real property notes - oats and sugar web viewreal property . 1. tenure, estates, and native title4....

Real Property 1 TENURE, ESTATES, AND NATIVE TITLE.............................41.1 Definitions 41.2 Tenure 51.3 Estates 81.4 Native Title 10

2 THE MEANING OF LAND................................................152.1 The right to airspace 152.2 Legislation regulating airspace and ground-level access 182.3 The owner’s rights to minerals 202.4 Boundaries with neighboring land 212.5 Growing things 21

3 FIXTURES AND CHATTELS:............................................223.1 Definitions 223.2 Tenant’s fixtures 233.3 Test for fixtures/chattels 243.4 Cases on Fixtures 27

4 WASTE.........................................................................344.1 Permissive waste 344.2 Voluntary waste 344.3 Equitable waste 344.4 Ameliorating waste 34

5 THE TORRENS TITLE SYSTEM........................................355.1 Essentials 355.2 Indefeasibility 37

6 TORRENS TITLE - EXCEPTIONS TO INDEFEASIBILITY.......426.1 Fraud (make flowchart) 426.2 The Personal Equity Exception 486.3 Prior folios (s 42(1)(a) of the Real Property Act) 526.4 Omitted/misdescribed easements (s41(1)(a1) of the Real Property Act) 526.5 Misdescribed/omitted profit â prendre (s 42(1)(b) of the Real Property Act)

536.6 Wrong Boundaries (s 42(1)(c) of the Real Property Act) 536.7 Short term tenancies (s 42(1)(d) of the Real Property Act) (Maybe read more) 536.8 Overriding statutes 546.9 Possessory title (Part 6A of the Real Property Act) 54

70317: Real PropertyJohanan Ottensooser – oatsandsugar.com 1

http://www.oatsandsugar.com/

7 TORRENS TITLE - PRIORITIES BETWEEN UNREGISTERED PARTIES..........................................................................557.1 Characterizing unregistered interests 557.2 Caveats (Part 7A of the RPA) (Todo: caveats by registrar general) 567.3 Injunctions 587.4 The difference between unregistered interests: legal and equitable interests. 587.5 Priorities between unregistered interests 617.6 Notice 63

8 TORRENS TITLE – UNREGISTERED INTERESTS: POSTPONING CONDUCT....................................................638.1 Different where a beneficiary is involved 638.2 Types of postponing conduct 638.3 Failure to take possession of Title Deeds 648.4 Failure to retain possession of title deeds by an act of gross negligence 648.5 The premature release of the title deeds by a vendor on sale or by a first mortgagee on discharge of mortgage; and the inclusion of a receipt clause which wrongly states that the proceeds of sales have been received. 658.6 Execution of a dealing which does not truly reflect the transaction, such as the execution of a transfer by a registered proprietor, who has mortgaged but not sold a property (Holding out) 688.7 The failure of the holder of an unregistered interest to create a caveat, where that person was not in a position to take possession of the title deeds 698.8 The requirement for a purchaser to caveat 708.9 The requirement for a beneficiary under a trust to caveat 70



9 OLD SYSTEM TITLE.......................................................719.1 Chain of title 719.2 Interests in old-system title land 729.3 Deeds 739.4 Registration of deeds and s 184G of the Conveyancing Act 749.5 Converting old system land to Torrens Title land 76

10 MORTGAGES...............................................................7810.1 Mortgages under Old System Title 7810.2 Remedies available to a mortgagee 8010.3 Tacking 87

11 CO-OWNERSHIP..........................................................8911.1 Types of Co-ownership 8911.2 Creation of co-ownership 9011.3 Severance (joint tenancy tenancy in common) 9111.4 Ending co-ownership 9411.5 Rights of co-owners inter se 9511.6 Taking accounts: after co-ownership ends 9511.7 Entitlements (occupation, rent and profits) 96

12 EASEMENTS................................................................9812.1 Characteristics of an easement 9812.2 Creation of Easements 10112.3 Ancillary rights to an easement 11012.4 Obligation on the owners of the dominant and servient tenement; deviations of a right of way coming from obstruction 11012.5 Changing an easement 11012.6 Extinguishing an easement 11312.7 Remedies 115

13 RESTRICTIVE COVENANTS..........................................11713.1 Introduction 11713.2 Requirements for a binding covenant under OST 11813.3 Restrictive covenants on TT land 12013.4 Remedies/defences 12113.5 Extinguishing a covenant 12113.6 Etc. 122



14 LEASES.....................................................................12314.1 Introductory issues 12314.2 Essential characteristics of a lease 12414.3 Types of leases 12614.4 Covenants 12714.5 Assignment and subleasing 13414.6 Terminating/ending a lease (breach and consequences) 13514.7 Waiver 13814.8 Remedies 138



Part 1 – Preliminary Matters1 Tenure, Estates, and Native title1.1 DefinitionsAllodial system Where land holding is absoluteTenurial Where land is held “of” another

partyReal property Land, and interest in land, made up

of: Corporeal hereditaments;

and, Incorporeal hereditaments

(intangible rights, e.b. an easement)

Estate An interest of land, held “of” the crown, entitling the holder to a parcel of rights

Free and common socage Land ownership without periodic payment or military service

Terra Nullius Land with no ownerReservation clause A limitation on the rights enjoyed

by the holder of estate in fee simpleFee simple Unrestrictedly inheritable indefinite

title to land“fee” inheritability“simple” no restrictions on inheritance

Radical title A beneficial right the crown holds with respect to land: practically, this is the right to grant and manage land

Sovereignty The right to make laws with respect to something: e.g. the crown’s sovereignty with respect to Australia

Alienable Able to sellIntestate Without will bona vacantia

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1.2 TenureThe system of tenure is where land is held “of” the crown

The crown holds all land, and people have interest in land via grants

The interest you may hold of the crown is called an “estate”

1.2.1 History Early history:

o People (after fall of rome) transferred land to a leader in exchange for protection

These people maintained possession, but paid the leader with either cash or military service

o When William the Conqueror conquered England in 1066, the legal fiction was created where “all land is held of the crown”

At the same moment, all land was regranted to those who owned it in the first place

This made the King paramount lord Transmission to NSW

o By the time of transmission to NSW, the state of tenure in England was as follows:

There could be only one level of tenancy (Land held “of” the crown, rather than a Lord as a middleman)

The only form of land holding (tenure) still around was “free and common socage”

o The common law of England was brought to Australia with settlement (settled as opposed to conquered because the English considered it Terra Nullius)

An Englishman brings as much of the common law with them as is relevant to the circumstances of the colony (Cooper v Stuart)

We imported the feudal law of tenure (Attorney-General v Brown)

1.2.2 Attorney-General v BrownThis case is Authority that the doctrine of Tenure is valid in Australia.

1.2.2.1 Facts A man owns land in Newcastle

o Finds coal, starts digging for it The crown says it was the crown’s coal, not his

o When the land was granted, there was a reservation clause granting the land but reserving mineral rights

1.2.2.2 Held Brown argued

o Reservation clause was valid



o But, the English tenurial system did not apply: Whereas England had sovereignty here, He argued that sovereignty and ownership of all land

are necessarily connected The court held

o Brown admitted that the Crown had sovereigntyo Thus, in creating his parcel of land, they were fully within

their rights as sovereigns to create reservation clauses Regarding the system of tenure

o The crown owned land since 1788o Tenure, in England, is a fiction

In Australia, it is a reality, because of Terra Nullius Thus, tenure in Australia is on an even more solid

legal basis than in England

1.2.3 Mabo (No 2)This argument put forth in this case were very similar to those put forth in Brown, but the conclusion was different: this redefined the tenurial system, stating that, with sovereignty, the Crown has the option to exercise power to own land (Radical Title), but this only extinguishes prior interests if exercised with the creation of an estate that allows for exclusive possession.

1.2.3.1 Development of native title Mabo was not the first attempt at establishing Native Title

o Gove Land Rights Case (1971) There, the aboriginal people had a spiritual, not

economic connection to the land The court could not create native title in this case,

since the aboriginal concept of land was so different to Western land concepts

The court did find native title in an earlier case in Papua New Guinea

1.2.3.2 Arguments made to the courtThe plaintiff argued that traditional rights to country survived the crown coming to Australia, and should be recognized as native title.

How could aboriginal land rights and the Crown’s ownership of all land (as in Attorney-General v Brown)?

o The crown said that when the land was vested in the crown, native title was extinguished

o The Plaintiff said that native title survived

To find for the plaintiff, the court would have to overrule Attorney-General v Brown.



1.2.3.3 What did the court decide?The court decided to rethink tenure, rather than to remove it (“To abolish tenure would fracture the skeleton of the common law” – Brennan)

This did not come out of judicial activism, but, rather, this let Australia catch up with the world (i.e. this decision was made in light of international agreements on discrimination)

So, if Tenure was essential, but the policy of native title had to be created, what possible solution was there?

There is tenureo Where no one holds land absolutely, but, rather, holds land

of the crown Thus, the crown has a notional interest in the land.

o What was this notional interest? This case created Radical Title

1.2.3.4 Radical Title “Radical title is the concomitant of sovereignty” – Brennan

o Sovereignty is the crown’s independence and right to rule How does sovereignty link with ownership?

o Radical title is sovereignty in land-lawo The power to create and manage interests in land

Thus, the crown has Radical Title, a beneficial interest in all land, rather than a notional interest

Thus, they don’t own the land, but have the power to grant and control it

Thus, the crown’s Radical Title did not extinguish Aboriginal land rights, unless the power to grant was exercised.



1.3 EstatesEstates are the bundle of rights that proprietor holds “of” the crown

Estates are, generally, alienable no restrictions on selling Estates give you respect to physical land (rather than actual

ownership)

1.3.1 Types of estatesNote, estates may be created by the government (grants) or by people (subdivision)

Freehold estates (uncertain duration)o Fee simple (pl. fees simple)

This has the most rights out of any estate This can be passed on In the common law, given by:

“to A and his heirs” Now under Conveyancing Act s 74(1), may be given by

“To A forever” “To A in fee simple”

Also created by default if it is attempted to create a fee tail (Conveyancing Act ss 19, 19A)

o Life estate An estate for the life of the person granted

After the death, the estate in fee simple falls back on the remainderman

This is often embedded in a trust This often occurs out of familial situations This grants use of the property for life

Though you do not have right to “waste” the land

In common law, created by “to A for the life of A (or B if it is a case of pour

autre vie for the life of another) Now, you must show an intention to create a life

estate, also, it is created by failing to make a fee simple (Conveyancing Act s 47(2))

Note: If sold, it is still for the life of the original holder

of the life estate Note, if the fee simple is sold, on which there is

a life estate, the fee simple is still subject to the life estate

o Fee tail (abolished) Inheritability is “entailed” “cut” i.e. to the oldest married child

Leasehold land (certain duration)



o i.e. purchasing a 99 year lease, etc.

