Chang v Registrar of Titles: 11 Feb 1976

(High Court of Australia) The court discussed the trusteeship arising on a contract for the sale of land.
Mason J said: ‘It has long been established that a vendor of real estate under a valid contract of sale is a trustee of the property sold for the purchaser. However, there has been controversy as to the time when the trust relationship arises and as to the character of that relationship. Lord Eldon considered that a trust arose on execution of the contract (Paine v Meller; Broome v Monck). Plumer M.R. thought that until it is known whether the agreement will be performed the vendor ‘is not even in the situation of a constructive trustee; he is only a trustee sub modo, and providing nothing happens to prevent it. It may turn out that the title is not good, or the purchaser may be unable to pay’ (Wall v Bright). Lord Hatherley said that the vendor becomes a trustee for the purchaser when the contract is completed, as by payment of the purchase money (Shaw v Foster). Jessel M.R. held that a trust sub modo arises on execution of the contract but that the constructive trust comes into existence when title is made out by the vendor or is accepted by the purchaser (Lysaght v Edwards). Sir George Jessel’s view was accepted by the Court of Appeal in Rayner v Preston.
It is accepted that the availability of the remedy of specific performance is essential to the existence of the constructive trust which arises from a contract of sale’. Jacob J: ‘Where there are rights outstanding on both sides, the description of the vendor as a trustee tends to conceal the essentially contractual relationship which, rather than the relationship of trustee and beneficiary, governs the rights and duties of the respective parties’.

Judges:

Mason J, Jacob J

Citations:

(1976) 137 CLR 177, (1976) 50 ALJR 404, (1976) 8 ALR 285, [1976] HCA 1

Links:

Austlii

Jurisdiction:

Australia

Cited by:

CitedJerome v Kelly (Her Majesty’s Inspector of Taxes) HL 13-May-2004
In 1987, trustees holding land for various beneficiaries in undivided shares entered into a contract to sell it to a purchaser. In 1989 Mr and Mrs Jerome, who were absolutely entitled to interests in the land, assigned part of their beneficial . .
CitedScott v Southern Pacific Mortgages Ltd and Others SC 22-Oct-2014
The appellant challenged a sale and rent back transaction. He said that the proposed purchaser had misrepresented the transaction to them. The Court was asked s whether the home owners had interests whose priority was protected by virtue of section . .
Lists of cited by and citing cases may be incomplete.

Land, Contract, Commonwealth

Updated: 16 May 2022; Ref: scu.196888