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Facts: In 1979 the Bahrs obtained a licence of Crown Land in Western Australia. On the building of commercial premises the Bahr’s could transform the licence into a Crown Grant and so become the proprietors of the property. The Bahr’s sold to Nicolay. Nicolay was resell the property to them at the end of the 3 years. During the 3 year term Nicolay sold the property to the Thompson’s. The contract between Nicolay and the Thompsons contained an acknowledgmentof the agreement between Nicolay and the Bahr’s (Clause 4 of the contract). After the Thompsons’s became registered as proprietors theycommenced negotiations for the resale of the property in accordance with their agreement with Nicolay but later refused to transfer the property. The Thompson’s argued that they had mere notice of the Bahr’s interest and so were not obliged to resell and were not guilty of statutory fraud.Held: Mason and Dawson JJ. Fraud, a “dishonest repudiation of a prior interest which the registered proprietor has acknowledged or Distributing prohibited | Downloaded by Patricia Moawad ([email protected])
agreed to recognize as the basis for obtaining title. (upheld Bahr’s interest)Wilson and Toohey JJ. No statutory fraud – in any case it occurred after registration. Conduct does give rise to a constructive trust. (Thompsons held property on constructive trust for bahrs) Brennan Jcollateral contract and constructive trust.“the title of a purchaser who not only has notice of an antecedent unregistered interest but who purchases on terms that he will be bound by the unregistered interest is subject to that interest. Equity will compel him to perform his obligation”Elevated acknowledging to bound by a prior interest above that of “mere notice”. Thompson knowingly received constructive trust property, therefore held property on trust for Bahr. Receipt of trust property (part of in personam)Barnes v Addy: A person can become a constructive trustee for property if they:Knowingly receive trust property (the first limb) (overturned in AUS)Knowingly assist a breach of trust (second limb) (still applicable in AUS) orAct as trustee without authority Tara Shire Council v Garnerheld there was an arguable case for an in personam claim against the registered proprietor where the registered proprietor knowingly took a transfer of trust property in breach of that trust. FACTS: The Garners were the registered proprietors of land in Queensland. Part of the land, containing a water bore was sold to the local council. The Council paid the purchase price but the transfer could not be registered until the land was subdivided. A second contract to sell both subdivided lots to Arcape Pty Ltd was executed and eventually Arcape became the registered proprietor of both lots. It refused to recognise any interest on the part of the Council.The Council argued that Arcape was subject to an exception to their indefeasibility of title based on the action for knowing receipt constructive trust. What is “knowingly receiving”?