Garnock v Black (No. 2) [2005] NSWSC 1218

In this case the new purchasers of a property were unable to register their title because a writ for the levy of the property was recorded on the Register. The purchasers sought a declaration that they were entitled to priority over any interest in the land the creditors held, an injunction to prevent the Sheriff from executing the writ, and an order that the recording of the writ be cancelled.

The judge determined the situation was governed in the first instance by s 105A(2) of the Real Property Act which states:

Where a writ is recorded … the Registrar-General shall not, during the protected period, register [any] dealing unless the writ is referred to in the dealing as if it were a prior encumbrance.

The judge had already determined s112(2) of the Civil Procedure Act did not assist the purchasers see Garnock v Black [2005] NSWSC 1218.

The judge now had to decide whether s 43A(1) of the Real Property Act applied.

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.

The judge found that s 43A was irrelevant as their transfer was not a “dealing registrable” because it did not refer to the writ “as if it were a prior encumbrance” as required s 105A(2), because the writ had by then already been recorded.

Them judge further held that s 43A only protects a purchaser who acquires land for value without notice. The purchasers were deemed to be on notice of the writ as they failed to undertake searches that ought reasonably to have been carried out. Their solicitors carried out an electronic search between 8:53 and 8:55 am on the day of settlement, but settlement did not occur until about 5 hours later. The evidence of a conveyancing expert, was that the usual practice is to make a final search either simultaneously with settlement or as near as practically possible to the time of completion. Accordingly the court held that the purchasers had failed to undertake a search that ought reasonably to have been carried out. If they had done so then they would have discovered the recording of the writ.

This decision was overturned on appeal in Garnock v Black [2006] NSWCA 140.

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