(c) that the standard form of contract for the sale of land which the parties have employed also brings about a different result.
25 Mr Parsons argued that Montgomery's case did not bar him from relief. In essence, he puts that certainly West v Read (supra) and probably as well Montgomery's case, merely deal with the question as to when a contract for the sale of Torrens system land merges in the transfer. In West's case it was held that an action for the failure to make title was still possible until registration of the transfer as there had been no merger, and in Montgomery's case rescission for mistake was still possible. See also Twidale v Bradley [1990] 2 Qd R 464, 477.
26 I do not consider that one should read down Montgomery's case in the way in which Mr Parsons suggests. After all it was a case of rescission for mistake.
27 Section 43A(1) of the Act provides:
"For the purpose only of protection against notice, the estate or interest in land under the provisions of this Act, taken by a person under a dealing registrable … shall, before registration of that dealing, be deemed to be a legal estate."
28 Mr Kelly SC and Mr Lowe say that under no stretch of the imagination can s 43A assist the present problem. It is directed solely to the question of notice as the section itself says, and the mere fact that the purchaser with a registrable transfer before registration may be protected against notice of a third party's interest does not affect at all the question as to whether there has been a fully executed contract between the vendor and the purchaser.
29 Although during the oral hearing I was attracted to the idea, on further reflection I do not consider that the artificial advancement of the time of getting the legal estate for the purposes of notice under s 43A of the Real Property Act or the usual fact that an equitable fee simple is obtained once the purchase money has been fully paid and a registrable transfer obtained (if not at some earlier point), see Barry v Heider (1914) 19 CLR 197, 213, assists in the resolution of the present point.
30 However, as will appear, it is not a matter that is of any moment in the decision of the present case.
31 The contract is in the 2000 edition of the standard form. Clause 15 requires the parties to complete by the completion date. Clause 16 specifies what is to happen on completion including the purchaser paying the vendor by cash or settlement cheque the adjusted price. Clause 17 provides normally for vacant possession to be given on completion.
32 Mr Parsons submits that NSW conveyancing practice virtually universally observed is that on settlement the vendor obtains payment of the purchase price, authorisation to obtain the balance of deposit from any stakeholder, and delivers a registrable transfer. Adjustments are calculated as at the settlement date, possession is taken by the purchaser, and for all intents and purposes a contract is completed and fully executed.
33 To this could be added the matter that very often new rights will be created in the land, for instance, rights of the incoming mortgagee.
34 Ordinarily, if a third party has obtained rights in the subject matter of the contract of which the parties have notice, they cannot rescind the contract, see Carter & Harland on Contracts 4th ed (Butterworths, Sydney, 2002) para [1052] pp 398-399.
35 This point caused me considerable trouble for a while, but then I realized, for the reasons set out in 3, that what the defendants had called "rescission" was not rescission at all but discharge by agreement.
36 3. The next matter is whether it is clear or even arguable that the so-called rescission of 6 August 2002 operated as a rescission ab initio, or whether it must be subject to the property rights of the plaintiffs.
37 Meagher, Gummow and Lehane Equity Doctrines and Remedies 3rd ed (Butterworths, Sydney, 1992) paras [2401] to [2405] point out that the word "rescission" is used in five different senses in various legal texts and reported cases. First, it is used improperly as a synonym for terminate. Secondly, it is used to describe a contractual right to put an end to a contract. Thirdly, it is an equitable right to dissolve a contract ab initio for fraudulent misrepresentation. Fourthly, it is an equitable remedy to deal with situations of equitable fraud such as undue influence; and fifthly, there is statutory rescission such as pursuant to the Trade Practices Act 1974.
38 The present "rescission" is not within any of those five categories. That is because it is really termination by agreement.
39 If the rescission being considered was allied to the third type of rescission, then a stumbling block may well have been that the plaintiffs had obtained third party rights of which the parties had notice at the time of rescission. However, with discharge by agreement that type of consideration is immaterial.
