MEMORANDUM OF ADVICE To: Supervising Partner From: Junior Lawyer Date: 12 May 2022 Client: Ilkay Re: Advice on Property Interests and License Conditions Our client requests advice on two matters. Firstly, whether his interest will prevail over João's equitable charge in a Wynnum property. Secondly, if his Newstead property interest will be affected by Phil's fraud claim. The client also asks we draft a license clause comprising special conditions for his Hamilton property. I CLIENT ADVICE 1. Does Ilkay have better priority interest in the Wynnum property? 1.1. What type of interest do parties have? Ilkay's interest in the property is an equitable interest as it is unregistered.1 João's equitable charge is incapable of registration and is also an equitable interest.2 1.2. Which interest occurred first in time? João's interest occurred first in time when Lauren contracted and charged her interest in the property to him. Ilkay's interest formed subsequently when he entered a contract to purchase the property.3 1 Barry v Heider (1914) 19 CLR 197; Butler v Fairclough (1917) 23 CLR 78 ('Butler'); Chan v Cresdon Pty Ltd (1989) 168 CLR 242. 2 Ibid. 3 Re Coffey Re Bartel [1995] Q ConvR 54-466 ('Re Coffey'). == == .... --
1.3. Does João have a caveatable interest? A caveat provides notice of an unregistered interest and prevents registration of any dealings relating to the land that are inconsistent with the caveated interest.4 A person claiming an interest in a lot may lodge a caveat.5 Such an interest includes an equitable estate in, or right in relation to, the land and accordingly, an equitable charge.6 Thus, João's charge over the property to secure repayment of Lauren's $300,000 debt is sufficient to create an interest supporting a caveat.7 1.4. Did Ilkay have notice of João's interest? If Ilkay had notice of João's earlier equitable interest at settlement, he will take subject to this earlier interest.8 Constructive notice occurs where an instrument would have come to the purchaser's knowledge had searches and inspections been reasonably made.9 Accordingly, where the caveat complied with all form requirements, Ilkay prima facie had constructive notice of João's interest as it was lodged prior to settlement.10 1.5. What principles of 'rights and justice' must be considered?11 Despite lodgement of a caveat, the court may apply such relevant principles to determine which claimant has the better equity.12 A particular focus is placed on whether the earlier claimant is 'guilty' of any 'disentitling conduct,' which can act to postpone their interest.13 This matter can be compared to Re Coffey14 where settlement took place with constructive notice of the earlier claimant's equitable interest as a caveat was lodged after the later equitable claimant acquired interest but prior to settlement. Here, the court held that the 4 Land Title Act 1994 (Qld) ss 124(1), 126(4)(b) ('Land Title Act'); Butler (n 1); J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546, 558; IAC (Finance) Pty Ltd v Courtenay (1963) 110 CLR 550; Black v