LLB301 Week 5 Topic 6 Priorities (Competing Equities) and Caveats Coverage · Unregistered vs registered interests · Competing equitable interests (priorities disputes): · Are the equities equal? · What is the timing of the interests? · Has there been prior notice? · Has there been disentitling conduct? · The importance of caveats · What is a 'caveatable interest'? Topic outline · Topic 6.1 Priority Rules · Topic 6.2 Competing Equities · Topic 6.3 Caveats and Priority Notices Topic 6.1 Priority Rules Priorities - competing interests Owner of property - Fee simple interest Competing interests - who gets paid first? Creates first interest (eg: mortgage) Creates second interest (2nd mortgage) First in time Second in time Types of competing interests 1. Prior legal estate vs subsequent legal estate 2. Prior legal estate vs subsequent equitable estate 3. Prior equitable estate vs subsequent legal estate
4. Prior equitable estate vs subsequent equitable estate · Note the difference between common law system (old system title) and Torrens system Priority rules - Overview · Old system · Legal interests are enforceable "against the whole world" · Equitable interests are enforceable against everyone except - · a bona fide · purchaser for value · of the legal estate · without notice · Torrens system (LTA) the general rule is that: · Registered = legal interest · Unregistered = equitable interest 1. Prior legal estate vs subsequent legal estate • Example . A transfers Blackacre to B and then transfers Blackacre to C · At general law · You cannot give what you do not have - nemo dat quod non habet . Priority is accorded to the interest created first in time . Under the LTA • s 182 - An interest is created or transferred upon registration • s 178 - Priority based on time registered instruments lodged · s 184 - Indefeasibility or registered interests Legal vs legal interests - Torrens system Land Title Act 1994 (Qld) · Section 177(1) · Instruments affecting a lot, including instruments affecting or creating an interest in the lot, must be registered in the order in which they are lodged. · Section 178 - Priority of Registered Instruments
· (1) Registered instruments have priority according to when each of them was lodged and not according to when each of them was executed. . (2) An instrument is taken to be lodged on the date and at the time endorsed on the instrument by the registrar as the date and time of the lodgement unless the contrary is proved. · (3) Subsection (1) is not affected by actual, implied or constructive notice. 2. Prior legal estate vs subsequent equitable estate · Example . A transfers Blackacre to B and then agrees to transfer Blackacre to C · At general law · The earlier legal interest prevails unless it should be postponed because of fraud, blameworthy conduct or an estoppel . Under the LTA • s 184 - registered proprietor holds the interest subject to registered interests affecting the