1.3.2 Simultaneous estates Reversion

o To A for life, reversion to grantoro Grantor has a fee simple in reversion

Remaindero To A for life, remainder to B in fee simple

Alienability:o You can sell your reversionary interest, but you cannot grant

possession

1.3.3 Estates as a bundle of rightsReal property is not ownership of a thing, but a bundle of rights with respect to land

These right are a set of inter subjective rights exercisable against the world with respect to a particular thing (in rem)

o As opposed to an in personam right, excerciseable against someone in particulat

An estate in fee simple gives you 11 rights, including:o Alienabilityo Possession, and, thus, excludability



1.4 Native TitleNote that native title is a Western concept, not an indigenous concept. Thus, it reflects western land concepts, not aboriginal ones.

1.4.1 Early historyMabo was not the first native title case in Australia

Internationalo Aboriginal title in Canadao Johnson v Macintosh in the US (1823)

Gove land rights case in NTo Gove could not have succeeded because aboriginal

relationship with the land was spiritual, not economic Sao v Gerber (PNG), native title was found, heard in the High

Court of Australia

1.4.2 Mabo (no. 2)This created Native Title in Australia.

Note, Mabo was one of seven plaintiffs

The fact that Mabo was Melanesian made the case much easier for the court to find for Mabo, because:

The land was important for its economic use There was a clear direct heritage It was as close to western land ownership as could be

However, the Melanesian people’s clear land use made it difficult for subsequent aboriginal peoples to claim as precedent

The Queensland Supreme Court found (and they went to the island, too):

There was market gardening There were plots of land divided There was exclusive possession

Thus, the use of land was considered “appropriate”, that is, productive (important because of Locke’s labor theory)

“appropriate” as contrasted with “adverse possession” (move onto land, openly, use in a certain way which is possession, after 12 years, you get ownership because the law does not like “land lying fallow”

Thus, the “radical title”, which allowed for the preservation of native title, was more easily created

1.4.3 What is native title?Origins are in the traditions of aboriginal law (Yorta Yorta)

Thus, custom is central



Every claim has different law based on different customs We can get information from oral traditions, writings about the

peopleo E.g. in Yorta Yorta

Aboriginal oral evidence was not favored because there was the diary of a “gentleman ethnographer”

Since oral evidence was problematic because of hearsay

It is not the best possible system for aboriginals

Very expensive The rights given are minimal Culture may be offended (they may have to give evidence that is

sensitive)

Note, Native title is the “recognition” of aboriginal rights and interests, rather than their creation (WA v Ward)

1.4.4 Elements Ongoing, “substantially uninterrupted” connection to the land

o What about dispossession? This would have counted as interrupted connection to land

Customs and traditions use of land must maintain its traditional nature (Yanner v Eaton)

o E.g. in Yanner, fishing happened traditionally, but aborigine used a spear gun and a motorboat, now

o Note, traditional right to fish is not commercial righto So, what can be granted (Mabo Brennan)

Hunting, fishing, subsistence Ceremonial use Exclusion Use of resources (i.e. use of ochre) Right to live on land

o In Bullan Bullan, intellectual property was held to be outside of native title



1.4.5 ExtinguishmentThe person claiming has to prove that the native title right has not been extinguished

Once this right is extinguished, it is extinguished forever

1.4.5.1 MaboBrennan:

Where the crown exercises sovereign power with an intention to extinguish (as shown by an inconsistent grant)

Or where the connection with the land is lost “tide of history is washed away”

Deane and Gaudron:

Inconsistent dealings Or abandonment

Toohey:

Clear legislative intention (though compensation is allowed)

1.4.5.2 FejoHere, the creation of an estate in fee simple was seen as extinguishing, since it is the exclusive right to possession.

Thus, native title is extinguished (because it is legally inconsistent with exclusive possession)

Native title, thus, “yields” to an estate in fee simple

1.4.5.3 WikThis case was with regards to pastoral leases

Giant leases, created by the State Lands Act Designed for grazing

Issue: did Pastoral lease extinguish native title?

Brennano Pastoral lease is a lease, and confers exclusive possessiono Thus, it extinguishes native title

Toohey (Majority)o Label “lease” is insufficient to immediately distinguish

(substance, not form)o Thus, the lease must be interpreted in light of the purpose of

its creation (a light footprint on the land)o Was there an intention to confer exclusive possession?

Probably not, since there lease was conditional:



o As such, there is no exclusive possession, and it does not totally extinguish possession.

Thus, have to list native title right (e.g. hunting, living, etc.) and pastoralist rights (running cattle, building a farmhouse, etc.) and we smoosh them together to see where they are inconsistent. If a native title right cannot coexist with a pastoralist right, it is extinguished.

1.4.6 What is the effect of native title? It is an inalienable right (it cannot be sold)

o It also cannot be mortgaged or economically developed It is communal

o It is vested in the group of native title right-holders It is a bundle of rights (different to the 11 rights conferred to a

holder of an estate in fee simple) that is not fixed, but changeable, based on culture.

1.4.7 The native title actReplaces most of the common law.

It provides a claim mechanism. It sets out a difficult mechanism for future governments to change

this law It defines native title (s 223)

o Rights and interests are part of the definition (sub-s 1)o Right with respect to land or water (sub-s 1(a)(b)

1.4.8 Who is an aboriginal personBrennan J in Mabo:

Membership is based on biological descent As well as recognition by the group

WA v Ward:

Ancestral connection is required between the original native title holders and the present claimants



1.4.9 Mabo, discussion Brennan

o Cannot get rid of tenure (fracture the skeleton)o Tenure exists, and the crown grants lando Sovereignty is not the same as a benificial interest in the

lando When native title expires, the crown gets a beneficial

interest Deane and Gaudron

o Native title is extinguished by an unqualified crown grant of an inconsistent estate

Mason, Brennan, McHugho Title extinguished by inconsistent grant

Mabo (No 2) Brennan J Deane and Gaudron JJ Toohey JTerra nullius No No NoEstablishing native title

Retained link with the land. Traditional connection

Occupation and use of the land

Physical presence

Content of native title Your rights are ascertained by your traditional laws and customs on the land

As under traditional law and custom

N/A

How can native title holders deal with their rights

Depends on the traditional laws and customs

Rights are personal rather than proprietary. Native title cannot be sold.

N/A



2 The meaning of LandReal property deals with land, but the boundary of the land may be questioned. How does land exist in 3d space: regarding airspace, depth, boundaries with neighbors and things that grow on the land.

Traditionally, a person owns their land “Cuis est solum, eius est usque ad coelom”1 – “upwards of the sun and downward to the center of the earth.”

This is, in practice, constrained: trespass requires the “interference of possession,” and, as such, any trespass, which does not interfere, is, practically, outside of “land.”

2.1 The right to airspaceWhere does “land” end vertically?

2.1.1 Who may bring proceedings?2

An owner of mineral rights An owner in possession

o NB: here, a lessee in possession may bring forth an action. Where an owner’s reversionary interest may be affected

2.1.2 Permanent encroachments to airspaceThe court is more likely to find trespass where the encroachment is permanent.

2.1.2.1 Kelson v Imperial Tobacco Co LimitedHere, a permanent encroachment constituted a trespass.

2.1.2.1.1FactsThere was a sign protruding over the property

2.1.2.1.2HeldThis was trespass based on the judgment in Gifford v Dent.

Since there has been legislation excusing planes from trespass (Civil Aviation Act 1949 s 40(1)).

Then aerial encroachment may be trespass, and, since it is close, and permanent, this current situation was trespass.

2.1.2.2 Wandsworth District Board of Works v United Telephone Co Limited

Here, a wire swinging over neighbor’s land was trespass.

2.1.2.3 Lemmon v WebbBranches and roots growing onto your property may be removed if they encroached (subject to relevant legislation).

1 Commissioner for Railways v Valuer General.2 Rodrigues v Ufton.



2.1.3 Temporary Encroachments

2.1.3.1 Pickering v RuddThis case held that a bullet flying over a parcel of land will not be trespass. This was also authority for the assumption that no “aerial” encroachment will be trespass.

2.1.3.2 Davies v BennisonThat if the bullet fired over a house hit a cat, there would be trespass because of its proximity to the structure on the land.

2.1.3.3 Bernstein of Leigh (Baron) v Skyviews & General LimitedThis case is authority for the rule that you have an interest in the airspace until such a height where trespass would no longer violate your enjoyment of the land.

2.1.3.3.1Facts An airplane flew over Baron’s house

o To take photography

2.1.3.3.2HeldThe court rejected the submission that the plaintiff’s interest in land continued to an unlimited height: he only had rights where an infringement would violate his “enjoyment of the land.”

2.1.3.4 Woollerton & Wilson Limited v Richard Costain LimitedThis case regards swinging (“weathervaning”) cranes.

2.1.3.4.1FactsBuilder encroached on land with a crane

15m above property

Builder admitted trespass

He did, however, try to buy the righto encroach with substantial moneys.

2.1.3.4.2HeldThere was trespass, though the injunction was postponed by the court’s discretion, since there had never been precedent and since the defendant had tried to reimburse the plaintiff.

2.1.3.4.3Graham v K.D. Morris & Sons Limited (QLD)Here, Woolerton was applied, but the injunction was to happen immediately since the defendant “flagrant[ly] disregard[ed]” the plaintiff’s rights.



2.1.3.5 LJP Investment Pty Limited v Howard Chia Investments Pty LimitedClarifies owner’s enjoyment to “ordinary use.”

2.1.3.5.1FactsThe defendant erected scaffolding 4.5m above the plaintiff’s property

2.1.3.5.2HeldNot any “owner’s enjoyment” or “actual use of land”, but the “ordinary use and enjoyment of the land and the structures upon it.”

2.1.3.6 Bendal Pty Limited v Mirvac Pty Limited

2.1.3.6.1FactsThe defendant was building a skyscraper

Secured with a mesh screeno Which protruded onto the neighbors property

There was also a weathervaning crane

2.1.3.6.2HeldThe screen trespassed, the crane was not.

Screeno Continuing trespasso That the plaintiff was not currently at that height did not

permit the defendant to build scaffolding over the propertyo There were alternatives (albeit costly ones)

Craneo Little encroachmento Required for safetyo Low risk, where compared to cranes lifting weight above a

building

2.1.4 EnforcementTrespasses may be corrected with:

Self-help (e.g. eviction)3

Damages (both normal, and, in cases where the defendant should be punished, restitutionary damages)4

Seeking an injunction5

3 Traian v Ware.4 LJP Investments v Howard Chia Investments.5 Woollerton & Wilson Limited v Richard Costain Limited; Bendal Pty Limited v Mirvac Pty Limited.



2.2 Legislation regulating airspace and ground-level access

2.2.1 S88K of the Conveyancing ActThis creates an easement by statute.

2.2.2 Access of Neighboring Land ActYou may ask for access for repairs and other small-scale cases: for “reasonable use.”

