Lapin v Abigail [1930] HCA 6

Lapin v Abigail [1930] HCA 6 - HCA 1930 case summary — Zoe

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1924 Mrs. Heavener mortgaged the land to the English, Scottish and Australian Bank. These memoranda of mortgage were registered on 14th August 1925, and on 2nd September 1925 they were discharged; and on the same day Mrs. Heavener executed in favour of Abigail a memorandum of mortgage over the said lands to secure repayment of £5,500. This memorandum of mortgage was never registered. It did not appear how or out of whose money _ the English, Scottish and Australian Bank was paid off, but the sum of £3,500 was paid by Abigail into Heavener's bank account on 2nd September and the balance of £2,000 on 7th September 1925. On 4th September 1925 Abigail's clerk, on behalf of Abigail, lodged a caveat against dealing with the said lands. On 16th October 1925 Lapin commenced proceedings in equity against Heavener for an injunction. Abigail was Heavener's solicitor in those proceedings. On 30th November 1925 Abigail advanced to Heavener a further sum of £1,000, and memoranda of mortgage over the above-mentioned lands were on that day executed by Mrs. Heavener in Abigail's favour to secure the repayment of £6,600. These memoranda were never registered. On 1st December 1925 Abigail caused a caveat to be lodged claiming an interest under such memoranda. In 1927 the Lapins instituted a suit in equity against Heavener and his wife, Abigail and others, the plaintifis claiming a declaration that the memoranda of transfer from them to Mrs. Heavener were void and that the plaintiffs were respectively entitled to be registered as proprietors in fee simple of the lands in question freed from the mortgage to Abigail. The plaintifis alleged that the transfers to Mrs. Heavener were obtained by means of representations by Heavener that they were memoranda of mortgage, and that the plaintiffs did not knowingly sign transfers of the lands in question, that Abigail took with notice of the facts alleged ; and further that Abigail, when he obtained his securities, was carrying on the business of a money-lender within the meaning of the Money-lenders and Infants Loans Act 1905 (N.S.W.) and was not registered. The appellants had not lodged a caveat with respect to the lands in question, and Abigail before advancing the money to the Heaveners had not searched for one.

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shown as being the registered proprietor of land under the R Property Act 1900 is the legal and equitable owner of such land therefore, anyone dealing with him is entitled to assume, witho more appearing, that he is such legal and equitable owner. as the respondent was concerned Heavener was in that p As the object of a caveat is to give notice of other interests a pe is not prejudiced by not having searched when the position is f] had a search been made, nothing would have been found (Com ancing Act 1919 (N.S.W.), sec. 164). Sec. 43 of the Real Pro Act 1900 should be read literally, and, if so read, a caveat may b ignored. The protection afforded by that section should apply before registration, and not after registration only as expressed Knox C.J. in Templeton v. Leviathan Pty. Ltd. (1). Such ani pretation is not a correct interpretation of the words " contracti or dealing with or proposing to take a transfer " as appearing in th section. All the sections in the Real Property Act 1900 dealing caveats are exceptions to sec. 43 of the Act. A caveat makes result voidable whether before or after registration. The obje the Act was to force people to protect their unregistered inter by caveat (Oertel v. Hordern (2); Cooke v. Union Bank (3)). regards priority of equities, the respondent intended to keep Bank's mortgage alive for his own benefit and only parted with his money on the understanding that he was to have a legal mort; over the property (Whiteley v. Delaney (4)). As between # appellants and the Bank there was a good mortgage. The case show that where an existing charge is paid off by a third person and that charge could by appropriate conveyance be kept alive for the benefit of that third person, the law will assume it was intende to keep the benefit of such charge alive for such third person (B v. Rice (5); Halsbury's Laws of England, vol. xxt., p. 180). [Knox C.J. referred to Real Property Act 1900, sec. 65 (2).] Even if the respondent is not entitled to the benefit of the char the doctrine that equitable relief will be given only to those wh do equity will apply ; that is to say, relief will be granted only on wal!) (1921) 30 C.L.R. 34, at pp. 54- (3) (1893) 14 N.S.W.LR. (Eq.) 28 (4) (1914) A.C. 132, at pp. 139,

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memoranda of transfer from the appellants to Mrs. Heavener were void, a declaration that the respective appellants were respectively entitled to be registered as proprietors in fee simple of the lands contained in the said respective memoranda of transfer freed from the memoranda of mortgage to the respondent Abigail, and conse- quential and other relief not now material. The appellants alleged that the transfers to Mrs. Heavener were obtained by means of representations by Heavener that they were memoranda of mort- gage to secure certain advances and that they did not knowingly sign transfers of the lands in question, that respondent Abigail took with notice of the facts alleged by them, and that the respondent Abigail was, when he obtained his securities, carrying on the business of a money-lender within the meaning of the Money-lenders and Infants Loans Act 1905 and was not registered under that Act. By his statement of defence the respondent Abigail set up that at the time he made the advances to Heavener he had no notice, express or implied, of any claim of the appellants, and that he acted bona fide and dealt with the registered proprietor of the said lands, and further that at the time of such dealing the only incumbrance noted on the certificate of title of the said lands was a mortgage to the English, Scottish and Australian Bank Ltd., and that immediately on obtaining the said securities he lodged caveats against dealings with the said lands. He set up further that the mortgage to the English, Scottish and Australian Bank was a valid mortgage and. that he advanced the necessary moneys to discharge the same and that, in any event to the extent to which the moneys advanced by him were used to discharge the first mortgage and any other incum- brances over the said lands, he was entitled to security over the said lands. He denied that he at any time carried on the business of a money-lender within the meaning of the Act. He set up, further, that the appellants had been guilty of negligence in (among other things) not lodging caveats against dealings with the said lands and in allowing Mrs. Heavener to become and remain the registered proprietor thereof. The learned trial Judge held (1) that the trans- fers to Mrs. Heavener were given not as absolute transfers but as security for payment of Heavener's costs and for the repayment

