Unregistered interests competing

Competing interests – one registered v none registered?

One registered → subject only to interests already on the register, then indefeasible free of unregistered/equitable interests (s 51 LTA) subject to exceptions | Neither registered → off-register priority dispute: court decides whose interest is recognised / who can register.

Role of caveats in priority disputes?

If you can't register yet, caveat to protect your interest | If unclear whether anyone is registered, acknowledge and consider both possibilities.

WARNING (Part C) for priority contests?

The winner of an off-register contest can register free of the loser – don't argue the winner commits LTA fraud by registering with knowledge | A caveat can never improve priority (Mercury Geotherm, approved in Perkins v Purea).

Starting presumption (Rice v Rice)?

'Qui prior est tempore potior est jure' – he who is earlier in time has the stronger claim in law | Provided the equities are equal; usually a 'wrongdoing' party loses | Onus on the LATER party to establish the better equity.

Factors – FIRST interest in time?

Did they arm the other with the ability to go out under 'false colours' (failing to disclose their prior interest so Y acted as if it didn't exist)? | Did they caveat – if not, why not? | Did they let the second interest act to their prejudice?

Factors – SECOND interest in time?

Did they know of the first interest (actual or constructive knowledge)? | Did they ignore warning signs? – occupation CAN be a warning sign.

CASE: Emslie v Genuine Investments – facts?

The Emslies were caught in a scheme transferring their Borich Road title to GI, which on-sold to RS Trust | Their lawyer let a caveat lapse; a second caveat came only after RS contracted and paid | GI held on constructive trust for the Emslies; RS had an equitable interest under its contract.

CASE: Emslie – reasoning + held?

Onus on RS (later) | Emslies: commercially reckless transfer armed GI with false colours; failure to caveat relevant though lawyer's error – they bear some responsibility | RS: knew of a tenancy dispute, but that didn't point to ownership – not on inquiry; no duty to 'check in' with former owners | RS had the better equity.

CASE: Perkins v Purea – facts?

Old contract: daughter June would live in the property, pay off the mortgage, then own it | Father then sold quickly to Perkins | June lodged a caveat → priority dispute.

CASE: Perkins v Purea – reasoning + held?

June: no false colours (not reckless); caveat delay was her lawyer's error (tension with Emslie) | Perkins: constructive knowledge – knew of the dispute and ought to have inquired (highly determinative) | June first in time; nothing reversed the equities | BFP defence doesn't apply between equitable interests but knowledge is highly relevant ([104]).

CASE: Mercury Geotherm v McLauchlan – facts?

Network (later Venture) should have transferred lots 1–2 to MGL to lease to the McLauchlan trust; overlooked, so it held them subject to the trust's equitable lease | Receivers contracted to sell to Contact Energy; McLauchlan caveated 5 days before settlement.

CASE: Mercury Geotherm – reasoning + held?

First (lease): no paper trail (no rent), no steps to publicise, months of delay (ill-health, reliance on lawyer/JV partner considered) | Purchaser: constructive knowledge of occupation and background | Equities finely balanced but M did nothing 'wrong' enough to reverse → Contact registered subject to M's lease.

Mercury Geotherm – constructive notice rule?

'If a potential purchaser knows of certain facts which put him, or should put him, on inquiry as to the possible existence of the rights of another and fails to take reasonable steps to verify whether such other rights exist, he will take subject to that earlier right.'

CASE: AGC v CFC Commercial Finance – facts + held?

Two unregistered mortgages: AGC first, but didn't take the duplicate title and delayed 9 days caveating; CFC searched a clear title, took a mortgage and the duplicate, and tried to register | CFC took priority (equities reversed) – but looking at the 'whole picture' priority re-reversed to the extent of $54,000 because of CFC's own delay.

APPLY: A has an unregistered agreement to buy; doesn't caveat for months; owner sells to B, who saw A living there. Who wins?

A first in time; onus on B (Rice v Rice) | Against A: delay/no caveat (relevant, not decisive – Emslie v Perkins) | Against B: occupation = warning sign → constructive notice (Mercury Geotherm, Perkins) → likely A keeps priority.