Rands Developments Pty Ltd v Davis

[1975] HCA 36

High Court of Australia|1975-07-01|Before: Jacobs JJ, Gibbs J, Taylor J, Matthews J

View original source

At a glance

Source facts

Court

High Court of Australia

Decision date

1975-07-01

Before

Jacobs JJ, Gibbs J, Taylor J, Matthews J

Source

Original judgment source is linked above.

Judgment (34 paragraphs)

[1]

High Court of Australia Gibbs, Stephen and Jacobs JJ. Rands Developments Pty Ltd v Davis [1975] HCA 36

[2]

The facts of this case are set out in the judgment of my brother Jacobs and I have no need to repeat them. The question for decision is whether the appellant company, the vendor, complied with its obligations under its contract with the respondent purchaser by tendering to the respondent, on the day fixed by the contract for completion, a certificate of title in the name of a third person, a memorandum of transfer from that third person to the vendor and a memorandum of transfer from the vendor to the purchaser. (It is not irrelevant to notice that the certificate of title referred to other land as well as that the subject of the sale, and would therefore in fact probably have been produced rather than tendered to the purchaser, but I do not need to base my judgment on this circumstance.) It was submitted on behalf of the appellant that the obligation of a vendor of land under the Real Property Acts is to place the purchaser in a position to obtain registration in his own name of the title to the land sold, that is, to make available to him documents which would secure his registration as the proprietor of the land. Reliance for this submission was placed on some observations made by the Chief Justice in Godfrey Constructions Pty. Ltd. v. Kanangra Park Pty. Ltd. [1] , and Travinto Nominees Pty. Ltd. v. Vlattas [2] . I do not question the correctness of those observations but in neither of those cases was it necessary to consider the question whether the obligation of the vendor is to have himself registered as proprietor on or before the date of completion. This question must depend primarily upon the terms of the particular contract, for if the parties have agreed that the vendor will at the date of completion be the registered proprietor of the land sold and will tender a transfer from himself to the purchaser, that will be decisive. Equally, the contract may contain an effective provision negativing an obligation to produce the title in the vendor's own name - cf. Vickery v. Woods [3] . If the contract is silent on the point, or ambiguous, it may be necessary to have regard to more general considerations such as the practice of conveyancers (of which there was no evidence in the present case) and the effect of the Real Property Acts.

[4]

The obligation of the vendor under cl. 1 (a) of the contract now under consideration is to give the purchaser in exchange for the balance of the purchase price "a registrable transfer and such other documents (including the relevant certificate of title) as may be appropriate to lead to registration of the purchaser as proprietor of an estate in fee simple, free from encumbrances". The expression "registrable transfer" means of course a transfer capable of regstration, and although in some contexts it could refer to a transfer that would become capable of registration if certain conditions were first fulfilled - e.g. if prior dealings were registered - it more naturally appears to refer to a transfer which can, without more, be registered, that is, to a transfer in proper form executed by the registered proprietor. This is the meaning which the phrase was given, in a different context, by Taylor J. in I.A.C. (Finance) Pty. Ltd. v. Courtenay [4] , and, in a context similar to that of the present, by Matthews J. in Daamen v. W. & T. Investments Pty. Ltd. [5] . (The judgment of Matthews J. in that case was affirmed by the Full Court of the Supreme Court [6] whose decision was followed by the learned primary judge in the present case.) On behalf of the appellant it was submitted that the words in cl. 1 (a) refer only to the sufficiency of the transfer as a conveyancing form. In my opinion the words should not be given so narrow a meaning; the parties to the contract obviously intended that the transfer should be executed by the proper transferor, and were not concerned only with the form of the document. Further, the words "a registrable transfer and such other documents as may be appropriate to lead to registration " suggest that it is contemplated that only one memorandum of transfer will be used to complete the transaction; in the context, "such other documents" naturally mean documents other than a transfer. If the contract requires that only one transfer will be used to complete the transaction, that transfer, to be effective, must be executed by the registered proprietor. Clause 20, which gives the vendor a right to rescind if any predecessor in title fails to make title to the vendor on or before the date of settlement, supports the conclusion that the vendor was intended to have title to the land at the date of settlement and to be the person by whom the transfer is executed.

[6]

No other provision of the contract appears to require a different conclusion. The appellant particularly relied on cl. 14 which provides that, "If on or before the date of settlement is due hereunder, any financing institution for the purchaser declines to accept any unregistered dealing relating to the title of the vendor, the vendor may at its option elect to rescind this contract". It was submitted that this clause impliedly excludes any right of rescission by the purchaser on the ground that any dealing necessary to make title is unregistered at or before the date of settlement and contemplates the possibility that the vendor's title may depend on an unregistered instrument. However, cl. 14 does not purport to affect in any way the rights of the purchaser if the contract is not in fact rescinded by the vendor. The clause is intended only to confer a special right of rescission on the vendor. In the absence of a provision such as cl. 14, neither party could, before the date of completion, rescind on the ground that a dealing, whose registration was necessary to give title to the vendor, remained unregistered. Before the date of completion arrived the purchaser would have no right to rescind the contract on the ground that the vendor was not registered as proprietor (Forbes v. Butler [7] ) unless it was quite clear that he would not be able to perform his obligation to make title when the time for performance arrived (cf. Bell v. Scott [8] ; and Rawson v. Hobbs [9] ). Clause 14 does not affect that situation. In the absence of a provision such as cl. 14 the vendor could not rescind the contract on the ground of his own difficulty in making title. However, if an institution from which the purchaser was seeking finance objected to the vendor's title, on the ground that a relevant dealing was unregistered, the vendor might wish to rescind, simply because for practical reasons it might be thought more profitable to get rid of a contract which the purchaser for lack of finance might be unable to complete, even though he might still wish to complete it. Clause 14 enables the vendor to rescind in such a case. This may explain the purpose of cl. 14, but whatever its purpose that clause does not enable the vendor to force the purchaser on completion to accept a transfer which is not "registrable" within cl. 1 (a).

[30]

But in any event the appeal even if it be properly brought must in my opinion fail. Clause 1 (a) of the contract must be read in the light of the proper conveyancing procedure on a settlement of a transfer of land under registered title. That procedure must be determined and then it must be ascertained whether the clause on its true construction shows that the parties intended that a different procedure be followed. The procedure to be adopted on settlement must be such that it gives to the purchaser the fullest protection which is consonant with a settlement of transactions without undue delay or expense. The purchaser is entitled to all reasonable protection. Once a purchaser or transferee is registered as proprietor no substantial problems can arise, particularly when the proprietor obtains the wide protection enunciated in Frazer v. Walker [15] and Breskvar v. Wall [16] . The protection which a purchaser or transferee requires is protection between the date of settlement and the date of registration, particularly if he has notice of any outstanding interests to which on registration his title would be paramount. Until registration the transferee has no statutory protection. His interest in the land is equitable only and he runs the risk of being postponed to a prior equity. There is no provision in Queensland legislation which is similar to s. 43 A of the Real Property Act, 1900 N.S.W. which gives some further protection against notice of prior interests to transferees between settlement and registration. If a transferee does not deal with the registered proprietor of the land he runs the particular risk that there may be outstanding some equitable right or interest in that proprietor which is enforceable against the transferor from whom the transferee is asked to take a transfer but who is not registered as proprietor. That is a risk which ordinarily a transferee is not required to take. It is true that an equity of a registered proprietor who has given a transfer, for example an equity to set the transfer aside, may be postponed to the later equity of the ultimate transferee but not if the latter has notice of the earlier equity.