Spagnolo and Rodrick, ‘The Perpetual Trustee Co Ltd v Smith Priority Paradox: Just How Paramount are Paramount Interests?’

ABSTRACT
The purpose of this article is to explain and critique how courts have interpreted and applied the paramount interest provisions in Torrens system legislation. The discussion pivots around the case of Perpetual Trustee Co Ltd v Smith (Perpetual), which concerned ‘the interest of a tenant in possession’ in the Transfer of Land Act 1958 (Vic) section 42(2)(e). An exception to indefeasibility for tenancies is recognised in all Australian jurisdictions to varying extents, although the Victorian legislation provides the most expansive protection. In this article we outline and analyse the two High Court cases upon which the Court in Perpetual relied and critically compare the ‘two step manner’ in which Perpetual analysed priority under section 42(2)(e) with the ‘one step manner’ in which priority is dealt with in other exceptions to indefeasibility. Proceeding on the assumption that the interpretation of section 42(2)(e) adopted in Perpetual is correct, we consider whether the judges characterised the interests of the parties correctly under the general law and whether the approach to section 42(2)(e) that was taken in Perpetual could, and should, be taken to the other paramount interests listed in section 42(2).

Spagnolo, Lisa and Rodrick, Sharon, The Perpetual Trustee Co Ltd v Smith Priority Paradox: Just How Paramount are Paramount Interests?‘ (May 10, 2021). University of New South Wales Law Journal, volume 45, no 2, 2022.

First posted 2021-06-09 13:15:58

Leave a Reply