70317 Chap.6 Unregistered Interests and Priority Disputes
Unregistered Interests and Priority Disputes
When two valid interests collide
A priority dispute arises when two interests in the same land are valid but inconsistent. The Week 4 lecture gives a four-step method: identify the interests, classify each as legal or equitable, find which ones actually compete, and apply the right rule.
The rules for Torrens land
Registered against registered, the first registered wins.
Registered against unregistered, the registered interest wins unless an exception to indefeasibility applies. Between two unregistered interests, the first in time prevails subject to the merits.
Where the later party is a purchaser who has settled but not registered, test s 43A of the Real Property Act first.
Notice under s 43A
Section 43A protects only a purchaser, or its incoming mortgagee, between settlement and registration, and only without notice. Notice includes constructive notice, so a purchaser who never inspects can be bound by a tenant in possession.
What this chapter covers
- 01
Formalities under ss 23B to 23E and 54A
- 02
Legal and equitable interests on Torrens land
- 03
The four general law priority rules
- 04
The four-step method for priority disputes
- 05
Postponing conduct and Heid v Reliance
- 06
Section 43A and the settlement window
- 07
Actual, constructive and imputed notice
Worked example · free
Testing the s 43A window for a buyer who never inspected
- 1A five-year oral lease is outside s 23D(2), but possession and fit-out are part performance, so Esi holds an equitable lease.
- 1Lars has settled but is unregistered: test whether s 43A treats him as holding the legal estate.
- 1Notice includes constructive notice (IAC v Courtenay); an inspection would have revealed Esi in possession, so s 43A fails.
- 1Two equitable interests remain: Esi is first in time and nothing postpones her, so her lease prevails for now.
Key terms
- Priority Dispute
- A contest between two or more valid but inconsistent interests in the same land.
- Postponing Conduct
- Conduct by the holder of an earlier interest that makes it inequitable for that interest to keep its priority.
- Constructive Notice
- Knowledge the law attributes to a person who would have discovered a fact by making the usual inquiries.
- Vendor's Lien
- A seller's equitable interest in the land for purchase money that remains unpaid after the sale.
- Part Performance
- Acts done in reliance on an oral agreement that let equity enforce it despite the absence of writing.
Unregistered Interests and Priority Disputes FAQ
What are the four steps for a priority dispute?
First identify the interests, such as a tenant, mortgagee or purchaser. Second classify each as legal or equitable. Third find which interests actually compete, for possession, repayment or use of the land. Fourth apply the matching rule, testing s 43A whenever a purchaser has settled but is not yet registered.
Who can rely on s 43A of the Real Property Act?
A purchaser who has settled and holds a registrable transfer, or that purchaser's incoming mortgagee, during the window before registration, and only if it had no notice of the earlier interest. The Exercise 2 feedback stressed that an existing unregistered mortgagee of the seller cannot use the section.
Does section 23C make an interest equitable?
No. Section 23C of the Conveyancing Act sets the formality for creating or disposing of an interest in land, writing signed by the person making it. The interest is equitable because, on Torrens land, an unregistered dealing passes no legal interest, and equity recognises the transaction, as Barry v Heider shows for an unregistered mortgage.
What does first in time subject to the merits mean?
Between two equitable interests the earlier one usually wins, as Rice v Rice states, but not automatically. The court compares the conduct of the parties and may postpone the earlier interest if its holder enabled the later one to be created on a false footing, as Heid v Reliance shows. Failing to caveat is only one factor.
Exam move
Draw the priority matrix from memory and then the four Torrens rules beside it, and practise the four-step method on every tutorial problem from Week 4 onwards. Keep a note of which case belongs to which contest: Rice v Rice and Heid for two equities, Northern Counties v Whipp for a prior legal interest, IAC v Courtenay and Hunt v Luck for notice under s 43A.
Use the optional Week 4 self-test to check that you can name the type of dispute quickly. Before the exam, reread the Exercise 2 feedback on Dave, Penny and Max, and rewrite one of your own answers using the priority-line layout it recommends.
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