Minister for Education & Training v Canham [2004] NSWSC 274

This case concerned some land at Mulwala. The Minister sought an order that an estate in fee simple in that parcel of land be retransferred to him from the current registered proprietor, the defendant. The proceedings arose because the plaintiff transferred that parcel of land to the defendant by mistake after an auction.

The defendant relied upon the indefeasibility provisions of the Real Property Act 1900, claiming that, since he had been registered as the proprietor of the disputed site, his title could not be disturbed. The plaintiff asserts, however, that the facts and circumstances created in the plaintiff a right in personam, or personal equity, which he was entitled to enforce against the defendant and which would empower the Court to order the retransfer of the disputed site.

 The defendant’s principal assertion was that he honestly believed that the disputed site was included within the school site, and that he was buying at auction land that included a parcel upon which a house was located.

The Court held the defendant’s evidence had an air of unreality about it. He was a real estate agent with years of experience, yet he took none of the preparatory steps one would have expected him to take prior to an auction at which he was intending to bid. His conduct prior to and at the auction satisfied the Court that he knew, or ought to have known, that the disputed site was not included in the sale.

The state of the defendant’s knowledge was also derived from the conduct of his solicitor prior to settlement. His solicitor, acting as his agent, also knew or ought to have known that the disputed site was not included in the sale. It was not included in the contract, and the answers to requisitions on title confirmed that it was not so included.

Held that prior to settlement the defendant knew or ought to have known (by himself or through his agent) that the disputed land was not included in the sale.

The relevant law

It is well established that a registered proprietor has an indefeasible title to the land in respect of which he or she is registered, subject only to the exceptions set out in s 42 of the Real Property Act 1900 (“the RP Act”) and subject only to an in personam claim against the registered proprietor: Frazer v Walker and Ors (1967) 1 AC 569 at 585; Breskvar v Wall (1971) 126 CLR 376 at 384-385.

The facts and circumstances of this case did not fall within the exceptions set out in s 42, and the case turns on whether or not the plaintiff had established an in personam claim against the defendant that would have entitled the plaintiff to the relief that he sought.

The relevant principles guiding the Court in its determination are as follows:

1. A personal equity arises where there is a known legal or equitable cause of action enforceable against the registered proprietor: Grgic v Australian and New Zealand Banking Group Ltd (1994) 33 NSWLR 202 at 222;

2. The personal equity includes the equity to order rectification or retransfer for mistake. Relief will be available where the registered proprietor knew, or had reason to know, that the other party was, or might well be, mistaken: Tutt and Anor v Doyle and Anor (1997) 42 NSWLR 10 per Handley JA at 14 – 15;

3. Unconscionability is the test – is it unconscionable for one party knowingly to take advantage of another party’s mistake? per Meagher JA in Tutt v Doyle at 12. The Court is able…”exercising its jurisdiction in personam to insist upon proper conduct in accordance with the conscience which all men should obey:” per Lord Russell of Killowen delivering the judgment of the Privy Council in Oh Hiam v Tham Kong (1980) 2 BPR 97130 at 9454;

4. The personal equity may arise from the conduct of the registered proprietor both before and after registration: Bahr and Anor v Nicolay and Ors (1988) 164 CLR 604 at 638.

5. And the conduct in question may be that of a person for whom the registered proprietor is responsible, such as his agent: Grgic v ANZ Bank at 223.

Conclusion

The Court was satisfied that the plaintiff should succeed in his claim. The defendant’s solicitor, acting on behalf of the defendant, made a mistake. He included the disputed site in the transfer by reference to the whole of the land in Auto Consol 1331 441 rather than part of that land. He created “a loaded gun”. He gave the “gun” to the plaintiff’s solicitor in circumstances where he knew, or ought to have known, that it was “loaded”. The plaintiff’s solicitor mistakenly believed that the transfer was in accordance with the contract (and erred in not checking its accuracy). Relying on his mistaken belief, the plaintiff’s solicitor had the transfer executed and handed over on settlement.

However, prior to settlement the defendant knew, or ought to have known, that the disputed site was not included in the sale. He sought to take advantage of the plaintiff’s mistake in accepting the transfer, and to retain more land than the plaintiff intended to convey and more land than he undertook to purchase. It would be unconscionable for the defendant to retain the disputed site in circumstances where (by himself or through his solicitor as his agent) he knew or ought to have known what was being sold and that the transfer did not reflect what was being sold.

The facts and circumstances create in the plaintiff a right in personam or personal equity that is enforceable against the defendant as registered proprietor of the disputed site. It was sufficient for the plaintiff to succeed for the Court to find that the plaintiff had an equity to relief by way of retransfer by mistake (Tutt v Doyle at 14). It was not necessary to go further and decide whether or not the personal equity residing in the plaintiff arose from a cause of action in negligence or an action under the Fair Trading Act.

The plaintiff was entitled to a retransfer from the defendant of the estate in fee simple in the property.

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