Ruthol Pty Ltd v Mills

Ruthol Pty Ltd appealed against a decision of Palmer J concerning competing equitable interests in a property. The dispute involved Mr and Mrs Mills, who held an option to purchase the property, and Tricon, which subsequently acquired an equitable interest in the property through its own option. The core of the appeal concerned the priority of these equitable interests and whether Ruthol had acted wrongfully in relation to the Millses' option.

The legal issues before the court were whether the Millses had validly exercised their option to purchase the property, and if not, whether Ruthol's conduct in relation to the Millses' option created a mere equity that was subordinate to Tricon's later equitable interest. The court also had to consider the principle that a party cannot take advantage of its own wrong, and how this applied when a third party, such as Tricon, acquired an interest for value without notice of the prior equitable right.

The Court of Appeal found that Palmer J had erred in his assessment of the evidence. It was held that the Millses' option had expired due to their failure to exercise it in accordance with its terms. Furthermore, the court determined that any wrongful conduct by Ruthol in relation to the Millses' option did not create a mere equity that would prevail over Tricon's subsequent equitable interest, which was acquired for value and without notice. The principle that a subsequent equitable interest for value without notice prevails over a prior mere equity was applied.

The appeal was allowed, and the judgments and orders of Palmer J were set aside, except for costs. The court ordered that Ruthol pay the costs of the first and second respondents on appeal, and that the second and third respondents be indemnified by Ruthol for their costs of the appeal in relation to the third respondent.