Garnock v Black [2006] NSWCA 140

In this case the new purchasers of a property were unable to register their title because a writ for the levy of the property was recorded on the Register. The purchasers sought a declaration that they were entitled to priority over any interest in the land the creditors held, an injunction to prevent the Sheriff from executing the writ, and an order that the recording of the writ be cancelled. They lost before the trial judge but won before the Court of Appeal.

The Court of Appeal considered how s112(1) of the Civil Procedure Act applied:

A writ of execution against land binds the land, as from the time the writ is delivered to the Sheriff, in the same way as a writ of execution against goods binds the property in the goods.

With one dissent the court determined that s 112(1) of the Civil Procedure Act does not give the judgment creditors priority over holders of equitable interests in the land. It follows that the interests of holders of equitable interests in the land have priority over whatever rights judgment creditors obtain upon registration of a writ.

This interpretation was based on the intention of the legislature to protect purchasers in the current position as evinced by Section 105(3) of the Real Property Act (which provides that the Registrar-General may refuse to record a writ where it appears to him or her that the land is held by the registered proprietor in a fiduciary capacity). The court determining that upon the contract for the purchase of the land being entered into, the registered proprietor held the land in a fiduciary capacity for the benefit of the purchaser.

The purchasers had unsuccessfully before the trial judge that s112(2) of the Civil Procedure Act applied:

A writ of execution does not affect the title to land acquired by a person in good faith and for valuable consideration unless, when the person acquires title, he or she has notice that such a writ has been delivered to the Sheriff and remains unexecuted.

The trial judge had determined that as the purchasers, were unregistered, they had not acquired title. This finding was overturned on appeal with the court finding, for the purposes of s112(2) title includes unregistered interests in land. However this determination seems to have been unnecessary to the outcome as the court did not examine the question of notice (upon which the trial judge had made his determination).

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