Davies v Littlejohn [1923] HCA 64

Davies v Littlejohn [1923] HCA 64 - HCA 1923 case summary — Zoe

[47]

Crown lands shall not be sold, leased or dealt with except under and subject to its provisions. It contains elaborate provisions regulating the acquisition, holding, disposition, and forfeiture of (inter alia) conditional purchases, which may be outlined as follows : - With certain specified exceptions all Crown lands are open for conditional _ purchase at a fixed price of 20s. per acre and, subject to certain restrictions and disqualifications prescribed by the Act. any person may apply for an original conditional purchase. The application is referred to the Local Land Board, which confirms it if satisfied that it is made in good faith, but may for sufficient reasons disallow it. The applicant must reside on the land for a period of ten years from the date of the application, and must also comply with certain con- ditions as to fencing or improvements. The purchase-money with interest at 2} per cent on the unpaid balance is payable by annual instalments of 5 per cent of the price of the land, the first instalment being payable at the end of the third year after the date of application, and the holder has the right to pay off the whole or any number of the instalments at any time after the issue of the final certificate that he has complied with the conditions other than payment of purchase- money. The land, together with any moneys paid in respect of it, is liable to forfeiture on default being made in performance of the conditions of residence, &e., or in payment of any instalment of purchase-money within three months of due date. Forfeiture is declared by notification published in the Government Gazette and takes effect thirty days after such notification, and sec. 206 provides that thereupon the land "shall become Crown lands . . . and be reserved from every form of sale or lease, until otherwise notified in the Gazette." The forfeiture may be waived or reversed by' the Minister in accordance with the provisions of the Act. By sec. 181 it is provided that the conditions attaching to a conditional purchase shall bind, not only the original applicant, but also all - persons deriving title through or under him. The title to a con- ditional purchase is to commence from the date of the application, if valid (sec. 150); and, when all conditions have been complied with and the balance of purchase-money and certain fees have - been paid, "a Crown grant in fee simple of the land shall be issued upon application." By sec. 261 it is provided that a transfer

[62]

Isaacs J. This appeal relates primarily to the interpretation of certain words in the will of John Henry Davies. The crucial words are "the charges or encumbrances on my said station properties." That question, however, cannot be settled without considering some very important matters of general concern. The station properties include some current conditional purchases under the New South Wales Land Acts. The learned primary Judge (Harvey J.) held that the Crown has a vendor's lien on the land until full and complete payment, and that such lien fell within the testamentary expression "encumbrances." This view, after some discussion at the Bar, was not pressed by the respondents; but there were substituted, in argument for the vendor's lien, two alleged Crown rights, namely, first, a general tight of the Crown, at all events before the last Conveyancing Act, to hold a charge on all real property of its debtor, and, next, the liability to forfeiture under sec. 55 of the Crown Lands Consolidation Act 1913. I pass by the affidavits as immaterial for the purpose of influencing the Court with regard to the meaning of the term " encumbrance." The meaning of this expression must be determined from its inherent legal signification in such a collocation. There is no context in the will affecting its primary import. I cannot agree that the Crown has an ordinary vendor's lien. The doctrine of " vendor's lien" is one created by equity as part of a scheme of equitable adjustment of mutual rights and obligations applying, unless negatived, to every ordinary contract of sale of land. In In re Thackwray and Young's Contract (1) Chitty J. says : - ' As is well known, where there is a contract for sale which is valid and can be specifically performed the equitable interest in the lands at once passes to the purchaser subject to his payment of the money, and, on the other hand, the vendor has a lien on the land for the unpaid purchase-money. That is the law, and it is scarcely necessary to refer to Shaw v. Foster (2) for that proposi-

[77]

that stage. Sec. 47 prescribes a condition of residence. Sec. 48 prescribes a condition of fencing, which is modifiable. Sec. 51 enacts the obligation of paying by instalments the balance of purchase-money. This is an important section. It imposes an obligation on ~ the holder of a conditional purchase " to pay a first instalment at the end of the third year at the rate of 5 per cent of the price of the land, and a similar instalment each year until the whole is paid. Sec. 55 is in these terms : " Upon default in the payment of any instalment of purchase-money for three months after the day when the same falls due, the conditional purchase, together with any moneys paid in respect thereof, shall be liable to be forfeited." There are other provisions relative to conditional purchases but not relevant to this ease. As to the point that all Crown debts are or were at the material time charged on all lands of the debtor, I do not stop to discuss it. It has no relevance here, because the lands comprised in a conditional purchase are ex necessitate the lands of the Crown itself. With regard to the other point, whether sec. 55, enacting a liability to forfeiture, is, like a vendor's lien, an encumbrance , a more arguable position is created. Lord Selborne's judgment already quoted, how- ever, is decisive as to the governing principle. There is no equitable estate in the conditional purchase. The equitable estate of a pur- chaser is simply a convenient expression for his right to compel in equity the transfer of the legal estate. In Central Trust and Safe Deposit Co. v. Snider (1) Lord Parker said : - * It is often said that after a contract for the sale of land the vendor is a trustee for the purchaser, and it may be similarly said that a person who covenants for value to settle land is a trustee for the objects in whose favour the settlement is to be made. But it must not be forgotten that in each case it is tacitly assumed that the contract would in a Court of equity be enforced specifically." I place no special reliance for this purpose on the word " contract.

[104]

on my said real and personal estate) is power to postpone sale, power to carry on the business, power to raise any money by mortgaging or charging all or any of the estate, not only for the purchase or acquisition of stock and land of any tenure but also for discharging any mortgages or charges affecting the estate. There is power to realize any investments, and to invest the proceeds " in the purchase of any freeholds conditionally purchased conditionally leased land or lands of any other tenure." There is an annuity given to the Nicholson family out of the income - an annuity which is not to be "a charge against or encumbrance upon" the estate as between the trustee and any purchasers. Then follow the directions which I have set out at the beginning of this judgment. Several affidavits have been filed, made by bankers and others. to the effect that the balances owing to the Crown on conditionatly purchased land are not "usually" spoken of as charges or encum- brances on the land. I concur with the learned Judge in his view that these affidavits cannot be regarded as evidence of the meaning of the words of the will. Yet, when one looks at the scheme and manifest general purpose of the will and the context, even before closely considering the nature of a conditional purchase under the Crown Lands Consolidation Act, one would naturally hesitate before treating in one and the same category an obligation which is a mere burden on the estate, and an obligation which, if satisfied, will increase the estate. Almost immediately before the clause under discussion, the testator directs that the Nicholson annuity, although payable out of the income, shall not as between the trustees and any purchaser "be a charge against or encumbrance upon" the estate. These are the precise words used as in this clause. The annuity is a mere burden on the estate ; the payment thereof does not bring any increase to the estate ; whereas by paying all the instalments on a conditional purchase a fee simple title can be acquired instead of a mere conditional purchase title. There is surely a clear distinction

At a glance

Court

Decision date

Before

Source

Judgment (140 paragraphs)