Davies v Littlejohn

The parties to this appeal were the trustees and beneficiaries under the will of John Henry Davies, who had conditionally purchased land in New South Wales. The dispute concerned the interpretation of the phrase "charges or encumbrances" in the testator's will, specifically whether it included unpaid instalments of purchase-money owed to the Crown for conditionally purchased land. The matter was heard by the High Court of Australia on appeal from the Supreme Court of New South Wales.

The legal issues before the High Court were whether unpaid instalments of purchase-money on conditionally purchased land constituted a "charge or encumbrance" on that land within the ordinary legal meaning of those terms, and consequently, whether such instalments were to be paid out of the income of the testator's residuary estate as directed by his will. This required the Court to determine the nature of the Crown's interest in conditionally purchased land and the legal status of outstanding purchase-money.

The Court reasoned that the rights and obligations of the Crown and a conditional purchaser were governed by the *Crown Lands Consolidation Act 1913* (N.S.W.) and its associated regulations, which established a statutory code. This code did not create an equitable vendor's lien in favour of the Crown for unpaid instalments, nor did it impose a charge or encumbrance on the land in the ordinary legal sense. The Court found that the provisions for forfeiture under the Act were inherent to the nature of a conditional purchase and did not constitute an encumbrance separate from the land itself. Therefore, the unpaid instalments were not included in the "charges or encumbrances" to be paid from the residuary estate's income. The decision in *Brett v. Hamilton* was overruled.

The High Court allowed the appeal, varying the order of the Supreme Court. It declared that the "charges or encumbrances" referred to in the will did not include the unpaid instalments of purchase-money owing to the Crown on the conditionally purchased lands. The costs of all parties were to be paid out of the estate, with the trustees' costs to be taxed as between solicitor and client.