Application in the Land and Environment Court where:o They have already askedo They have already offered reasonable recompense

2.2.3 Encroachment of Building Act 1922Where there is a “substantial building … of permanent character” which is causing the encroachment, it cannot easily be removed. E.g.:

A concrete drive6

A concrete-block wall7

A retaining wall8

Etc.9

This does not include:

A pool’s pump/pump house10

Paving-stones11

This encroachment need not be on purpose.12

Any involved party may bring the action.13

6 Ward v Griffiths.7 Cuthbert v Hardie.8 Boed Pty Limited v Seymour.9 See Real Property p13.10 Cuthbert v Hardie.11 Cantamessa v Sanderson.12 Ibid.13 Encroachment of Building Act 1922 (NSW) s3(1)



Remedies include:14

Payment of compensationo Land value if not on purpose or negligento 3 times land value in any other case

The removal of the encroachment The required purchase/lease of land that encroaches A grant of an easement15

o An easement for the life of the encroachment16

The court decides which remedy based on land value, the extent of the encroachment, the loss for both parties, etc.

2.2.4 Damage By Aircraft Act 1952 (NSW)No trespass or nuisance for the ordinary flight above a property.17

Anything that falls off the aircraft may be trespass where there is damage.18

2.2.5 Damage By Aircraft Act 1999 (Cth)Wherever it is federal (international, corporate, etc.) the same applies.

Where there is damage by extraordinary circumstances, the operator/owner is jointly and severally liable.19

14 Ibid s3(2)15 Re Marsh16 Cantamessa v Sanderson17 Damage By Aircraft Act 1952 (NSW) s (2)(1).18 Ibid s (2)(2)19 Damage By Aircraft Act 1999 (Cth) s 10(2)



2.3 The owner’s rights to mineralsA mineral is something capable of being mined. At common law, you have a right to minerals downwards, subject to permit. That is, where there is an absence of limitation, you have rights.20

2.3.1 The royal mineralsThe crown owns all that is “most excellent”21, including:

Gold, Silver, Copper laced with gold, Unicorn.

2.3.2 Mining Act 1906 (NSW)This act defines minerals.

2.3.3 CoalThis act states that the crown no longer reserves coal, by proclamation, in NSW. However, to mine it requires a license.

2.3.4 PetroleumAll petroleum belongs to the commonwealth right in states, regardless of reservation.22

2.3.5 OtherCommonwealth controls minerals on its land.23

The commonwealth controls minerals used in atomic energy.24

2.3.6 Summary Commonwealth controls, for defense, “prescribed substances” (e.g.

uranium)o It may also acquire land on just terms for mining

Commonwealth has title for minerals vested in the Constitution s85 State controls petroleum and helium, unless Commonwealth

resumes the land Gold and silver are reserved by the crown Other minerals may be reserved, dependent on grant

o If not reserved, minerals are owned by surface owner

2.4 Boundaries with neighboring land Tidal water boundaries are at the high-tide line.

o Non-tidal water is “ad medium filum.”20 Wade v NSW Rutile Mining Co Pty Limited.21 Woolley v Attorney General of Victoria; R v Wilson; English paramount legislation.22 Petroleum Act 1955 (NSW) 23 Commonwealth v New South Wales.24 Atomic Energy Act 1953 (Cth)



Fences must be paid (for a “sufficient” fence) ½ and ½.o Based on the usual fence in the area.

Common law obligation of support25

o Need to support neighboring land,o Except where massively altered

Overhanging (nuisance)26

2.5 Growing thingsA crop is a chattel that belongs to the person who plants it (e.g as apposed to trees, which are part of the land until severed)

Agricultural fractus industrialso May be harvested after sale

Natural fractus naturales

Natural things are part of the land, though they may be excluded or granted separately.27

25 Conveyancing Act s117.26 Trees (Disputes Between Neighbors) Act.27 Eastern Construction Co Limited v National Trust Co Limited & Schmidt.



3 Fixtures and Chattels:If a thing is a fixture, it is transferred along with the land; if it is a chattel, it remains distinct from the land – “Quicquid plantatur solo, solo cedit.”

What is defined, in a distinct property transaction, as a chattel or a fixture, may be found in an included chattels section of a contract for land. The law of fixtures and chattels is for items of property that are not allocated by an included chattels section, or are disputed. This section may also appear in contracts for life estates, mortgage defaults and tenancies (i.e. defining what is a tenant’s fixture).

3.1 DefinitionsTerm DefinitionQuicquid plantatur solo, solo cedit

Whatever is affixed to the land becomes part of the land.

Chattel An item of personal (as apposed to “real”) property.Fixture An item of personal property that has become a part

of the realty.Tenant’s fixture An item of personal property that has become a

fixture, but may be removed before the tenancy relationship ends.



3.2 Tenant’s fixturesWhere a tenant brings an item of personal property onto the land, the item may be:

A fixture, which remains part of the land forever; or,28

A tenant’s fixture, which may be removed before the end of tenancy; or,29

It may continue to be chattel.

When may tenant’s fixtures be removed?

Only before the tenancy is finished, it becomes part of the land once the relationship comes to an end.30

o Where a tenancy has come to an end, and the tenant stays on as a trespasser, the trespasser loses the right to remove tenant’s fixtures, but may remove chattels.31

o Since life tenancies are of uncertain duration, the estate of the life tenant is given reasonable time to remove tenant’s fixtures.32

This area is often guided by the appropriate legislation (e.g. the Retail Lease Act and the Tenants’ Lease Act).

28 E.g. a concrete floor installed as a base to a shed: Webb v Frank Bevis.29 E.g. the shed mentioned above: Ibid.30 Re Roberts; ex parte Brook.31 NZ Government Property Limited v HM & S.32 Re Roberts; ex parte Brook.



3.3 Test for fixtures/chattelsThere are two tests for defining fixtures: the first based on the degree and purpose (/object) of annexation, the second based on “each case[s] […]facts and circumstances.” The second test has superseded the first one as good law.

3.3.1 Degree of annexation and purpose of annexation:This test allows the court to define where the annexation is temporary, and where it is permanent.

The degree of annexation creates a presumption, which may be rebutted:

The “rule is, that articles not otherwise attached to the land than by their own weight are not to be considered part of the land, unless the circumstances are such as to [show] that they were intended to be part of the land [:] the onus of [showing] that they were so intended [lies with] those who assert that they have ceased to be chattels.” 33

The “intention” is shown via “the degree of annexation and the object of the annexation.”34

Degree of annexation:

“If the thing has been securely fixed” so that “It cannot be detached without substantial injury

o “To the thing itself or to that to which it is attached “This supplies strong […] evidence that a permanent fixing was

intended.”35

Object of annexation (note: this is not a subjective test). Has the object been fixed for the purpose of:

“The better enjoyment of the land”36; or,o Whereby it would be a fixture.

“Merely to steady the thing itself, for better use or enjoyment of the thing fixed.”37

o Whereby it would remain a chattel.

This may also be rephrased as the question: was the object affixed for the better enjoyment of the realty or the object itself?

33 Lord Blackburn in Holland v Hodgson.34 Ibid.35 Jordan CJ in Australian Provincial Assurance Co Limited v Coroneo.36 Ibid.37 Ibid.



3.3.1.1 Facts which have been considered:For the degree of annexation38:

Would removal of the object cause damage to land?39

o Or to the object?40

What is the mode/structure of annexation?41

Does the cost of removal exceed the value of the object [then it is a fixture]?42

For the purpose of annexation:

Was it for the better enjoyment of the land generally [fixture] or for the buildings to which it was attached [chattel]?43

What is the nature of the property?44

Was the item to be in position temporarily, or permanently?45

What was the function served by the annexation? 46

o E.g. a printing press may be firmly annexed to stabilize the press: this would not make it a fixture.

38 Conti J in NAB v Blacker.39 Hellawell v Eastwood; Adams v Medhurst & Sons Pty Limited; Spyer v Phillipson.40 Litz v National Australia Bank Limited.41 Leigh v Taylor; Teaff v Hewitt.42 Metal Manufacturers Limited v FCT.43 Hobson v Gorringe; Leigh v Taylor; Reid v Smith; Litz v National Australia Bank Limited.44 Metal Manufacturers Limited v FCT.45 Australian Provincial Assurance Co Limited v Coroneo.46 A-G (Cth) v RT Co Pty Ltd (no 2).



3.3.2 Each case relies on its own facts and circumstancesThe old test is superseded by a holistic approach:

“There is no single text […] the court ought to have regard to all the circumstances of the case […] no particular factor has primacy.”47

“The chattel may be a fixture even though it is not affixed to the land.”48

The “facts and circumstances” approach, as proposed in Dunn v Ericsson and cemented in NAB v Blacker, replaces the historic two-stage test.

Whilst “the purpose […] and the degree of annexation remain important considerations […] the court should have regards to all facts and circumstances.”49

Note, this approach may also rely on what is common practice for that type of object in its circumstance.50

3.3.2.1 Is the “facts and circumstances” approachThere are authorities that say that it is purely objective, and those which suggest that some subjectivity (i.e. what was the intended purpose of the annexation) may be taken into account.51

47 Conti J in NAB v Blacker.48 Priestly and McHugh JJA in McIntosh v Goulburn City Council.49 Conti J in NAB v Blacker.50 Ibid.51 Ibid.



3.4 Cases on Fixtures3.4.1 NAB v Blacker – Read case (judgment for students)This case, currently, is authority on the “facts and circumstances” approach.

3.4.1.1 Facts Blacker defaults on a mortgage from NAB on his farm There is a large irrigation system present

o Blacker believes it is chattel and offers to sell it to the bank Blacker did not take the irrigation system, which is well annexed

o But Blacker did take the valves, pumps, etc. (worth approximately $30,000).

o The pump could be moved in any direction by a tractor (pumps are on skids)

First set of pumps sends water and is moveable, top set (boosters) were fixed

o Valves are interchangeable “L” shaped valves, then pipes and sprinklers

3.4.1.2 HeldConti J found that the pumps were chattels, since:

They bore the characteristics of chattelso Which shifted the burden of proof to the Bank, which did not

satisfy the burden The looked like chattels, since:

o They “for all intents and purposes” rested on their own weight

And weren’t heavy enough that permanence could be implied

o It was common practice for farmland to be sold separately of plant equipment

o No damage would be done to the equipment or to the realty if they were moved

o They could be moved (by tractor) in any directiono The cost of moving the pumps was less then their worth

He found that the valves and sprinkler heads were chattels, since:o They were cheap and replaceableo They could be removed without difficulty



3.4.1.3 Conti said [15] No single test … to determine … chattel or fixture. [16] It is clear the court … regard all circumstances of the case. [10] depends on “objective intention”,

o [14] Degree of annexation: Whether removal would cause damage The mode and structure of the annexation Whether removal would damage attached item of

property Whether the cost of renewal would exceed the value of

the attached propertyo [13] Purpose of annexation:

Whether the attachment was for the better enjoyment of the item, or for the improvement of the realty

The nature of the property that has been affixed Whether the item was in a position permanently or

temporarily The function to be served by affixing the item

3.4.2 Dunn v Ericsson This first proposed the “facts and circumstances” approach.

3.4.2.1 Facts Ericsson was the owner of a building

o Lessee leased building (5 year lease, 5 year option)o Lessee leased a PABX (telephone exchange system) from

Dunn (10 year lease, Dunn retained ownership of the PABX system)

Lessee did not renew lease of land, and vacated, leaving the PABX system behind

o It was installed into the buildingo It was nailed into the wallo Channels were cut for its use

3.4.2.2 Held The annexation was for the better use of the object, not for the

improvement of the realty; The system could have been removed quickly and cheaply; and, Regarding the “facts or circumstances”, the third party’s rights via

the higher contract on the PABX could not be compromised.



