Tutorial 9 Resolving Conflicts between Unregistered Interests
Silvia and Dennis were life partners. They lived together in a house at 7 Ormond Street, Camberwell. Dennis was the sole registered proprietor of the fee simple in 7 Ormond Street, land under the Torrens system.
In 2010, the health of Silvia’s 70 year old mother,-Geraldine, deteriorated sharply and (in all likelihood) permanently. Silvia was concerned. She brought up the subject with Geraldine at a family barbecue on 10 March 2010. Dennis was present during the conversation. He heard it all, but said nothing. The gist of the conversation was as follows. Silvia suggested to Geraldine that, given her poor health, she was better off living with Silvia and Dennis at 7 Ormond Street. Geraldine accepted that the suggestion was a sensible one, but said she was keen to maintain some degree of independence. Geraldine then asked whether she, Geraldine, could pay for a self-contained flat for herself to be built over 7 Ormond Street’s four car garage. Silvia said that she certainly could. Geraldine pointed out that she would have to sell her own home (which she owned free and clear) in order to be able to afford to build the flat. She asked for reassurance that she would be able to live in the flat until her death. Silvia gave Geraldine the reassurance she sought.
Geraldine proceeded to sell her home in North Balwyn for $500,000. She used $210,000 out of the proceeds of sale to build the flat for herself at 7 Ormond Street. She gave the rest of the proceeds to her son, James, to finance the expansion of his small business.
Dennis was a compulsive gambler. Towards the end of June 2013, Silvia finally got tired of living with Dennis’s gambling problem and she decided to end her relationship with him. However, she did not want the end of the relationship to put an end to Geraldine’s living arrangements. On 11 July 2013, after informing Dennis that their relationship was over, Silvia asked Dennis whether he would be willing to sell 7 Ormond Street to her. Dennis agreed to do so. That same day Silvia moved in with her brother, James, pending completion of the agreed sale. Geraldine remained in the flat over the garage.
On 15 July 2013, Dennis and Silvia entered into a written contract of sale. At that time Silvia paid Dennis the entire $750,000 purchase price out of her personal savings. Settlement date on the contract of sale was set for 15 September 2013.
Silvia did not lodge a caveat against Dennis’s registered title, because she did not want to jeopardise the civilised ending of their relationship with such a sign of mistrust.
Unfortunately, before settlement day came around Dennis found himself in urgent need of money to settle gambling debts. On the morning of 25 August 2013, he went to the local real estate agency and listed 7 Ormond Street as available for private sale at a price of $600,000. That afternoon, Bruce Quick came into the real estate agency, saw 7 Ormond Street listed for sale, and decided to buy it as an investment property sight unseen. After making a search of the title at the Land Registry and finding it clear, Bruce arranged through the real estate agent to meet Dennis at the agency office that evening. At the meeting, Bruce asked to see the certificate of title for 7 Ormond Street. Dennis showed it to him. Dennis and Bruce then entered into a written contract of sale, and Bruce paid Dennis a 10% deposit on the purchase price. Settlement date on the contract of sale was set for 26 October 2013. On 26 August 2013, the day after entering into the contract with Dennis, Bruce lodged a caveat to protect his interest in 7 Ormond Street.
On 15 September 2013, Dennis completed a transfer of 7 Ormond Street to Silvia and handed it to her together with the certificate of title in exchange for the rest of the purchase price. Silvia went down to the Land Registry and lodged the documents for registration the same day. However, her registration was prevented by the caveat which had been lodged by Bruce Quick.
On 16 September 2013, Silvia lodged her own caveat and then confronted Dennis. Dennis expressed contrition for his actions, but then informed Silvia that he had already run through all the money paid to him by both Silvia and Bruce.
Silvia comes to you for advice.
Advise Silvia about the following matters, explaining your answers fully:
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