Held followed butler v fairclough held that abigails

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Held: Followed Butler v Fairclough. Held that Abigail’s interest was the better equity because of Lapin’s conduct in failing to caveat. It was such unreasonable and negligent conduct as to make their equitable interest inferior. HCA: Majority held that the possessor of the prior equity was not to be postponed unless the conduct contributed to a belief in the 2 nd interest holder that the first one did not exist. (Abigail did not search for a caveat so the failure to search for a caveat did not matter). The only difference between Butler and the current case was the failure to check for a caveat. The failure to search the register made a difference. Privy Council: Upheld the view of the minority of the HCA. Breskvar v Wall Facts: Prior equitable interest was the right to set aside a fraudulent transaction (was treated as a full equitable interest) versus a specifically enforceable K of sale. Menzies J: The Bs conduct should lead to their interest being postponed. J & H Just Holdings Facts: Josephson in an RP created a mortgage for the bank of NSW by giving them possession of the CoT and a registrable instrument of mortgage. The bank did not caveat and did not register. He gave a second mortgage to J & H Just and represented that it was unencumbered. J & H Just searched the register and found nothing to the contrary. They did not register or caveat and did not ask to see the CoT. If they has asked to see the CoT he would have to go to the bank – would understand that they have a mortgage. 43
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Barwick CJ: Said that the purpose of caveats is not to give notice of an equitable interest to the whole world. Abigail v Lapin was decided on the idea that conduct arms somebody to act in an unauthorised fashion. Abigail was not decided on the failure to lodge the caveat. Ultimately Rice v Rice is all about agents exceeding their authority but acting within their apparent authority. Failure to caveat does not mean that priority is lost. It must have contributed to the assumption. Felt that the failure to caveat was not fatal. The first equitable interest holder may have failed to caveat but they did protect themselves by taking possession of the CoT. Windeyer J: Absence of a caveat is not notice to the world that no interest exists – otherwise they would be equated to registration. If the first equitable interest holder has done some postponing conduct look to the second equitable interest holder. Heid v Reliance (1983) Facts: Heid had a vendors lien and failed to caveat. Heid had not been paid he executed and gave transfer for the property and gave an authority to collect the CoT. Gave it to Connell. Conell gave an equitable mortgage to reliance. Reliance relied on the fact that Conell had executed transfers and the CoT. Then Heid caveated.
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