3.4.3 Pulumberi v PalumberiThis case serves as a guide for many object-types.

3.4.3.1 FactsDispute between brothers over what the sale of a house included.

3.4.3.2 HeldItem Classificati

onReason

Venetian blinds

Chattel “indirect and very slight form of annexation”

Curtains Chattel Conceded by purchaserTV antenna

Chattel “merely for the better enjoyment of the TV set”

Carpets Fixture “[The carpets,] notwithstanding the slight degree of annexation” “[were installed for the] improvement and enjoyment of the premises”

Outside spotlight with timer

Chattel Conceded by purchaser

Light fittings


Stove Fixture “[The stove is] essential and integral to kitchen […] necessary to ordinary use […] notwithstanding the slight degree of annexation” “[was installed for the] improvement and enjoyment of the premises”

Portable heater




3.4.4 Holland v Hodgson Helps define level of annexation requirement.

3.4.4.1 FactsThe owner of a “worsted” mill had a mortgage on the property that included the land, the engines and “all other fixtures whatever which … shall be set up and affixed.”

There were 436 woolen looms installedo By nails into wooden plugs into the stone flooro This was in order to keep them in a proper position and

steady

3.4.4.2 HeldThe looms were classed as a fixture:

Since they were “affixed” And since even the most basic mill requires these looms

o i.e. common practice for them to be left

3.4.5 Hobson v GorringeThis case held that rental agreements do not affect (in the classical test) the court’s decision as to whether the object is a fixture.

3.4.5.1 Facts King owns a mill

o Hires a gas engine from Hobson Bolted into iron plates sunk into concrete To prevent the engine from rocking/shifting

King mortgages his millo Defaults on rental agreement and on mortgage

There is a dispute between the mortgagee and the lessor as to whether the steam engine is a chattel or a fixture

3.4.5.2 HeldIt was a fixture

Since it was annexed firmly to the soil

Note, the court said that the rental agreement did not affect its decision.



3.4.6 National Dairies WA Limited v Commissioner of State Revenue

Decision regarding interconnected plant equipment standing “on its own weight.”

3.4.6.1 Facts National Dairies did not want to pay stamp duty on equipment

o It would have to if it was found to be a fixture The equipment was:

o Mostly standing on its own weighto Mostly connected to the electricity, to gas and to watero Interconnected

3.4.6.2 HeldThe items of equipment were considered fixtures:

Even though they were lightly affixed, They were interconnected; Installed for an indefinite period And there was nothing to show that there was ever an intention of

removing the equipment once it was originally installed

3.4.7 Standard Portland Cement v Good Regarding extraneous agreements that something is a chattel based on time.

3.4.7.1 Facts Rural property sold

o 100 tonne cement mill on lando standing on its own weight

Agreement for sale of land said the vendor may pick up the mill within the first 12 months of the sale

o He tried to pick it up after 12 monthso Purchaser said it became a fixture

3.4.7.2 HeldThe agreement showed that both parties had intended the mill to be a chattel

The breach of sale contract did not change the mill into a fixture But it may have exposed the vendor to damages



3.4.8 Reid v SmithThis case is used for “house-dwellings.”

3.4.8.1 Facts Houses resting on their own weight On stilts driven into the ground The vendor wanted to take the house away

3.4.8.2 HeldWas found to be a fixture – “part of the freehold”

“Any dwelling-house put on the land should be considered annexed to the freehold”

3.4.9 D’Eyncourt v GregoryThis case is used for architecturally significant objects.

3.4.9.1 FactsThere were “architecturally significant” stones, statues, vases and seats, which rested on their own weight.

3.4.9.2 HeldThey were fixtures since they were part of the architectural design of the land.

The object is placed there “in order to complete the architectural design.”

3.4.10 Leigh v TaylorThis is used for the “better enjoyment of the object” rather than the realty, argument.

3.4.10.1 FactsThere was an expensive tapestry:

Wood was nailed into the wall Canvas was stretched over the wooden frame The tapestry was stretched over the canvas

3.4.10.2 HeldThis was a chattel, since the affixation was not for the “improvement of the realty”, but, rather, to improve the “enjoyment of the thing.”



3.4.11 Spyer v PhillipsonThis case is a good example for Tenant’s Fixtures.

3.4.11.1 Facts A lessee, unauthorized, installing expensive antique wooden

paneling.o Wooden bits in wall, paneling drilled into bits

3.4.11.2 HeldThis was a tenant’s fixture, and could be removed:

The price of the paneling was greater than the cost of removal It was put in for the purpose of decorating, with the (apparent)

intent to repurpose after the moveo Since it was expensiveo And installed in removable manner

3.4.12 Webb v Frank BevisThis case is about a “temporary buildings”.

3.4.12.1 FactsThere was a temporary building:

Mounted with rope (that could easily be undone)o And by the weight of the structure

On a sunk cement base

3.4.12.2 HeldThe structure was impermanent, and, thus, a chattel, whilst the foundations were a chattel, since:

The structure could have been removed without losing its identityo Was built in such as way that it could be removed

And the concrete “could not be detached [without it] ceasing to exist as concrete”

Short term relationship



4 Waste Waste is alteration or damage to land by an occupier. Waste is often in issue with a landlord/tenant relationship or life tenant/remainderman.

4.1 Permissive wasteWhere an occupier allows the land to fall into disrepair. A person is not usually held liable.52 Liability to repair may be created in the contract creating the relationship.53

4.2 Voluntary wasteVoluntary waste is a positive act, where the occupier intentionally damages the land. A lessee is usually liable, unless excused by the lease.54 Even if excused, a life tenant is liable for waste that is held to be equitable waste.55

4.3 Equitable wasteEquitable waste is any waste that is “wanton destruction”: a Court of Equity does not allow this type of waste.56 However, a life-tenant may still contract out of this liability.57

4.4 Ameliorating wasteAmeliorating waste improves the land. However, the Court of Equity may still intervene if the waste is of a “substantially injurious character.”

52 Powys v Blagrave.53 Conveyancing Act 1919 (NSW) s80(1), 84(1)(b).54 Imperial Acts Application Act 1969 (NSW) s 32.55 Conveyancing Act 1919 (NSW) s 9.56 Vane v Lord Barnard.57 Conveyancing Act 1919 (NSW) s 9.



Part 2 – Torrens Title5 The Torrens Title SystemPriorities under the Torrens Title System:

Registered v Registered58

Registered v Unregistered59

Unregistered v Registered60

Unregistered v Registeredo Legal v Legalo Legal v Equitableo Equitable v Legalo Equitable v Equitable

The party in bold/underlined has priority, unless:

(for R v R, R v U and U v R) one of the exceptions to indefeasibility is relevant; or,

(for U v U) unless the earlier party is guilty of postponing conduct, or the later party had notice.

5.1 EssentialsNote: most land in NSW (>99%) is Torrens Title land (the rest is “old system”, see CR below).

This is a statutory system, created with the Real Property Act 1862, which is now replaced by the Real Property Act 1900.

5.1.1 Certificate of TitleEach property, under the Torrens Title system, has a certificate of title, which lists:

In the First Scheduleo The Registered owner

NB: at a time of registration of sale, the vendor’s name is erased from the First Schedule and replaced by the purchaser’s name.

In the Second Schedule:o Mortgagors

Borrowing, with the property as a securityo Lessees

58 Whichever interest is registered first (which is not the same as which dealing occurred first) has priority: Real Property Act s 36(9).59 Real Property Act ss 41, 42.60 Real Property Act ss 41, 42.



o Easements Swapped rights on land (e.g. rights of way, etc.)

o Restrictive covenants

However, the CT may not be an exhaustive list of interests in the property, since there may be unregistered interests.

5.1.2 Timeline for a transfer of land under the Torrens system Exchange of contracts

o The Statute of Fraud 1677 requires that transfers of Land be in writing.

o The Conveyancing Act 1919 requires certain attachments to a contract for the sale of land (e.g. floor-plan, etc.)

o Two identical contracts are exchanged (the one executed by the vendor is given to the purchaser, and vice versa)

Here, a deposit is usually (but not necessarily) paid Here, the purchaser gets an unregisterable equitable

interest in the land.61

They may be able to ask for specific performance of the contract from the Court of Equity

Settlement/Completiono This usually occurs 6 weeks after exchangeo The vendor hands over a “transfer”, transferring property

from vendor to purchaser.o NB: sensible vendors don’t transfer until payment

Note, if transfer occurs, but payment isn’t completed, the vendor has a “lien” (an equitable interest in the land with respect to the unpaid purchase price)

Lodgmento This usually occurs on the same day as settlemento The settlement forms and the CT must match perfectly

Registrationo Now takes approximately 1 working day, used 3-12 months

5.2 Indefeasibility5.2.1 Title by registration s 41Torrens Title system is a system of title by registration.62 This is contrasted with old system title, whereby title was given, and then you could, if you wanted to, register it.

According to Breskvar v Wall, Torrens Title Land has the following attributes:

Title is not historical or derivative

61 Tanwar Enterprises Pty Ltd v Cauchi.62 Real Property Act 1900 s41; Breskvar v Wall (Qld).



A registration by a “void instrument”, if properly registered, transfers title

o i.e. in the old system, title gotten by forgery does not count, in Torrens, if registered property, transfer of title is held to have occurred, especially when on sold to third parties.

It is the State of NSW giving you title.63

5.2.2 Indefeasibility of titleIndefeasibility of title is set out in the Real Property Act, ss 41-43.

s 41 title by registration s 42 title is indefeasible, except for the exceptions s 43 you don’t need to track the history of the property (as in

Old Title): you may deal with the register directly.

Thus, rules of indefeasibility are:

A person registered in the first schedule is subject to whatever is registered in the second schedule (s 41, 42); and,

Order of registration is central for persons claiming in the second schedule (s 36(9)); and,

Registered interests prevail over unregistered interests (s 43).

Note: indefeasibility is now immediate – whilst previous authority said it indefeasibility was been deferred (i.e. the holder’s title is indefeasible against everyone but the party to the contract where title was granted),64 the weight of current authority states that it is immediate.65

5.2.3 Unregistered interestsUnregistered interest may come out of the following (where interests are unregisterable):

The interest of a purchaser arising from a contract for sale of lando On exchange of contracts, an unregisterable equitable

interest in the property is created Mortgages created by the deposit of title deeds

o Where there is no mortgage in writing, there may still be an equitable mortgage where a financier lends money in consideration for the title deed being deposited.66

An agreement to grant a mortgageo This is enforceable in a similar way to the right of a person

who has exchanged contracts but not yet transferred.67

63 Commonwealth v NSW, per Isaac.64 E.g. Gibbs v Messer.65 E.g. Mayer v Coe; Schultz v Corwill Pty Limited; Breskvar v Wall; etc.66 Cooney v Burns.67 Australia and New Zealand Banking Group v Burns.



