Significance of failure to caveat 1 the significance

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PRACTICAL EFFECT IS LIMITED. Significance of failure to caveat 1. The significance of failure by the first interest holder to caveat before the second interest was acquired is unsettled. 2. It depends to some extent on what view you take of the function of the caveat. High Court’s view on this has shifted over time. This is being driven by the understanding of what a caveat is. Butler v Fairclough 1. Priority conflict between two competing interests created within two days, so hard to have a caveat. 2. RP executed a charge to B to secure a debt. 2 days later he executed a transfer to F. F checked the register before settling (handing over money and taking the title) but found no caveat. 5 days later, B lodged caveat. F then lodged his transfer - blocked by B’s caveat 3. Failure to caveat was deemed to be postponing (you would normally expect to get priority, but you lose it because of this) conduct. 4. Griffiths CJ said caveat acts as notice of interest claimed, so B’s failure to caveat induced F to act to his detriment. Based on idea that caveat told world you’d made a claim. BUT, s. 43 says notice is not an issue. At the moment though, they’re still in Kansas, so need notice. Abigail v Lapin 1. A solicitor called Heffernan had been acting for Lapin. He asked the Lapin’s to hand over something as security, which was dodgy on solicitor’s behalf. The solicitor went and had the things registered. As security for legal costs owed to H, the Lapins executed transfers of 2 properties to Mrs H and handed over the DCT. Mrs H registered, 41
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42 then mortgaged to Abigail, who knew nothing of Lapin’s interest, but didn’t search the register!!! Lapins did not caveat their equitable interest, but A did not search the register. 2. PC overturned HC decision. Found that Lapins should be postponed for handing over indicia of title and failing to caveat. 3. PC said that failure to caveat can be postponing conduct even if 2 nd interest holder does not search the register (as would’ve found nothing anyway). Endorsed Butler v Fairclough. J & H Just Holdings v Bank of NSW 1. J (RP) mortgaged land to BNSW in 1961. Bank took DCT but didn’t register or caveat the mortgage. 3 years later he did it for J & H Holdings. In 1964 J mortgaged to JH, which did title search but did not check his story that the bank was holding his DCT for safe-keeping. In June, JH lodged a caveat to protect its mortgage (didn’t register, as cheaper not to). In August, Bank of NSW lodged its mortgage for registration (3 years after getting it!!!) – blocked by caveat. Just Holdings said Bank of NSW should have less priority (interest postponed), as didn’t put caveat on interest. 2. Barwick: significance of failure to caveat should be considered in light of the purpose of the caveat provisions. A caveat is not notice to the world but ‘an injunction to the registrar’. JUST A HOLDING DEVICE AND NOTHING MORE!!!
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