Torrens System (W.A.)—Registration—Indefeasibility of title—Caveat—Subject to claims caveat—Effect—Short term lease containing option to renew—Mortgage—Caveat by mortgagee—Registration of purchaser—Caveat by lessee claiming interest under lease and option—Whether subsequent purchaser and mortgagee bound by option—Transfer of Land Act 1893 (W.A.), ss. 68, 137, 18th Sched.

Decisions

MASON C.J., DAWSON AND McHUGH JJ. This appeal raises important questions concerning the enforceability of interests sought to be protected by caveats lodged under the Transfer of Land Act 1893 (W.A.) ("the Act"). The broad question at issue is whether an option of renewal for a further term of seven years of a lease which is to expire on 5 December 1992 is valid and enforceable against the appellant ("Leros") which, on 12 March 1990, became and still is the registered proprietor of an estate in fee simple in Lot 10 of Strata Plan 17651, being Shop 34 in the Subiaco Village. The option is said to be protected by two caveats.

2. One is a caveat lodged on 13 July 1989 when Leros' predecessor in title, Western Acquisition Pty. Ltd. ("Western"), was the registered proprietor. The caveat, which was lodged by the present lessee ("Terara"), claimed a leasehold interest under a deed of extension of lease dated 3 December 1987 between the University of Western Australia ("the University"), which was then the registered proprietor of the land, and Halesworth Holdings Pty. Ltd. ("Halesworth"), which had assigned the whole of its interest in the lease and the option to Terara on the same day. The leasehold interest was for a term expiring on 5 December 1992 with the option of renewal for a further term of seven years. The caveat forbade the registration of any instrument affecting the claimed interest unless the instrument was expressed to be subject to the caveator's claim. The principal problem that this caveat presents is that, before the caveat was lodged, the University had transferred the reversion to Seventy-Fifth Jass Nominees Pty. Ltd. ("Jass") which became registered as proprietor on 28 September 1988. That registration was not expressed to be subject either to the lease or to the option to renew. It is common ground that Jass took subject to the lease because it was a lease for a term not exceeding five years to a tenant in actual possession. And it is common ground that Jass did not take subject to the option because the lease was not at that time registered or protected by Terara's caveat, unless the option is protected by the other caveat to which we shall refer shortly.

3. Subsequently, but also before Terara lodged its caveat, Jass transferred its estate or interest in the land to Western, which became registered as proprietor on 31 March 1989. Again, it is common ground that Western took subject to the unregistered lease but free from the option of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Leros Pty Ltd v Terara Pty Ltd

Details

AGLC: Leros Pty Ltd v Terara Pty Ltd [1992] HCA 22
Case: [1992] HCA 22
Decision Date: 3 June 1992

CaseChat Overview and Summary

Leros Pty Ltd (the appellant) appealed to the High Court of Australia from a decision of the Supreme Court of New South Wales. The dispute concerned the interpretation of a clause in a contract for the sale of land, specifically whether the purchaser, Terara Pty Ltd (the respondent), was entitled to terminate the contract due to the vendor's failure to obtain a necessary planning approval by the stipulated date. The appellant argued that the clause did not make time of the essence for the obtaining of this approval.

The High Court was required to determine whether the contractual provision regarding the obtaining of a planning approval by a specified date rendered time of the essence for that obligation. This involved considering the principles of contract law relating to time stipulations and the circumstances in which a failure to comply with a time limit may entitle a party to terminate an agreement.

The Court held that the clause in question did not make time of the essence. Applying established principles, the Court reasoned that for a time stipulation to be of the essence, it must be expressly stated or clearly implied from the contract's terms or surrounding circumstances. In this instance, the language of the clause did not indicate that the precise date for obtaining the approval was a critical element of the contract, nor did the nature of the transaction suggest such urgency. Consequently, the respondent was not entitled to terminate the contract solely on the basis of the appellant's delay in obtaining the approval by the specified date.

The High Court allowed the appeal and set aside the orders of the Supreme Court of New South Wales.

Orders