Oral leases for three years or lesso Normally there is a requirement for writing.68

o This is forgiven if: The term of the lease is not greater than 3 years It is for market value rent The lessee has an immediate right to possession

Written leases where the approved form is not usedo Leases created by other forms (i.e. unregisterable under the

Real Property Act, but valid as per the Residential Tenancies Act) may still be a valid unregistered interest.

Beneficiaries of interests held on trust by a trusteeo These interests need not be in writing69

o Trusts may not registered owners/interest-holders70

5.2.4 Cases illustrating indefeasibility

5.2.4.1 Mayer v CoeIllustrates indefeasibility/fraud of a third party (i.e. the fraudulent party is not party to the contract).

5.2.4.1.1Facts Mayer is an owner She left CT with solicitor.

o Solicitor was dishonesto Represents to Coe that Mayer wanted a mortgage

Solicitor misappropriates moneys Coe gets the mortgage registered in the second schedule

5.2.4.1.2HeldWhilst under Old System title, the mortgage would have been void,71 under Torrens Title, Coe had indefeasibility,72 and the mortgage was valid.

If Mayer had sued before Coe was registered, Coe would have no title.

The fraud was of a third party, and, thus, this did not constitute an exception to indefeasibility.

5.2.4.2 Bursill Enterprises Limited v Berger Bros Trading Co LimitedThis case is an example of indefeasibility and authority regarding weird registered interests (here, a strange right of way).

5.2.4.2.1FactsThere are 2 adjoining two adjoining properties, with a front on George

68 Conveyancing Act s 23D.69 Conveyancing Act s 23C.70 Real Property Act s 82.71 E.g. Re Cooper.72 Via s 42 of the Real Property Act.



This was an early Torrens Title property There was a registered easement (a Right of Way) for the benefit of

the neighboro This granted the neighbor passageo The fine print of this easement also granted the neighbor

exclusive rights to any building more than 12ft above the easement.

The neighbors find out about the easemento The owner says it should be limited in scope to a normal

easemento Since an easement could not ordinarily give rights such as

those expressed

5.2.4.2.2HeldThe High Court held that the easement, as well as the exclusive right to possession above the easement was indefeasible, since they were registered.

5.2.4.3 Fels v Knowles (NZ)Another example of indefeasibility, also: trusts.

5.2.4.3.1FactsA landlord holds the land on trust for beneficiaries (note, a trust cannot hold the title to a property: Real Property Act s 82).

The trust agreement said that he could not sell, but could lease He issues a long-lease

o With an option to purchase This lease was registered

The trust said that this lease went against the trust-deed (i.e. he had no power to grant the option to purchase), and, thus, that the option was invalid

5.2.4.3.2HeldThe High Court held that the option was indefeasible, because it was registered. The beneficiaries might have a cause of action against the trustee for breach of contract.

5.2.4.4 Koteff v BogdanovicThis case is authority that indefeasibility extends to properties given as gifts.

5.2.4.4.1FactsA property in Anondale owned/occupied by Koteff Snr

He is getting oldo Hires a chick to take care of himo Tells her she can get a life estate after he dies



Court holds this to be enforceable in equity against the his estate

He dieso Leaves everything to his son

Son registers as recipient of gift

5.2.4.4.2HeldUnder old system, “you cannot hold greater title than the giver,” who had already transferred the right.

However, under Torrens:

Son registered Thus, his title was indefeasible as per s 42.

5.2.4.5 State Bank of NSW v Berowra Waters HoldingsThis case is Authority that the registration of a discharge of mortgage is binding even if made in error.

5.2.4.5.1Facts SB holds BWH’s mortgage

o A clerk calculates a wrong payout sum (less than actually required)

o Sum is paid Discharge of mortgage is registered

5.2.4.5.2HeldMortgage was gone at registration of discharge, despite the mistake. The bank may have a cause of action in debt, but the interest in land is dissolved.



6 Torrens Title - Exceptions to indefeasibilityThese exceptions apply where at least one party is registered. Sometimes, where under the rules of indefeasibility the person would lose, they might win if an exception is found.

6.1 Fraud (make flowchart)Notice of itself is not fraud.73 Fraud requires the additional element of “dishonesty” or “some moral turpitude.”74

6.1.1 Mayer v CoeThis case requires the fraud to be by one of the involved parties (/the parties on the register), or for one of their benefits.

6.1.1.1 FactsThe solicitor defrauded Mayer, not Coe, who bought the property

6.1.1.2 HeldSince Coe was not involved in the fraud (nor anyone else on the register), this was not sufficient for an exception to indefeasibility to be created.

6.1.2 Wicks v BennettThis case is authority that notice of itself is not fraud.

6.1.2.1 Facts Landlord was subject to an unregistered lease

o The short tenancy exception (Real Property Act 42(1)d) was not yet in force

Landlord sold to the purchasero Who settleso With actual notice of the leaseo And registers

Purchaser then attempts to evict the tenant

6.1.2.2 HeldThat the Purchaser had notice of the lease did not make him subject to it.

73 Wicks v Bennett; Leros v Terara.74 Stuart v Kingston.



6.1.3 Loke Yew v Port Swettenham Rubber CoThis case is a good example of fraud.

6.1.3.1 Facts Eusope owns land

o Sold a parcel to Loke Yewo Who did not register

Eusope goes to sell the rest of the land to Rubbero Eusope tells Rubber about Loke Yewo Rubber persuades Eusope to transfer all of the land, saying

that they would recognize Loke Yew’s holding: that they would “take care of it”

Eusope transfers whole parcel of lando Rubber tries to evict Loke Yew

6.1.3.2 HeldThe Privy Council held that the company did act fraudulently: since they made an assurance they never intended to keep. Thus, they were subject to Loke Yew’s unregistered interest.

6.1.4 Breskvar v WallThis case is authority for the imputability of fraud, where the fraudulent person is acting as the agent of one of the parties registered.

6.1.4.1 Facts The Breskvars were registered owners of land

o Borrowed money from Mr. Petrie Instead of signing a mortgage, he convinced them to

sign a blank transfer as security Mr. Petrie wrote his grandson, Mr. Wall, into the transfer, as the

transferee (recipient)o Mr. Wall then transferred the property to Alban Pty Limited.

Before registration, the Breskvars sued Mr. Wall

6.1.4.2 HeldThe High Court held that the fraud of Mr. Wall’s grandfather, Mr. Petrie, was imputed onto Mr. Wall, since he acted as Mr. Wall’s agent. Thus, there was fraud, and the Breskvars were to be reinstated in the register.

Note, Breskvar failed against Auburn, since they were more innocent (Breskvar was guilty of postponing conduct).

6.1.5 Schultz v Corwill Pty LimitedWhere the alleged agent is acting “on a frolic” of his or her own, there is no fraud.



6.1.5.1 Facts Mrs. Schultz has money to invest by way of first mortgage Mr. Galea recommended that she advance the money to Corwill

o Mr. Galea was her solicitor, and the solicitor for the company

o He misappropriated the money Mrs. Shultz dies

o Mr. Galea persuades Mr. Shultz to sign a discharge of mortgage before the mortgage was fully paid out

o Mr. Galea registers this discharge, without the money being paid

6.1.5.2 HeldThe High Court held that Mr. Galea was acting on “a frolic of his own” which did not benefit the company/without the knowledge of the company. Thus, the fraud was not imputed and the register determined rights.

6.1.6 Assets Co Limited v Mere Roihi (“The Assets Case”) reconsidered by Bahr v Nicolay

This case is authority that it is not fraud to not be aware of a legislative impediment which would have disentitled the person now registered from becoming registered. Thus, that there must be actual fraud/knowledge of a dishonest act.

6.1.6.1 Facts New Zealand law prohibited certain types of land sales Maori sold to Assets in breach of this law

6.1.6.2 HeldThere was no fraud since the Assets Co did not have an “actual appreciation [/knowledge] of dishonesty,” i.e. they did not know that it was in breach, and thus there was no intention.

6.1.7 Bahr v NicolayThis case illustrates how acknowledgement of a prior agreement may make one subject to it, if it is subsequently dishonestly repudiated. Also, it was held in the minority judgment (though not in the majority judgment) that either fraud or personal equity may be held where the intention to renege on a prior assurance was formed after registration.

6.1.7.1 Facts The Bahrs owned some land, but were short on money

o They sold to Nicolay (for $32,000) (who registered)o With the option to repurchase (for $45,000)

Nicolay on-sold the property to the Thompsons for ($42,000)o On the condition that they respect the Bahrs’ repurchase

option



o Thompson said they would respect thiso And confirmed this to the Bahrs after purchase

The house price goes upo The Bahrs go to exercise their purchase option, o Thompson then changes his mind and said the option is no

longer valido Said it was void, since they had a registered interest trumps

an unregistered interest

6.1.7.2 HeldThe Supreme Court held that Thompson was registered and thus his title was indefeasible. However, this was overturned in the High Court:

Mason and Dawson JJ (Minority)

Relied on Fraudo Whilst reaffirming that notice of an unregistered interest

does not bind one to an unregistered interest, since there was a requirement for “moral turpitude”,

They held that some kinds of equitable fraud were still fraud:o Rejecting the decision in the Assets Case, that “Fraud means

actual fraud […] not what is called […] equitable fraud” They said that fraud should not be limited to the time before

registrationo “Why should the exception not embrace fraudulent conduct

arising from the dishonest repudiation of a prior interest which the registered proprietor has acknowledged”

o “The repudiation is fraudulent because it has as its object the destruction of the unregistered interest notwithstanding that the preservation of the unregistered interest was the foundation […] underlying the execution of the transfer”

Wilson, Brennan and Toohey JJ (Majority)

These judges refused to extend fraud to situations where intention to renege on a prior assurance occurred after registration

o Since the fraud alleged was fraudulent registration (which did not, here, occur)

Thus, whilst they had an action in personal equity, fraud failed

6.1.8 Leros Pty Limited v Terara Pty LimitedLike Wicks v Bennett, this states that knowledge in and of itself is not fraud.

6.1.8.1 Facts There is a commercial property subject to a 5 year lease (with a 7

year option)o In Western Australia, only a 5+ year lease is required to be

registered



o Thus, this lease was unregistered Landlord (Vendor) put the property on the market

o Tenant exercises 7 year option Vendor asks Purchaser to accept this 7 year extension

o Purchaser says noo Vendor says no dealo Purchaser is not willing to negotiate

Vendor then offers property, without being subject to the leaseo Purchaser buys

Purchaser has knowledge (equal to actual notice) of lease but has not agreed to be bound by it

6.1.8.2 HeldKnowledge, even actual notice, did not constitute fraud.

In obiter, the nature of Torrens Title, namely that it is a system of “title by registration rather than registration of title,”75 and that it is more appropriate for those with an equitable interest to create a caveat.

6.1.9 National Commercial Banking Corporation of Australia Limited v Hedley

This is authority for a different type of fraud, namely, fraud on the Registrar General.

6.1.9.1 Facts The Hedleys are husband and wife

o Mr. Hedley goes to National to negotiate a mortgage Secured by a property owned by both Mr. and Mrs.

