. The effect of s 42(2)(e) is that the estate of a registered proprietor of land (including the proprietor of a mortgage) is subject to the rights of a tenant in possession. In this area the relevant principles are clearly established. The first is that the possession of a tenant is notice of any right of the tenant affecting the land: McMahon v Swan [1924] VLR 397 , 406. The second is that, as Dixon J confirmed in Burke v Dawes (1938) 59 CLR 1, 17-18, s 72 of the Transfer of Land Act 1928 (Vic) (which is the forerunner of s 42) was not intended to apply merely to a tenancy as commonly understood. See also Downie v Lockwood [1965] VR 257 , 259 where Smith J said "As appears from the cases the exception in s. 42 (2) (e) is to be widely construed; and it is to be treated as producing the result that "any person in actual occupation of the land obtains as against any inconsistent registered dealing protection and priority for any equitable interest to which his occupation is incident, provided that at law his occupation is referable to a tenancy of sort, whether at will or for years". Thus, for the purposes of the section a purchaser under a contract, who is given possession by the vendor and is only a tenant at will, is protected in respect of his equitable ownership: Robertson v Keith (1870) 1 VLR(E) 11. So, too, is a vendor who remains in possession until the purchase price is paid: he is a tenant "whatever might be the legal denomination of the tenancy": The Commercial Bank of Australia Limited v McCaskill (1897) 23 VLR 10 , 12. It has also been held that an equitable life estate will prevail over a subsequent registered interest: Black v Poole (1895) 16 ALT 155. These principles will protect the tenancies granted to the clients (who it must be assumed were always in possession of their homes) over subsequent dealings with the land. Put another way, the clients' life tenancies are secure, that is their tenancies are "guaranteed" to survive any adverse claims made by subsequent registered proprietors and mortgagees, provided they (the clients) continue to pay $1.00 per annum by way of rent and do not vacate their home. Their Honours referred at various times in the judgment to Burke v Dawes , which they approved generally. Gibbs ACJ stated, at 140: In Burke v Dawes (1938) 59 CLR at 17 18; Dixon J discussed as follows the effect of an earlier Victorian statutory provision which corresponded to s 42(2)(e): In Victoria these words have received an interpretation and an application as a result of which any person in actual occupation of the land obtains as against any inconsistent registered dealing protection and priority for any equitable interest to which his occupation is incident, provided that at law his occupation is referable to a tenancy of some sort, whether at will or for years. Thus, a purchaser under a contract of sale, who at law is in possession as tenant at will of the vendor, has been held protected in respect of his equitable ownership as purchaser ( Robertson v Keith (1870) 1 V.R. (E.) 11 ; Sandhurst Mutual Permanent Investment Building Society v Gissing (1889) 15 VLR 329) , a lessee in respect of an option of purchase contained in his lease ( McMahon v Swan [1924] VLR 397) and a wife in respect of an equitable life interest claimed under an unsigned separation agreement made with her husband ( Black v Poole (1895) 16 ALT 155). a'Beckett J. decided the last named case in deference to previous decisions and against his own opinion, which he stated to be that 'those words were intended to refer to a tenancy as ordinarily understood arising out of an agreement under which the person in possession was allowed to occupy in consideration of some kind of rent or service of which the proprietor was to have the benefit'. The cases are collected and criticized by the late Dr Donald Kerr in his work on The Australian Lands Titles (Torrens) System (1927), at pp. 75 et seq. But the interpretation has stood for nearly seventy years, and it would, I think, be most undesirable now to undertake the re-examination of its correctness. Similar views were expressed by Latham C.J.(1938) 59 C.L.R. at p. 8 and by Evatt J. (1938) 59 C.L.R., at p. 24. McTiernan J. agreed with the remarks of Dixon J ((1938) 59 C.L.R., at p.27). The fifth member of the Court, Starke J., was perhaps not so definite in the expression of his opinion but he did not disagree with what the majority of the Court said on this point (1938) 59 C.L.R., at pp. 12-13. This question should therefore be regarded as settled. The interest of the appellants under the contract of sale from Craigie was within the protection given by s. 42(2)(e). However, it was decided in Burke v Dawes (1938) 59 C.L.R., at pp. 17-18 that s. 42(2)(e) does not give to a tenant in possession any greater protection than he would have had if the land were under the general law: see per Dixon J. (1938) 59 C.L.R., at p. 18, and per Starke J. (1938) 59 C.L.R., at p. 13. Evatt J., who dissented in the result, but whose views on this point were not in my opinion different from those accepted by the majority, said (1938) 59 C.L.R., at p. 25: In my opinion the effect of the exception in favour of every tenant of the land is to deprive the proprietor of the registered interest of the paramountcy which registration would normally confer. It follows that, in determining the competition between the tenant and the proprietor of the registered interest, the latter must be regarded as having been stripped of the benefit conferred by the fact of registration and as having been remitted to the position of holding an unregistered interest. In the present case the respondent is deprived by s. 42(2)(e) of the paramountcy which registration would otherwise have conferred. It then becomes