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Citation:
SASR 210
Court:
Date:
18 September 1998
Parties:
CONCISE FACTS
The case initially involved eight competing claimants to the residual
funds of $368, 696.93 remaining after the sale by the first
mortgagee, Elderly Citizens Homes of SA Inc, of a house property
owned by the defendant, Peter Balnaves (Balnaves).
Peter Balnaves became the registered proprietor of the property
through his appointment as trustee of the Balnaves Family Trust on
ISSUES
The dominant issue of the case was to resolve the question of which
of the claimants declared interests took priority over the other. In
doing so, the first step for the Court was to identify the nature of the
proprietary interests held by the claimants and ascertain whether
they were of a legal or equitable nature.1 Once this had been done,
and depending on what category the interest fell into, the court was
able to resolve the priority dispute.
Ultimately the court had to consider the following issues:
Does an agreement between two parties for one to take over the
right to purchase land under a contract of sale create an unpaid
vendors lien or does it simply assign the originals interest in the
contract to purchase the land to the later? Additionally, does the
failure to express an agreement in writing have any impact on their
rights or interests?
What affect, if any, does the lodging of a caveat over an interest in
land, and its subsequent withdrawal, have on the order of priorities
of any identified claimants? Do any of those who acquire an interest
1 Peter Radon & Camerson Stewart, Principles of Australian Equity
and Trusts, (LexisNexis Butterworths, 2nd ed, 2015) [7.2].
after this event have the right to assert that the first party lose their
priority by their failure to register a mortgage, and failure to defend
the caveat lodged even after it had been warned by a Registrar?2
Additionally, does a vendor have an equitable lien on the sale for a
land property from the date of the contract or only when and if the
vendor fails to proceed with the full terms of the contract?
DECISION/ORDER
In its ruling the court firstly dismissed the claim of Melbourne
Projects. It then went on to rank the remaining interests of the
claimants in the following order; JAD, Moir Management, Mr Burton,
Mr Parsons and Mrs Balnaves.8
The court then stated that it would be desirable that the parties
attempt to agree the amount which is due and owing to each.9
However, failing that, it directed that an accountant would
subsequently need to be appointed to determine what is due and
owing to each claimant.
6 Ibid.
7 Ibid.
8 Elderly Citizens Homes of SA Inc v Balnaves (1998) 72 SASR 210,
231.
9 Ibid (Debelle J).
RATIO
Before proceeding with its analysis in determining the priority of
interests, the Court took time to detail its rejection of Melbourne
Projects claim. In determining any interest that they may have had,
the Court focussed on the nature of the transaction between
themselves and Cummings Corporation. It reasoned that the
transaction was in essence simply Melbourne Projects assigning its
interest in the contract with EFG Finance for the purchase of Rymill
House in consideration for Cummings Corporation agreeing to pay
the deposit.11
The Court also found that any argument that Melbourne Projects
held an unpaid vendors lien was grounded on a false premise.12
Any equitable interest that it held essentially failed when it did not
complete the contract for the purchase. In fact, Cummings
Corporation became entitled to the equitable interest in the
property. Additionally, by taking the assignment of the contract in
question, Cummings Corporation was entitled to the equitable
interest at the expense of Melbourne Projects.13
Further, while a party may have an oral promise to repay a debt
and/or to execute a mortgage, if neither is in writing the
10 Ibid.
11 Elderly Citizens Homes of SA Inc v Balnaves (1998) 72 SASR 210,
221.
12 Ibid, 222 (Debelle J).
13 Ibid.
SIGNIFICANCE
29 (1864) 10 HLC 672.
30 Elderly Citizens Homes of SA Inc v Balnaves (1998) 72 SASR 210,
230.
31 Ibid (Debelle J).
32 Ibid.
33 Ibid.
Although this case does not declare any new law, it is useful as a
reminder of basic principles governing competing interests in
Torrens Title land.34 Furthermore, it supports the law as previously
declared by the High Court. For example it is in line with Latec
Investments Ltd v Hotel Terrigal Pty Ltd (in liq),35 where the Court
stated that a second equitable interest will take priority over a prior
equity if they are "a bona fide purchaser for value without notice in
cases where an equity",36 is the first in line.
However, this should be taken in the context that the behaviour of
the parties involved can have an impact on a courts determination.
Merits can be considered unequal for instance where conduct on
the part of the owner of the equitable interest has led the other to
acquire his interest on the supposition that the earlier did not exist.
37
BIBLIOGRAPHY
A. ARTICLES/BOOKS/REPORTS
Conveyancing and Property (2000) 74 Australian Law Journal 351
Radon, P & Stewart, C, Principles of Australian Equity and Trusts,
(LexisNexis Butterworths, 2nd ed, 2015)
B. CASES
Bradford Banking Co Ltd v Henry Briggs, Son & Co Ltd (1886) 12
App Cas 29
Butler v Fairclough (1917) 23 CLR 78
Elderly Citizens Homes of SA Inc v Balnaves (1998) 72 SASR 210
Heid v Reliance Finance Corporation Pty Ltd (1983) 154 CLR 326
Hopkinson v Rolt (1861) 9 HLC 514
J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125
CLR 546
Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR
265
Rose v Watson (1864) 10 HLC 672.
C. LEGISLATION
Real Property Act 1886 (SA)