Hedley Bank officer approves the loan and requires that both parties sign

o Mr. Hedley signs as himself and as his wife Officer reports that he witnessed both signatures (though he did

not know there was a forgery)

6.1.9.2 Held Usually, this would not be fraud, since the bank did not do this for

personal gain, and was, in fact, a victim of Mr. Hedley’s fraud However, since they said they witnessed the signature, they

committed fraud against the registrar general, and thus Mrs. Hedley’s portion would be excused.

Note: one co-owner may force the sale of the property.76

6.1.10 Bank of South Australia Limited v FergusonThis case is authority that the fraud must flow from one interest to another: a fraud between the bank and his employee (i.e. within one interest) will not negate indefeasibility.75 Breskvar v Wall.76 s 66F of The Conveyancing Act.



6.1.10.1 Facts Ferguson applies to borrow money from Bank

o Tells his financial position accuratelyo Officer says he cannot approve the loan

Another officer falsifies financial details in order to get the loan approved

o Ferguson, at all times, knew the exact amount that he was to be lent

The bank lends him the moneyo He cannot repayo The bank wants to reposes

Ferguson’s lawyers discover the officer’s fraud (to the Bank) and alleges fraud

6.1.10.2 HeldThe fraud was between the Bank and the Officer, and Ferguson was not subject to the fraud (at all times he was aware of how much money he was to receive). The approval of the loan did not constitute financial advice that Ferguson could afford the repayments.

“For fraud to be operative, it must operate on the mind of the person said to have been defrauded.”



6.2 The Personal Equity ExceptionThis exception to indefeasibility is in common law only, i.e. it is outside of the Real Property Act.

It is also known as: “a right in personam,” “right in person,” “personal right,” equitable right,” “equitable obligation,” and “personal equity.”

It has its roots in Frazer v Walker:

“[Indefeasibility does not deny] the right of a plaintiff to bring against a register[ed] proprietor, a claim in personam, founded in law or in equity”

This may be summarized as follows: where there is an agreement to be subjected, there is an unregistered, enforceable, equitable obligation to honor the title you have agreed to be subjected to.

6.2.1 Barry v HeiderThis court outlines the principles of the personal equity exception.

6.2.1.1 Facts Barry is registered

o Borrows money from Schmidto Who, dishonestly, makes Barry sign a transfer, rather than a

mortgage Barry gives Schmidt the CT (this is usual for mortgages)

o If the action was brought here, a court could regularize the transaction (i.e. make it a mortgage instead of a transfer)

Schmidt, then, mortgages the house in favor of Heidero Who is unaware of the fraud in the original transfer

Heider lodges the transfer and the mortgageo Before it is registered, Barry finds out, and challenges the

mortgage Barry claims that since he is still registered, and Heider is

unregistered, his title is indefeasible

6.2.1.2 HeldThe high court held that a personal equity exception to indefeasibility will exist where:

A registered person creates the unregistered interest; and/or,

A registered person engages in conduct that contributes to the creation of the unregistered interest.

Although Barry did not create Heider, he armed Schmidt to create Heider by executing the transfer.



6.2.2 Personal Equity in Bahr v NicolayThe majority in this case found that a personal equity was created.

6.2.2.1 HeldSince the intention to renege on the promise was only made after registration, fraud was ruled out.

However, a registered person (Thompson) agreed with a second person (Nicolay) to be subject to a third (Bahr).

The agreement to acknowledge the option amounted to an agreement to be subject to the Bahrs

Thus, when Thompson bought the property, they were purchasing on trust for interests still held by Bahr. And, thus, the unregistered Bahr was able to rely on the personal equity exception to indefeasibility.

This created a third type of personal equity exception:

Where a registered interest agrees with a second person to be subject to a third (the unregistered interest).

6.2.3 Mercantile Mutual Life Insurance Co Limited v GosperThis case is seen as controversial, but continues to be authority. It regards a fiduciary duty where there is an existing legal relationship between parties.

6.2.3.1 Facts Gospar owns land and is registered in the first schedule

o In the past, she borrowed money from Mercantileo This borrowing was recorded in the second schedule as a

mortgage Her husband, without her knowledge or permission

o Goes to Mercantileo To double the loano Although the house was still worth enough to secure the loan

Mercantile agreed to the increase in debt: on the condition that Mrs. Gospar signed the variation

o Mr. Gospar forged her signatureo The variation was registered

Mr. Gospar dieso Mrs. Gospar did not know of the variation

6.2.3.2 HeldJustice Meagher, in dissent, said that this was a case of pure Mayer v Coe and that upon registration of the variation, it became indefeasible. He stated that the fraud was between the bank and the third party, and that, thus, fraud did not break indefeasibility (Mercantile was not aware of Mr. Gospar’s fraud).



Kirby, stated that Mercantile owed Mrs. Gospar a duty to inquire of her (rather than of her husband), since it was her mortgage being extended.

The authoritative judgment comes from Marney:

Since there was a pre-existing relationship between Mercantile and Mrs. Gospar (i.e. that of mortgagor and mortgagee)

o Mercantile owed a fiduciary duty to Mrs. Gospar not to use the CT (which was in their possession) without her express authority

o This duty was breached, thus she has equity. Thus, if there is no pre-existing relationship, the mortgagee, upon

registration, acquires immediate indefeasibility.

This has been challenged by Windeyer, who says that as a matter of conveyancing practice, consent is rarely given, and, thus, that no fiduciary duty could have been owed. This was given in obiter in an unreported case, and awaits higher confirmation before becoming authority.

6.2.4 Grgic v ANZ BankThis case challenged the authority of Gospar, but was differentiated factually and held to be more similar to Mayer v Coe, since there was no pre-existing relationship between the parties.

6.2.4.1 Facts Grgic was a registered owner

o Wife and son went to ANZ to negotiate a mortgage (unbeknownst to Grgic)

ANZ says “I would like to meet Grgic”o Wife/son brought an impostero Who signed mortgage

Mortgage was registered

6.2.4.2 HeldSince there was no pre-existing relationship, registration created indefeasibility.

6.2.5 s 56C of the Real Property Act is EnactedThis section requires the bank to satisfy themselves of the true identity of people signing mortgages: they must keep records. It is not yet in effect, but will affect the above cases.

6.2.6 Storey v Advanced BankThis case regards the company seal.

6.2.6.1 Facts Storey negotiates a loan with Advanced Bank

o In the name of a company



o Storey is the director, but he requires board approval for loan

He doesn’t get board approval, but affixes company seal

6.2.6.2 HeldIf, prima facie, the company seal is affixed, there is no requirement for the bank to check with the board.

6.2.7 Snowlong Pty Limited v ChoeThis case is an example of either fraud or personal equity.

6.2.7.1 Facts A landlord is subject to an unregistered 5 year lease

o Purchaser agrees to buy subject to the leaseo Purchaser registers

Purchaser seeks to kick out tenant, since his title falls outside of the short tenancies rule

6.2.7.2 HeldThe purchaser agreed to be subject to the lease: 77

If he formed the intent to break the agreement before registration, it is fraudulent

If he formed the intent after, he is subject to a claim of personal equity

77 As in Bahr v Nicolay.



6.3 Prior folios (s 42(1)(a) of the Real Property Act)Where the Land Title Office makes a mistake, and there are two different CT’s for the same piece of land, the older CT prevails.

If an error is made, you can recover damages.

6.4 Omitted/misdescribed easements (s41(1)(a1) of the Real Property Act)

Where easements are omitted or misdescribed, there is an exception to indefeasibility. Most easements are now registered, but, under Old System, they could be registered or implied, thus they were not all written (although they were all equally enforceable).

If an easement is created when the land is old-system, it is continuingly enforceable.

The elements for an easement are (as held in Re Ellenborough Park):

There is a dominant an a servient tenement; The easement accommodates the dominat tenement; The dominant and servient tenement must be owned by different

persons; and, An easement must be capable of forming the subject of a grant

Further:

When the burdered land was Old System, the easement may still be protected (James v Stevenson)

Even if an implied easement is registered and forgotten (or omitted by the registrar-general), it is still considered omitted, and thus, enforceable (James v Registrar General)

If an easement is created where the land is old title, and the land subsequently becomes Torrens Title land, the easement is still protected (Australian Hifi v GHL)

If land is Old System, and an easement is used for 20 years continuously, a proscriptive easement is created.

Implied/proscriptive easements cannot be created under Torrens Title.

Thus:

An easement is omitted if the easement was created when the servient tenement was Old System and was not subsequently registered: that is, even an unregistered easement, in this case, will be held to be binding.

An easement is also omitted if it is registered, and subsequently omitted by the registrar general.



6.5 Misdescribed/omitted profit â prendre (s 42(1)(b) of the Real Property Act)

A profit a prendre is the right to enter land and remove produce.

Where the land was Old System: where it was left off the title, it is considered “omitted”, and is still enforceable.

Where the is Torrens, it is only omitted where all steps have been taken: including completing and lodging appropriate documents.

6.6 Wrong Boundaries (s 42(1)(c) of the Real Property Act)

Where boundaries are misdescribed in the register, they may be rectified.

6.7 Short term tenancies (s 42(1)(d) of the Real Property Act) (Maybe read more)

Note, an oral lease is enforceable when:

The period of the tenancy is three years or less; and, The price is “the best rent reasonably obtainable”; and, There is an immediate right to possession.

This exception is only available when a tenant can show:

The lease is oral and enforceable, or written The registered person had notice of the tenant

o This may be actual, constructive, or imputed notice

6.7.1 Actual noticeThe purchaser literally knew that there was a short tenant.

6.7.2 Constructive Notice (Marsden v Campbell)What a person should have know if a person carried out all the enquiries that a reasonable person should have carried out.

Note: you have constructive notice of everything you would have learned had you searched the register/ASIC files (Mills v Renwick; Conveyancing Act s164)

Knowledge that there is a wife may be constructive notice of her interest (joined) in the property (Williams and Glyn’s Bank Limited v Boland)

6.7.2.1 Facts There was an owner with a mortgage

o And a lease, in favor of the mortgagee The owner sells

o He doesn’t know about the tenanto But sees animals grazing



6.7.2.2 HeldHe had constructive notice: he should have asked, if you didn’t live in the house, why was there grazing?

6.7.3 Imputed noticeActual or constructive notice of the tenant by the agent is imputed onto the principal.

6.7.3.1 The Clyne casesIt was held, that although Clyne did not know the name/specifics of a rental agreement, he knew that there was a tenant, and this created notice (Clyne v Lowe)

Clyne mortgages house to Building Society, which he defaults on purpose, so the building society can sell it unencumbered: the building society had constructive notice of the tenant (USB Co-operative Building Society (No 11) Limited v Clyne).

6.8 Overriding statutesThe subsequent statute prevails; the federal statute prevails over state statute.

6.9 Possessory title (Part 6A of the Real Property Act)This is similar to the Old System concept of Adverse Possession.

If you have title, and are registered in the first schedule And you allow a trespasser to live unchallenged for 12 years on the

land Then the trespasser has better title

Principles outlined in Mulcahy v Curramore

Posession must be open, not secret Peaceful, not by force Adverse, not consented It does not have to be the same person for 12 years:

o A B C The person there on the 12th anniversary gets title There needs to be no gap

o Independent I.e. B is adverse to A who is adverse to owner A gets title

Signs of possession:

Fixing fences (Mulcahy) Grazing animals (Hanarnett v Green) Paying rates (Kirby v Cowderoy)



7 Torrens title - priorities between unregistered parties

The priorities go as follows, where equities are equal (there is no postponing conduct and the latter party has no notice).