40 Parties can, of course, make any contract they like. That contract can affect the rights of the contracting parties with some exceptions that need not be discussed here.
41 It was competent for the parties to declare or agree that in so far as they were capable of doing so, their contract should be set aside as if it had never been. However, such an arrangement could not have the effect of removing rights in property which had accrued to other persons before that setting aside. Particularly will this be the case where there was notice of the rights of a third party.
42 Accordingly, in my view, the transaction of 6 August 2002 could not affect any right in the land which the plaintiffs may have acquired before 6 August.
43 4. Mr Parsons also submitted that the transaction culminating in the alleged rescission of 6 August was void in fraud of creditors under s 37A of the Conveyancing Act 1919.
44 This submission must be rejected, at least at this stage, because there is not the evidence which would amount to a strongly arguable case that there has been fraud of creditors generally or even fraud in respect of the plaintiffs. At the moment there are two equally consistent possibilities: (a) that the transaction was aimed at the plaintiffs; or (b) that the caveats put on by the plaintiffs were sufficient to frustrate consummation of the conveyancing transaction. There may be other scenarios exposed when all the facts are in.
45 5. Likewise, there is not the material at this stage to support the submission of Mr Johnson for the third defendant, that because of s 304 of the Duties Act 1997, the plaintiffs have no interest in the land. It appears that no duty has been paid on the loan documents. However, it is not clear to me that the documents are a mortgage within the meaning of s 205 of the Duties Act, or whether s 211 of the Act displaces s 304. It is not for the Court, if the point is taken under the Duties Act to itself work through the intricacies of the Act. The person taking the point must clearly demonstrate (a) that the document is dutiable; and (b) that the duty has not been paid, though this latter will usually become obvious. Accordingly, I do not uphold Mr Johnson's point at this stage, though it may be agitated at a later stage of these proceedings.
46 It is, I must confess, always a matter of great surprise to me that so many unstamped documents are now attempted to be tendered in proceedings involving property rights in this Court. Although s 304 of the Duties Act 1997 is in slightly different terms to its predecessor, it still makes it clear that an instrument is not available for use in law or equity for any purpose unless it is duly stamped. The mere giving of an undertaking allows the document to be tendered in evidence, but it still does not make it available for use in law or equity. That phrase was the subject of an exegesis by Isaacs J, giving the judgment of the High Court in Dent v Moore (1919) 26 CLR 316 at 324, where his Honour says that until the instrument is duly stamped:
"The instrument (except in criminal proceedings) is not 'available' and not 'effectual' - that is, it has no effect - for any purpose whatsoever at law or in equity: in other words, it cannot be considered as an instrument giving title, or as one which could be made the means of compelling anyone to give title. It is in the eyes of the law a nullity, except for criminal proceedings and, of course, for the purpose of being stamped."
47 6. These conclusions mean that the plaintiffs should succeed in having the caveats extended.
48 There is currently in place an order that the caveats be extended until further order. However, three things need to be done, namely (1) to consider whether an undertaking as to damages should be required; (2) to provide for the costs of this part of the case; and (3) to provide for its ongoing management.
49 As to (1), my provisional view is that this is a case where an undertaking as to damages is required in order to keep the status quo pending the hearing. Such undertakings are not always required by the Court in caveat cases, but it seems to me the present is one where such should be given. However, as no notice of this requirement was given, nor was the matter ventilated at the oral hearing, I should deal with it on the next mention date.
50 (2) My provisional view is that the costs of this episode should be costs in the cause as it is like a situation where the plaintiff succeeds in obtaining an interlocutory injunction to keep the status quo pending the trial.
51 (3) The matter might perhaps be a fit one for the expedition list. If not, then it should be put in the Registrar's list at a convenient time to make sure that it is progressed with due diligence.
52 In order to consider finally the matters (1), (2) and (3) listed above, I will have the matter listed before me at 9.30 am on Tuesday 1 October 2002 with the provision that should this date be inconvenient to counsel, provided my Asociate is given due notice, some other Tuesday or Thursday morning can be substituted.