(Australia) Mr and Mrs Lapin, the registered proprietors of land, had given transfers by way of security to creditors who fraudulently mortgaged it. The majority in the High Court had held that the unregistered security of the subsequent lender did not take priority over the Lapins’ equitable right to redeem. Knox CJ and Dixon J, in the majority, and Gavan Duffy and Starke JJ, in the minority, agreed that prima facie the equitable interest of the prior equity holder took priority of the later. That position could be disturbed by disentitling conduct on the part of the holder of the prior equity which warranted its postponement to the subsequently acquired equity.
Held: The appeal succeeded. The Lapins’ conduct in arming their creditors with the capacity to become the registered proprietors was disentitling conduct. The Board rejected Kindersley V-C’s position that priority in time was the test only where the equities were otherwise equal. It was clearly established that prima facie priority in time would decide the matter unless there was something ‘tangible and distinct having grave and strong effect’ to warrant taking away the pre-existing equitable title.
‘For the general protection of equitable interest or estates, the act provides that a caveat may be lodged with the registrar by any person claiming as cestui que trust, or under any unregistered instrument or any other estate or interest; the effect of the caveat is that no instrument will be registered while the caveat is in force affecting the land, estate or interest until after a certain notice to the person lodging the caveat. Thus, though the legal interest is in general determined by the registered transfer, mortgages or other changes, the register may bear on its face and notice of the equitable claims, so as to warn persons dealing in respect of the land and to enable the equitable claimant to protect his claim by enabling him to bring an action if his claim is disputed.’
Citations:
[1934] UKPC 33, [1934] AC 491, 151 LT 429, [1934] All ER 720
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Cited – Cook v The Mortgage Business Plc CA 24-Jan-2012
The land owners sought relief from possession orders made under mortgages given in equity release schemes: ‘If the purchaser raises all or part of the purchase price on mortgage, and then defaults, the issue arises whether the mortgagee’s right to . .
Lists of cited by and citing cases may be incomplete.
Commonwealth, Land
Updated: 04 October 2022; Ref: scu.450476