L v L L v E E v L E v E

7.1 Characterizing unregistered interestsThis area of law is developed outside of the Real Property Act, instead, it is defined by the common law with regards to Old System land.

However, the classification of an interest as legal or equitable may be different between Old System and Torrens cases.

Unregistered interests may be protected by caveats.

7.1.1 Legal v LegalThe earlier legal interest prevails, if the equities are equal (i.e. the latter party had no notice (actual, constructive or imputed) of the earlier interest and the earlier party did not engage in postponing conduct) by reason of nemo dat quod non habet (“a person cannot convey an interest which he/she does not have”).

7.1.2 Equitable v EquitableWhere the equities are equal, the earlier equitable interest will prevail by reason of qui prior est tempore potior est jure (“first in time”).

If the earlier party engaged in postponing conduct, the equities are no longer equal (Heid v Reliance), and “the best equity” will prevail.

7.1.3 Legal v Equitable“Where the equities are equal, the law prevails” (Pilcher v Rawlins).

Further, if a subsequent equitable interest is created, the legal interest prevails if it is acquired for value, in good faith, and without notice of the earlier equitable interest.

For valueo Consideration in money or “money’s worth”. Must be

greater than a nominal sum, but can be less than the full value of the house (Bassett v Nosworthy).

For good faitho Lack of notice will usually imply good faith. o However, it is separate, and may be found to be unsatisfied,

even when no notice is given For notice



o If notice is given before the consideration for the legal interest is paid, notice is considered given (Pilcher v Rawlins)

7.2 Caveats (Part 7A of the RPA) (Todo: caveats by registrar general)

A caveat is a protection of an unregistered interest, put, unvetted (s 74 Q), on the register, until challenged. It prevents subsequent dealings (i.e. dealings lodged after the lodgment of the caveat (Re Rush) being made on the property (s 74H RPA). Note, it does not work retrospectively.

7.2.1 Unregisterable interestsSome interests are unregistered because they are unregisterable, e.g.:

A purchaser who has exchanged contracts has an equitable, unregisterable interest (Tanbar).

A beneficiary under a trust may not be registered (s82 RPA)o Though trusts may be implied, without the need for writing

(s23C Conveyancing Act) Unregisterable mortgages (Coonie v Burns)

o A first mortgage created by deposit of deedso A loan with the security of creating a mortgageo Where a mortgage is created, but not in an approved form

Some leaseso E.g. Oral (s23D Conveyancing)

Requirement for not greater than 3 years Best reasonably obtainable price Owner (rather than lessee) has no immediate right to

posession Etc.

7.2.2 Part 7A of the RPAA caveat prevents the registration (and creation of indefeasibility) of subsequent dealings on the land (s 74H RPA).

The caveat must specify (74F(5) RPA):

Name of caveator Address The name an address of registered proprietor The prescribed particulars of the legal or equitable interest

(Kerabee Park v Daley)o The precise nature of the interesto The precise dateo The precise quantum

A reference to the parcel’s folio What part of the land the caveat applies to Where the caveator may be served notices.



The strictness of the above is relaxed by s 74L (RPA) – “the court shall disregard any failure … to strictly comply with the requirements of the act”.

But it must still be sufficient enough to inform the reader of the nature of the interest claimed (Hanson Construction).

You can caveat your own property if you have two interests (Sinclair v Hope)

7.2.3 Removal of caveatsNote: it is a vendor’s responsibility to have a caveat removed before completing a contract for sale of land (Godfrey v Kanangra).

A lapsing notice may remove a caveat. A lapsing notice is served under ss 74I (person who wishes to make a dealing), J (registered proprietor or holder of interest) of the RPA.

o This requires that the caveator commence Supreme Court proceedings within 21 days, or the caveat is null.

o The caveator, here, pays for court costs. 74MA is used when the interested party cannot wait 21 days.

o This allows a person “who claims interest” to remove a caveat by bringing a court action.

o This is expensive. A court may extend a caveat if the caveator can satisfy the court it

has a case (Penny v Fountain).o This is lodged under s 74K, which allows a court to deal with

caveats created under 74F as “it seems fit”.

You can only caveat once, per order. You need the court’s permission to recaveat where the caveat has lapsed (s 74O).

7.2.4 DamagesDamages may be claimed under s 74P where:

A person wrongfully/without reasonable cause lodge a caveat; or Where a person procured the lapsing of such a caveat; or Where a caveat is not withdrawn/is reapplied after an order to do

so.

Damages may also be claimed where: (as per Beca Developments v Idameneo)

The caveator did not have a caveatable interest The caveator did not have an honest belief based on reasonable

grounds that a caveatable interest existed (Hilparm) The caveator lodged the caveat to deliberately infringe the interest

of the registered proprietor



Dissent in this case said the burden should be lowered to “lodged with no reasonable cause, where no caveatable interest existed”.

7.3 InjunctionsS 74R of the RPA states that you can apply to the Supreme Court for an injunction to prevent registration, in addition to, or in lieu of the recording caveat.

The judge is the duty officer in the court of equity.

The judge is available after hours (for when lodgment has occurred, but before registration).

The judge will often ask, “Why didn’t you caveat earlier”.

A common remedy is a two-day freeze on proceedings.

7.4 The difference between unregistered interests: legal and equitable interests.

An essential factor in determining priorities in unregistered interest is whether they are classified as a legal or an equitable interest.

7.4.1 Unregistered legal interestsAn unregistered interest is a legal interests iff:

It is an unregistered lease that satisfies s 23D of the Conveyancing Act

It is a transfer/mortgage which satisfies s 43A of the RPA

7.4.1.1 Unregistered legal interests – Leases under s 23D of the Conveyancing Act

An unregistered lease is a legal interest if:

The lease itself does not exceed three yearso Note, a 5 year lease, in writing, is binding on the person who

made the agreement, under equity (Chan v Creston) The lease is for the best rent reasonably obtainable The lease gives the lessee an immediate right to possession

o i.e. lease period has already begun

A lease which satisfies the above criteria may be written, or oral (s 23D of the Conveyancing Act provides an exception to the requirement under s23B, s54A of the Conveyancing Act for writing).

7.4.1.2 Unregistered legal interests (Protection of next registerable interest)– s 43A

This is to protect purchasers or first mortgagees after settlement, before registration. This person, who previously would only hold an equitable interest, by value of 43A, is held to have a legal interest.



Where there is competition between an earlier unregistered equitable interest and the interest of a purchaser or first mortgagee, s 43A enables the mortgagee/purchaser to prevail (the latter legal interest will prevail over the earlier equitable).

The dealing in question must be a “dealing registerable”, the requirements of which are as follows:

The dealing must be accompanied by the CT, or by a direction to the Registrar General to use the CT (if the Registrar General is already in possession of the CT): s36(6)

It must either be a transfer or a first mortgage: these are the only people who have the CT

After settlement (receives CT) and before registration The dealing must be stamped, otherwise it is not registerable:

Stamps Duties Act The dealing must be in an approved form, without defect

o If it is defective, the dealing is not a dealing registerable until the Registrar General’s requisitions have been answered.

The dealing must not be void: (Mayer v Coe; Jonray v Partridge). A void dealing, before registration, is worthless. Once registered, it is indefeasible

The person taking the dealing has no notice pre-settlement (IAC v Courtenay)

The dealing must be the next deal registerable (IAC v Courtenay)

o E.g. the discharge of mortgage occurs before the transfer, etc.

7.4.1.2.1 IAC v CourtenayThis case is authority for the requirement that it is only a legal interest where it is the next deal registerable.

7.4.1.2.1.1 Facts Ms Austin is regd owner of land

o Suitable for subdivisiono Sold to Courtenayo And lent him most of the money

Thus Ms Austin had the Mortgage (Lodged, 12 months later, had still not yet been registered)

Courtenay sells back to Austin (not completed)o Austin’s solicitor a crook, contract of sale not completedo Austin thought she had bought it back, but really solicitor

just attempted to cancel the original saleo In reality, Austin was still subject, and Courteney had an

equitable, unregistered interest on the property Austin sells to Denton S/D



o Solicitor blabs about cancelling sale, and thus, that Courtenay’s equitable interest may still exist

o Mortgages 1 Hermes (U/R) 2 IAC (U/R)

Courtney now wants to keep house (equitable, but first in time)

7.4.1.2.1.2 HeldHermes and IAC were not the next registerable, since the transfer would have to be made before their mortgage could be registered.

Denton had notice of Courtenay’s interest (via their solicitors, constructive notice was given), thus Courtenay’s interest prevailed. (NB: Austin’s repurchase was void because Austin defaulted)

If Denton was to be protected by s 43A, it might be that the protection can roll down the line to Hermes and IAC?

7.4.1.2.2 Jonray v Partridge (Approved in HC by Meriton v McLaurin)This case is authority for the assertion that if 43A protection is given to a party, this protection can roll down the line.

7.4.1.2.2.1 Facts Australian Express is registered proprietor of land

o First mortgage held by Bamberger Australian Express entered into a contract for sale with Moore, still

subject to Bamberger’s mortgage Moore entered into a contract for sale to Jonray

o After exchange, before settlement, Moore and Jonray argued about whether Moore was required to discharge the mortgage

7.4.1.2.2.2 HeldJonray did not need to be the next registerable; as long as Bamberger was protected under s 43A, this protection would be passed on to Jonray.

All a party needed to do (rather then be the direct next registerable party) was hand over whatever documents were necessary (i.e. transfer, discharge, etc.), so that the party could obtain registration the vendor must give over the relevant documents so that the purchaser may become registered.

7.4.1.3 Successive effectWith the handing down of a legal protection as per s 43A, the protection offered extends any claimant claiming through the protected interest (i.e. anyone who relied on the protected interest having priority, such as subsequent dealings) (Wilkes v Spooner; Meriton v McLaurin).



This is regardless of whether the interest was purchased or given, protection is offered as long as they did not participate in the original breach of trust (Staplefored).

7.4.2 Unregistered equitable interestsAny unregistered lease that does not satisfy s23D of the Conveyancing Act is an unregistered equitable interest.

A lease longer than 3 years should be registered (s53 RPA), any longer that is unregistered is an equitable interest (Carberry v Gardiner), and enforceable in equity (Leitz Leeholme Stud v Robinson).

A lease less than three years may be registered (Parkinson v Braham).

