Land Law Reading Notes: Priority and Registration Priority the doctrine of notice: The rule is o Legal estate

tate and interest bind the whole world. o Equitable estate and interest bind everyone except the bona fide purchaser for value of the legal estate without notice of the equitable interest or estate. Equitable interest Not recognized at law. Not binding on subsequent purchasers. Will not allow a purchaser to ignore a prior equitable interest. A volunteer cannot benefit from any prior equitable interest because he has not contributed to the interest and equity will not allow a prior equitable interest to be overridden. Equity darling is a bona fide purchaser of the legal estate without notice. Equity will free them from any prior equitable interest. Pilcher v. Rawlins (1872) o P and R carried out a fraudulent scheme on a trust property. Once the beneficiaries found out, they claimed priority over the subsequent mortgagee. o Held, the mortgagees were equity darlings hence took the property free from the beneficiaries. o Although the beneficiaries were also victims of Ps and Rs scheme, they lost because their interests were only equitable. o The beneficiaries had a claim against P as their trustee but success in such claim would only be in damages.

Legal interest Recognized at law and in equity. Binds on subsequent parties regardless of notice.

Bona fide purchaser of legal estate for without notice: Bona fide: But the rule on constructive notice has introduced another requirement separate from bona fide. Purchaser for value: Anyone who receives express (not implied) interest in the land. Eg: trustee in bankruptcy receives the property under the Bankruptcy Ordinance is not a purchaser. In order to defeat the prior equitable interest, purchaser must give value for the property he acquires (full consideration is not required).

The legal estate Equitable interest: The rule is where equities (factors) are equal, the first in time prevails. Factors that may affect the merits of an equitable interest are o Nature of the equitable interest; o Conduct of the parties. Rice v. Rice (1884) o R purchased properties from several vendors but did not pay them and then mortgaged the property. o R then disappeared without paying the whole price. o Held, the subsequent mortgagee had priority over the unpaid vendors. o Although the equities were equal, the unpaid vendors were negligent to leading the subsequent mortgagee to think he was the first one. The first in time rule can also be displaced by the nature of the merits (mere v. equitable equities). Eg: one has a right to seek an equitable remedy that is a mere equity because ones interest is not crystallized until the remedy is granted. The dividing line is that mere equity is ancillary rights that are dependant on some interest in land. A holder of equitable interest, who has no knowledge of the mere equity, can gain priority. Latec Investments v. Hotel Terrigal (1965) o Lactec (mortgagee) sold the property to a subsidiary company for an undervalue. o The mortgagor was entitled to set the sale aside but the property was mortgaged by way of equitable mortgage. o Held, sale was not set aside because of the time limit. o Nevertheless the mortgagee was not bound by his mere equity of which he had not notice.

Without notice: