LAWS2204 Property
Priority Disputes
When two unregistered interests compete — neither yet on the register — the question is which prevails, and this is the densest problem-solving area in the course. The starting rule is first in time, but the earlier interest can be postponed by the conduct of its own holder (Rice v Rice; Abigail v Lapin; Heid v Reliance Finance). The decisive discipline is to keep the two priority worlds apart: the general-law world (BFPVWN, notice, deeds) and the Torrens world (caveats, s 43A, postponing conduct). In general-law land there are four rules, applied after you characterise each interest as legal or equitable and fix the order of creation: prior legal vs later legal (nemo dat, first in time); prior legal vs later equitable (prior legal wins unless its holder is guilty of fraud or gross negligence with the title deeds); prior equitable vs later legal (the later legal wins only if a BFPVWN); and prior equitable vs later equitable (first in time unless the equities are unequal, Rice v Rice). In the Torrens world, the caveat regime, the priority-notice system and s 43A (which protects a purchaser under a paper conveyance between settlement and registration) reshape the analysis.
What this chapter covers
- 01Two priority worlds — general-law (BFPVWN/notice/deeds) vs Torrens (caveats/s 43A)
- 02Characterise each interest (legal/equitable + type) and fix the chronology
- 03The four general-law rules (nemo dat; deeds-negligence; BFPVWN; equal-equities)
- 04Postponing conduct — arming another with the indicia of title (Heid v Reliance Finance)
- 05Equitable vs equitable — first in time unless the equities are unequal (Rice v Rice)
- 06Failure to caveat and the caveat regime
- 07Section 43A — protection for the paper-conveyance purchaser before registration
Worked example: two equitable interests, one careless mortgagor
- +1Name the world and characterise. Both interests are unregistered equitable mortgages over Torrens land, so this is a priorities contest; the question is equitable vs equitable.
- +1State the rule. Between competing equitable interests, the rule is first in time — but only where the equities are equal (Rice v Rice); the earlier interest is postponed if its holder's conduct armed the later party or misled them (Heid v Reliance Finance; Abigail v Lapin).
- +1Apply. Pia is first in time, but her failure to caveat (and to secure the duplicate title) left the mortgagor able to present an apparently unencumbered title to Quinn, who relied on it in good faith. That is postponing conduct: the equities are not equal.
- +1Conclude. Pia's earlier interest is postponed to Quinn's; Quinn has priority despite being later, because Pia's own omission enabled the second mortgage. Lodging a caveat would have preserved her first-in-time priority.
Key terms
- First in time
- The starting priority rule: where two interests compete, the one created earlier prevails (qui prior est tempore potior est jure). For competing equitable interests it applies only where the equities are equal (Rice v Rice), and it can be displaced by postponing conduct.
- BFPVWN
- A bona fide purchaser of the legal estate for value without notice. In general-law priority disputes, a later legal interest defeats a prior equitable interest only if its holder is a BFPVWN — the central protection of the general-law world (its Torrens analogue runs through s 43A).
- Postponing conduct
- Conduct by the holder of an earlier interest that causes it to lose priority to a later interest — for example arming another with the indicia or duplicate title, or failing to caveat where that omission misleads the later party (Heid v Reliance Finance; Abigail v Lapin).
- Caveat
- A statutory notice lodged on the Torrens register that warns of an unregistered interest and can prevent dealings being registered without notice to the caveator. Failing to caveat can amount to postponing conduct that costs an earlier interest its first-in-time priority.
- Section 43A
- The RPA provision that protects a purchaser under a paper conveyance who has taken a registrable dealing but is not yet registered — conferring, in effect, the standing of a legal-interest holder for priority purposes (subject to its elements) so that the gap between settlement and registration does not defeat them.
Priority Disputes FAQ
What is the basic rule for ranking competing unregistered interests?
Start with first in time: the interest created earlier prevails. But this is only the starting point. For competing equitable interests it applies only where the equities are equal (Rice v Rice), and in every case the earlier interest can be postponed if its holder engaged in conduct — such as arming another with the title documents or failing to caveat — that enabled or misled the later party (Heid v Reliance Finance).
What are the four general-law priority rules?
After characterising each interest and fixing the order of creation: (1) prior legal vs later legal — nemo dat, first in time; (2) prior legal vs later equitable — the prior legal wins unless its holder is guilty of fraud or gross negligence with the title deeds; (3) prior equitable vs later legal — the later legal wins only if a bona fide purchaser for value without notice (BFPVWN); (4) prior equitable vs later equitable — first in time unless the equities are unequal (Rice v Rice).
Why does failing to lodge a caveat matter so much?
Because a caveat warns the world of your unregistered interest, and your failure to lodge one can be treated as postponing conduct: it may leave the registered proprietor able to present an apparently clean title to a later party who then relies on it. Where that omission enables or misleads the later interest-holder, the court can postpone your earlier interest to theirs even though you were first in time.
What does s 43A do in a priority dispute?
Section 43A protects a purchaser under a paper conveyance who has taken a registrable dealing but has not yet been registered, in the gap between settlement and registration. It effectively gives that purchaser the priority standing of a legal-interest holder (subject to its elements and to the protection running down the chain), so that an earlier equitable interest does not automatically defeat them before they reach the register.
Exam move
This is the highest-load problem area, so run the lecturer's drilled method every time: (1) identify who is advised and what they want; (2) characterise each interest (legal/equitable plus type — fee simple, lease, mortgage, lien); (3) fix the chronology of creation; (4) ask whether s 43A applies (paper conveyance only); (5) if not, apply the right priority rule, then test for postponing conduct. The single most important discipline is deciding which world you are in before you reach for a rule — general-law (BFPVWN, notice, deeds) or Torrens (caveats, s 43A, postponing conduct). Weld each step to a named case and the correct NSW section; misapplying a general-law rule in a Torrens dispute (or vice versa) is the classic way to lose the marks.
