feree becoming registered proprietor-Fraud-Knowledge of unregistered interest -Remedy of person having unregistered interest-Remedy against vendor- Partnership-Accounts of profits of partner-Secret profits-No claim for relief -Real Property Act 1900 (N.S.W.) (No. 25), secs. 42, 43.

Sec. 42 of the Real Property Act 1900 (N.S.W.) provides that "Notwith standing the existence in any other person of any estate or interest, whether derived by grant from the Crown or otherwise, which but for this Act might be held to be paramount or to have priority, the registered proprietor of land or of any estate or interest in land under the provisions of this Actshall, except in case of fraud, hold the same, subject to such encumbrances, liens, estates, or interests as may be notified on the folium of the register book constituted by the grant or certificate of title of such land, but absolutely free from all other encumbrances, liens, estates or interests whatsoever" &. Sec. 43 provides that "Except in the case of fraud no person contracting or dealing with or taking or proposing to take a transfer from the registered proprietor of any registered estate or interest shall

be affected by notice direct or constructive of any trust or unregistered interest, any rule of law or equity to the contrary notwithstanding and the knowledge that any such trust or unregistered interest is in existence shall not of itself be imputed as fraud.

A, a member of a partnership which held land under an unregistered agree ment for a lease, without the knowledge of the other partners purchased the land and became registered proprietor thereof, and subsequently sold and transferred it to B, who became registered as proprietor. The latter,

30 CLR 81

before he purchased, on stating to one of the other partners that he was thinking of negotiating for the land, was told that he could not do SO because it was held by the partnership under an agreement.

Held, by the whole Court, that the sale by A to B was not a "sham," and that the conduct of B did not amount to fraud within the meaning of secs. 42 and 43 of the Real Property Act 1900, so as to deprive him of his right as registered proprietor as against the unregistered rights of the partnership.

In a suit by the other partners against A and B, facts were alleged by the plaintiffs which were sufficient to base a claim for an order that A should account to the partnership for the profits made by him on the sale of the land, but no claim was made specifically for such an order and no argument presented for such relief. On appeal to the High Court,

Held, by Knox C.J. and Rich J. (Higgins J. dissenting), that no order for such relief ought to be made in the…

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 Wicks v Bennett

Details

AGLC: Wicks v Bennett [1921] HCA 57
Case: [1921] HCA 57
Decision Date: 16 December 1921

CaseChat Overview and Summary

The case of *Wicks v Bennett* involved an appeal to the High Court of Australia from the Supreme Court of New South Wales. The dispute concerned the sale of leasehold property that was subject to an unregistered agreement for a lease held by a partnership. One partner, Johnson, secretly purchased the freehold of this property and subsequently transferred it to another partner, Bennett, who then became the registered proprietor. Bennett later sold the property to Diplock. The original partnership, represented by Wicks and Nicholls, sought to enforce their unregistered interest in the leasehold property against Diplock and Bennett.

The primary legal issues before the High Court were whether the sale from Bennett to Diplock constituted fraud within the meaning of sections 42 and 43 of the *Real Property Act 1900* (NSW), thereby depriving Diplock of his status as a registered proprietor free from unregistered interests. Additionally, the court considered whether relief could be granted against Bennett for profits made from the sale, given his position as a partner and the alleged breach of fiduciary duty.

The majority of the High Court, comprising Knox C.J. and Rich J., held that the sale from Bennett to Diplock was not a sham and that Diplock's conduct did not amount to fraud under the *Real Property Act*. They reasoned that the evidence did not establish that the transaction was colourable, and Diplock's knowledge of the partnership's unregistered interest, while noted, was insufficient to constitute fraud as defined by section 43, which explicitly states that such knowledge alone does not amount to fraud. Higgins J. concurred on these points but dissented regarding relief against Bennett.

While the court found no grounds for relief against Diplock's executrix, Higgins J. concluded that Bennett, as a partner who had secretly purchased the partnership's leasehold land and profited from its sale, should be ordered to account for those profits to the partnership. However, the majority held that no such order should be made in the current proceedings, as the claim for relief against Bennett for an account of profits had not been properly raised or argued in the lower court, and they dismissed the appeal with costs, without prejudice to any further proceedings the plaintiffs might take against Bennett and Johnson.

Orders