Butler v Fairclough (1917) 23 CLR 78

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  • The owner of a crown lease which was charged with a mortgage obtained a loan, providing the lease as security
  • The loan was not registered however
  • The owner of the loan decided to sell the loan, and the purchaser inspected the register but did not see the loan.
  • 5 days after that, the person who had lodged the loan, added a caveat to state their equitable interest in the loan.
  • 5 days after that the purchaser lodged the transfer document and the person who lodged the caveat was notified
  • The purchaser later withdrew the application for transfer but then did lodge it, and the registrar did not notify the caveat.
  • The person who put on the caveat said it was fraud.
  • Does failing to lodge a caveat promptly amount to postponing conduct?
  • Registration was valid; once registered the caveator lost their priority.
  • The legislation that governed caveats tried to protect the caveatour and recognise equitable rights unless precluded by
  • The caveator must take action within 14 days or their caveat will lapse, however a caveaor may not wish to restrict the registration and that therefore the caveator does not need to do anything.
  • Imports personal dishonesty or moral turpitude
  • Isaacs J: that it must be the fraud of the registered proprietor, and in this case the owner was not responsible for the registrar’s failure to notify.
  • If all things are equal, the earliest equity wins, but it can lose its priority if the holder does something bad (e.g. not acting promptly to protect the interest).
  • The party who lodged the caveat lost their priority by failing to lodge the priority promptly and before the purchase price had been paid.
  • An equitable interest first in time can lose its time by act or omission which can induce the later equitable interest to act to his or her detriment (e.g. the delay).

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