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of the amount owing to the Union Bank ; (2) that he was not fied that the respondent Abigail was at the material dates carrying on business as a money-lender, though he was not satisfied that h was not doing so ; (3) that the respondent Abigail had establish defence that with respect to the mortgage of 2nd September he was a bona fide purchaser for value without notice ; (4) that y respect to the mortgage of 30th November 1925 he had failed establish that defence ; (5) that the respondent Abigail had establi: to his satisfaction that the advances of £5,500 and £1,000 made on the faith of the memoranda of transfer executed by t appellants in favour of Mrs. Heavener and of the certificates title standing in her name and of the execution by her of the relative memoranda of mortgage ; (6) that with respect to the mortgage 2nd September 1925 the decision in Barry v. Heider (1) applied and that the appellants were estopped by their representations from asserting against respondent Abigail that their equity was prior ir point of time to his. Incidentally the learned Judge held Harris was the person who acted for respondent Abigail in connecti with the conveyancing part of the loan transactions of 2nd Septembe 1925 and was his agent in that respect. With respect to the defences of purchaser for value without notice, his Honor said (2) : - " The onus of establishing that he was a bona fide purchaser for value without notice rests on the defendant (Wilkes v. Spooner (3) ; see also Pil v. Rawlins (4)). In my view the defendant Abigail has by own evidence discharged this onus so far as regards the mortge of the 2nd September 1925 to secure the repayment of the loan £5,500, which was advanced Ly his two cheques for £3,500 and £2,000 respectively on the 2nd and 7th September ; and I so hold, notw standing that his clerk Harris, who attended to the conveyancing part of the matter, was not called to prove that he also had no notice at that time of the plaintiffs' equity. There was not, in my view, any evidence to suggest that at that date Harris had such notice, or knowledge of any facts which might rouse his suspici or put him on inquiry, and it was not, therefore, in my opinion, incumbent on the defendant Abigail to call him, as he had himself gone

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the respondent. Prima facie the equitable title of the appellants, being prior in point of time, takes priority of the equitable title of the respondent Abigail, and it is for him to show facts which render it inequitable for the appellants to insist as against him on that priority. The facts relied on by the respondent Abigail as entitling him to priority are (1) that the appellants executed in favour of Mrs. Heavener transfers absolute in form purporting to be transfers on sale for valuable consideration ; (2) that the appellants by such transfers enabled Mrs. Heavener to become registered as proprietor infee simple and to obtain certificates of title; (3) that the appellants omitted to lodge caveats to protect their equitable interests. In the circumstances of this case these facts appear to me insufficient to justify the postponement of the appellants' equities to the equity of the respondent Abigail. Heavener was the appellants' solicitor, and it does not appear that they had any reason to assume that he was a rogue or that he would make a dishonest use of the certificates of title (Union Bank of London v. Kent (1)). There is no evidence that Abigail ever saw the transfers or that before the money was advanced any search was made to ascertain if a caveat had been lodged against dealings with the land. The registration of Mrs. Heavener as proprietor in fee simple was consistent with the existence of an equitable interest outstanding in some other person, and not inconsistent with the whole beneficial title to the lands being in the appellants. Mrs. Heavener was in a fiduciary relation to the appel- lants, and was entitled under the arrangement between them and Heavener to become registered as proprietor and to hold the docu- ments of title until the debt intended to be secured was paid off. The decisions in Shropshire Union Railways and Canal Co. v. The Queen (2), Carritt v. Real and Personal Advance Co. (3) and Taylor v. London and County Banking Co. (4), and the observations of Farwell J. in Rimmer vy. Webster (5) and Burgis v. Constantine (6), seem to me to indicate that the possessor of the prior equity is not to be postponed to the possessor of a subsequent equity unless the act

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rather a working rule, which applies in the great majority of ins but do not state the principle. The principle is that the Court not for the worst, but for the best equity. And the best equi for there may be several claimants - is that which on the whole i the most meritorious, it may be because the others are, by of circumstances indicated in the passages quoted, lessened in rela merit, or because one is, by reason of some additional circum not attributable to any act or omission of the others, rendered in the eye of equity more meritorious than the rest. That, I think, is the view taken by Parker J. in Crosbie-Hill v. Sayer (1), where he says: "The mortgages to the plaintiffs, and the mortgage to the first tw« defendants, are thus all of them equitable mortgages only, and the question I have to decide is whether the plaintiffs or these two defendants have the better equity." Then he says: "In m opinion the plaintiffs have the better equity"; the reason being: the plaintiffs had in the circumstances a better right to call for th legal estate than the first two defendants. That was quite inde pendent of any act or omission on the part of the defendants, whiel so to speak, created a special relation on their part towards thé plaintifis. To this I shall return in proper sequence. For present I advert to the point because, though in the majority of cases the result would be the same, yet in some instances, of which this is one, attention to principle tends to clarify the matter. In proceeding to determine whether Abigail's equity is bette it is convenient to test it first by the working rule indicated Bailey's Case (2) and Taylor's Case (3). What conduct, either by way of act or omission, is imputable to Lapin on which Abigail found a claim to subordinate the earlier equity to his own? So f as concerns the mere registration of Heavener as proprietor, contention fails. In Bradley v. Riches (4) Fry J. states both pr ciple and authorities, and acts on them, antagonistically to Al position here. So also Burgis v. Constantine (5). With to the absence of a caveat, the omission is not shown to have in any way influenced Abigail's action in advancing the money. If he, b himself or his agent Harris, had searched the register and found

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Judgment (220 paragraphs)

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