Nicolay sold to thompsons for 40000 contract of sale

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Nicolay sold to Thompsons for $40,000. Contract of sale included a special condition that purchasers ‘acknowledge’ the existence of N’s agreement with the Bahrs. This was held to be a promise, not mere notice. 3. On becoming RP, Ts refused to honour the agreement with Bs. Bs lodged a caveat. BAHR V NICOLAY: FINDINGS ON FRAUD 1. HCA unanimously granted the Bahrs specific performance against Ts. All 5 thought Bs had an in personam action. Two judges also though the fraud exception applied. 2. Mason CJ & Dawson J: A dishonest intent formed after registration to repudiate agreement inducing transfer is fraud. 3. Wilson & Toohey JJ: no Torrens fraud because there is no evidence Ts intended, at time of purchase, to repudiate B’s interest. FRAUD AND WILLFUL BLINDNESS 1. RP’s or agent’s suspicions have been aroused but he/she refrains from inquiry for fear of learning the truth (called ‘willful blindness’) 2. Australian courts insist that wilful blindness is fraud only if the failure to inquire is actually dishonest (eg Pyramid BS v Scorpion Hotels) 3. NZ courts ask whether the RP knew facts that made it is his duty as an honest man to 26
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27 inquire further. OBJECTIVE TEST PYRAMID BS V SCORPION HOTELS 1. Regd mortgage from SH to PBS was not authorised by SH and not properly executed 2. PBS solicitor obtained company search but failed to notice that one of the attesting witnesses was not a director 3. SH alleged that mortgage was defeasible for fraud, due to wilful blindness or reckless indifference of PBS’s agent as to the truth of the statements in the document 4. Immediate indefeasibility is the rule in Vic (overruling Chasfild v Taranto) In doing so, they said you had to show more than just a mere invalid execution occurred. 5. If the RP or his agent acted with reckless indifference as to truth or falsity of statements in the instrument, that can be Torrens fraud 6. Hayne J said fraud is dishonesty, moral turpitude, and had to be proven. Can be reckless indifference to the truth. Could NOT argue this on these facts, as failure to inquire is NOT reckless indifference or willful blindness. ALSO, nothing to suggest that the solicitor failed to discover the fraud for reasons that were dishonest. 7. Mere carelessness in failing to make usual inquiries does not amount to reckless indifference or willful blindness. Actual dishonesty must be proved. The fact that the RP might have discovered the fraud had it exercised more care or made inquiries is not enough. FRAUD AND AGENCY 1. RP or her agent (people who basically play a role in the process of registering a property, such as a solicitor, family member, holder of power of attorney, think broad) must have either Committed the fraud or Known of a fraud in the transaction 2. In what circumstances is the RP affected by The fraud of her agent Her agent’s knowledge of a fraud in the transaction SCHULTZ(S) V CORWILL(C) PROPERTIES 1.
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