necessary to consider whether, apart from registration, the interest of the respondent under the Creation of Easement will prevail over that which vested in the appellants by virtue of the contract of sale. This question depends on the effect of special condition 8 of the contract of sale. When an owner of land contracts to sell it to a purchaser there is no reason in principle why he should not reserve the right to grant an easement over the property sold or why he should not make the sale subject to the easement to be granted. If this is done effectively the easement when created will take priority over the equitable interest which was granted subject to it. Under the general law, apart from registration, the right of the owner of the easement will prevail over that of the purchaser, notwithstanding that he is in possession, and the provisions of s. 42(2)(e) will not give the purchaser any greater right. In Chesterfield v Pitisano [1964] V.R. 709 at p.713 , Smith J. said that a mortgage granted pursuant to a right reserved to the vendor by a contract of sale would take priority over the equitable interest of the purchaser, and that the rights of the mortgagee on registration would not be rendered subject by s. 42(2)(e) to the interest of the purchaser as a tenant in possession. I respectfully agree with his conclusion on this point. The question therefore is whether special condition 8 did make the sale subject to the easement to be granted. In my opinion the condition did have that effect. It is true that it did not in terms reserve the right to grant an easement, nor did it state that the sale was subject to the easement to be granted. However, the clause expressly stated that it was proposed to create an easement, and that the vendor should be entitled to the compensation paid when the easement was granted, and in my opinion these provisions plainly implied that the easement when granted was to be effective. The clause would be meaningless if the rights of the purchasers prevailed over the easement when it was created. In my opinion the effect of special condition 8 was that the Creation of Easement—not the option, as I have already explained—prevailed over the rights of the appellants. Section 42(2)(e) did not alter this position. It follows that the respondent became entitled to enter the subject land for the purpose of constructing the pipeline on 17 th December 1975 when the Creation of Easement was signed, but it was not entitled to enter for that purpose before that date. ... In any event, I have come to the view that even if there is to be a comparison of the two competing interests as suggested by Perpetual, the interests of the retirees have priority. Even accepting that Perpetual took the mortgage at arm's length, in the normal course of its business and for valuable consideration, I have formed this view for the following reasons: (i) the earlier equitable interest in the property of the retirees I have generally regarded as a stronger claim than the later interest of Perpetual; (ii) fairness and justice does not require or indicate the earlier equitable interest of the retirees should be postponed (see Heid v Reliance Finance Corporation Pty Ltd (1983) 154 CLR 326 at 341 (per Mason and Deane JJ)); (iii) any lack of notice by Perpetual is only one aspect of the circumstances I have taken into account, which does not displace the earlier interest of the retirees; (iv) Perpetual knew by itself, or its agents, that the properties were occupied, or at the very least expected the properties would be tenanted, even if Perpetual did not know the exact terms of the Contract of Sale or Agreement for Sale of Real Estate or of the lease. If I am wrong in this regard as to knowledge or expectation, this would still not alter my view as to the competing position; (v) the retirees were in fact in possession of the property which I regard as significant, although not 'decisive' (cf Burke v Dawes [1938] HCA 6 ; 59 CLR 1 per Evatt J at 26); (vi) Perpetual had constructive notice of the retirees' rights and it took its interest subject to them, and this occurs even if the tenant is in possession pursuant to additional entitlements: Hunt v Luck (1902) 1 Ch 428; Lowe v Clyne [1968] 2 NSWR 292 ; Daniels v Davison (1809) 16 Ves 249; and Allen v Anthony (1816) 35 ER 679, and particularly McMahon v Swan [1924] VLR 397 at 405-406 and Burke v Dawes 59 CLR 1 at 26-27 per Evatt J; (vii) Perpetual in failing to investigate the interest of the retirees did so at its 'peril' (see Evatt J at 27 in Burke v Dawes [1938] HCA 6 ; 59 CLR 1 ; and Lowe v Clyne [1968] 2 NSWR 292) ; (viii) whilst the retirees did not lodge timely caveats, the failure of the retirees to lodge a caveat is explicable. They were in fact still registered proprietors. In any event, 'the exception in s 42(2)(e) makes the failure to lodge a caveat of no moment, because it takes away from the registered proprietor that paramountcy which actual registration confers; and the only purpose of a caveat is to prevent such registration' (see Burke v Dawes [1938] HCA 6 ; 59 CLR 1 at 25-26 per Evatt J); (ix) further, I do not regard the failure to lodge a timely caveat as sufficient to postpone the retirees' interests, particularly as there was no evidence that Perpetual relied on the registration or absence of caveat (see IGA Distribution Pty Ltd v King & Taylor Pty Ltd [2002] VSC 440 at [205] per Nettle J); and (x) no retiree consented to or ratified the mortgage to Perpetual.


case_title: Prudential Assurance Co Ltd v London Residuary Body [1991] UKHL 10 ; [1992] 3 WLR 279


case_title: Rancho Holdings Pty Ltd v Impact Developments (Wodonga) Pty Ltd (1994) V ConvR 54-509


case_title: Re Midland Railway Company Agreement v British Railways Board [1971] Ch 725