If an option to renew brings the lease to more than three years, this does not make the lease one of greater than three years. This is an equitable interest, since it is not protected by the short tenancies exception (s42(1)(d) RPA)

More include:

Purchaser who has exchanged contracts, but not settled (purchaser’s lien)

A second, or subsequent mortgage An agreement to grant a mortgage A person who hold a mortgage supported by the deposit of title A beneficiary under trust A person enjoying a restrictive covenant

7.5 Priorities between unregistered interestsWhere equities are equal:

Legal v Legalo Earlier legal prevailso Nemo dat quod non habet

Legal v Equitable; Equitable v Legalo Legal prevails (Northern counties v Whipp)o If legal is subsequent, it will only prevail where it was

purchased (Wilkes v Spooner): In good faith Without notice For value

o Where the equities are equal, the law prevails Equitable v Equitable

o Earlier equitable prevailso Qui prior est tempore potior est jure

Mere equity v Equityo Later equitable prevails



For two equitable interests, the court is flexible in determining the better equitable interest (Heid v Reliance):

Where the late of two equitable interest has notice of the first, the first will be the better equity

Where the earlier postpones, it will be the worse equity

7.5.1 Types of equitable interests: equitable interests, personal equities and “mere” equities

The earlier equitable interest will not prevail where the earlier equity is a “mere” equity where the interest requires the assistance of a court of equity to remove an impediment to the interest, e.g.:

The right to have a document rectified The right to have a transaction set aside because it was procured

by the fraud of another

In Latec, the equitable right of a mortgagor (Terrigal) to set aside the transaction procured by fraud (Latec) was held to be a mere equity: the equity created by Latec (MLC) was greater, since MLC’s interest was paid for with value, and without notice.

A mere equity has no registerable interest: it is closer to a cause of action in equity (i.e. for an injunction or specific performance, etc.)



7.6 NoticeIf the later party has notice of the earlier party, the earlier party will prevail (most relevant to earlier legal, later equitable)

8 Torrens title – unregistered interests: postponing Conduct

Postponing conduct would mean that “the better equity” prevails: that is “the conduct of the holder of an earlier interest will determine whether […] the earlier interest should be postponed at a later interest.”

The idea of postponing conduct is based on conveyancing practice:

At V sells to P, they exchange contracts then settle/completeo At settlement/completion, V hands over title deeds/CTo If CT is transferred at another time, there may be

postponing conduct With a mortgage

o Title deeds/CT transferred from Mortgagor to Mortgagee at settlement

o Retained by the mortgagee until the mortgage is discharged

8.1 Different where a beneficiary is involvedA beneficiary’s equitable interest is not postponed to a later equitable interest created by the trustee in breach of the trust (Shropshire v R): this is unless the trustee fails to obtain title deeds, where this failure creates the later equity (Walker v Linom; Lloyds v Bullock). Further, where the beneficiary (as opposed to the trustee) acts in a postponing manner, he will still be postponed (Shropshire v R).

8.2 Types of postponing conductThere are 6 types of postponing conduct, the last of which is with regard to caveats. Whilst the first five were created with regards to Old System land, the concepts are equally applicable to Torrens land because of the Real Property Act’s silence on the topic.

The types of postponing conduct are as follows:

The failure of a purchaser or first mortgagee, at settlement, to take possession of the title deeds;

The failure of a purchaser or first mortgagee to retain possession of the title deeds by an act of gross negligence;

The premature release by a purchaser of first mortgagee of the possession of the title deeds, prior to the purchaser selling or the first mortgage being discharged;

The inclusion of a receipt clause stating that the proceeds of sale have been received when that is not the case.



The execution of a dealing which does not truly reflect the transaction, such as the execution of a transfer by a registered proprietor who has a mortgage but not sold a property;

The failure of the holder of an unregistered interest to lodge a caveat, where that person was not in a position to take possession of the title deeds.

8.3 Failure to take possession of Title DeedsThis is either the failure of the purchaser, at settlement, or the mortgagee, at settlement (or commencement of mortgage) to take possession of the title deeds.

8.3.1 Walker v LinomAn example/authority for failure to take possession of deeds

8.3.1.1 Facts Husband establishes a family trust

o Trustee is the solicitor, holding on trust for daughter and wife

Husband transfers properties to trusto Gives deeds to propertieso Except for one

Even though the trust owned the lando The husband transferred the land to X, and gave him the

deeds Both X and the solicitor/trust believed they owned the property

8.3.1.2 Held In common law, X had no rights

o But he did have a right in equity Since solicitor did not take possession of deeds, this failure allowed

Husband to convey the propertyo And X did not have notice of Solicitor’s interest

Thus Solicitor’s interest were postponed against X’s

Also the Solicitor’s postponing action was not defrauding the trustees (Shropshire Union Railways v R), or acting outside of the trust (Cave)

o The trustee was just being slack, thus the beneficiaries are postponed as well.

8.4 Failure to retain possession of title deeds by an act of gross negligence

If there is gross negligence which causes the title deeds to be misplaced, this will amount to postponing conduct (Northern Counties of England Fire Insurance Co v Whipp)

What amounts to gross negligence?



Gross negligence is only a real property concept, this is not the same as negligence in torts

E.g. leaving the CT on an accessible desk unnattended

8.4.1 Northern Counties of England Fire Insurance Co v WhippThis case is authority for this type of postponing conduct as well as for the requirement for gross negligence.

8.4.1.1 Facts Employee of insurance company borrows money off the company

o Signs a mortgage as securityo CT transferred to Insurance Company

CT’s were stored in a safeo Employee steels them from the safeo Without any authority from the banko And sells the property to a third party, who had no notice of

the Bank’s interest Did the bank commit postponing conduct by losing the CT’s?

8.4.1.2 HeldThere was no gross negligence: the employee stole, and was acting outside of their authority as an employee.

If he acted within the scope of his employment, the result would have been different

8.5 The premature release of the title deeds by a vendor on sale or by a first mortgagee on discharge of mortgage; and the inclusion of a receipt clause which wrongly states that the proceeds of sales have been received.

When should a vendor hand over title? When should a mortgagee hand back title?

When all money has been paid Handing over is conduct that implies full payment



8.5.1 Heid v Reliance Finance Corporation Pty LimitedThis case outlines the rule of postponing conduct by early surrender of documents and discusses the legal basis for this rule

8.5.1.1 Facts Heid was the owner of an estate

o Connell (a company) was to buy ($165 0000)o He put down a $15 000 deposit, paid to the vendoro Heid would lend $50 000 as a mortgage, receive final $100

000 at completion Connell was controlled by McKay: this company had dealings with

Heid a few times in the ppast McKay introduces Gibby to Heid as an employee and as a solicitor

o Gibby was not a solicitor Heid was persuaded to use Gibby for legal work, to save money

o Heid executed through Gibby a transfer in favor of Connell With the fine print “I acknowledge that I have

received the full purchase price”o Handed over the executed transfer and the CTo Before settlement and money transfer (because he was going

overseas) When he was overseas, Connell entered into 5 different mortgages

o Reliance had the first mortgage, but Connell was not yet registered, so Reliance could not get s 43A protection (they were not the next dealing registerable; the next deal went to Connell, who knew that Heid had not yet been paid, and could thus not seek protection)

When Reliance lent money to Connel, Reliance assumed that Heid had been paid fully as per the transfer.

When Heid came back from overseas, the $100 000 he was meant to receive at settlement was not paid.

o He also found out about the other mortgages

8.5.1.2 HeldTrial judge found that Heid had not engaged in postponing conduct, since he handed it to Gibby, who was meant to be acting as his solicitor, and this was normal practice.

The NSW Court of Appeal said that, since Gibby was working as an employee of Connell, he was given the documents prematurely, and, as such, there was postponing conduct.

The High Court found that there was postponing conduct.

Mason and Dean JJo Heid knew that Gibby was the employee of the companies



o Thus, this was postponing conduct because of early release of CT/Receipt clause

o Theory on postponing conduct: Where equities are equal, earlier prevails However, here, conduct of earlier led the later to

acquire the interest The giving of instrument of transfer,

acknowledgment of payment, CT The first equity “armed” the third party “with the

power of going into the world under false colours” (Dixon v Muckleston); that is “was the deception a natural consequence” of the first equity’s action?

The other judges spoke of this postponing conduct as creating an estoppel; which may be looked at favorably in the future.

8.5.2 Lloyds Bank v BullockHere, the documents handed over were handed over “in escrow” from the company to be used if a situation is satisfied.

8.5.2.1 FactsNB: this is an Old System case

H owns a houseo Mortgage conveys property to Building Societyo Subject to reconveyance if fully paid (equity of redemption)

H dieso Left house to Son, in trust of whole family, including Bullock

Solicitor is dishonesto Solicitor for H, Son and Building Society

Solicitor says to Son that he will buy the property off himo Draws up o Son conveys to solicitor house

With a receipt clause With no receipt of $

Solicitor goes to Building Societyo Drafts the reconveyance in Solicitor’s favor, to be activated

when paid in fullo Has deed and reconveyance

Solicitor goes to Lloyds Banko Says he owns it in full, and has paid everyone off (shows

receipt)o He is lent money

Build Society, Son, and Lloyds Bank are all owed money Who has the better equity?

o Building Society has a first mortgage by deed (legal)



o Bullock is a beneficiary of the estate under redemption (equity)

o Lloyds though that they were getting a first mortgage, did not not that Building Society had not yet been paid out (equity)

8.5.2.2 Held Building society has a legal unregistered interest

o Not guilty of postponing conduct, because the document was “in escrow”

Bullock knew Solicitor worked for the Building Society, and handed over the receipt, thus guilty of postponing conduct

Thus, Building Society (s 43A legal, no postponing) Lloyds (equitable) Bullock (equity, postponing)

8.6 Execution of a dealing which does not truly reflect the transaction, such as the execution of a transfer by a registered proprietor, who has mortgaged but not sold a property (Holding out)

8.6.1 Breskvar v Wall

8.6.1.1 Facts Breskvar was the proprietor Borrowed money from Mr. Petrie

o Convinced them to sign a blank transfer as security for the loan

o Write in his son, Wall, into the spot Onsold to Alban Before Alban registration, Breskvars sued

8.6.1.2 Held The fraud of the grandfather was imputed on the grandson So Breskvar and Alban had priority over Wall. What of the Breskvar (equitable) and Alban (equitable) dispute?

o The Breskvars were earlier, so would have wono But, they were postponed because they held out that

they had soldo And, Alban, not unreasonable, assumed this was the

true position Paid bona fide value Without notice

“The appellants armed the second respondent with the means of placing himself on the register” executed transfer and CT, authorized Petrie to use if nevessary



8.7 The failure of the holder of an unregistered interest to create a caveat, where that person was not in a position to take possession of the title deeds

This is only in Torrens, since Caveats are a creation of the Real Property Act.

Note, a caveat does not improve priority; failing to caveat, though, can be postponing.

8.7.1 Butler v FaicloughA second mortgagee (second mortgagees do not have access to the CT) must caveat, or they will be guilty of postponing conduct.

8.7.1.1 Facts Good was the registered owner (in Victoria, so no s 43A protection)

o Good was thus in Schedule 1o Mortgagee 1 was in Schedule 2

Good entered into a second mortgage with Butler (unregistered)o Took 7 days to register

Two days after enacting mortgageo Good sells to Fairclougho Good said the sale was only subject to Mortgagee 1

8.7.1.2 Held Butler v Fairclough (E v E) Therefore, unless postponing conduct occurred, Butler would

succeed High Court held that Butler should have caveated

o Without this caveat, it would have been impossible for Fairclough to know about Butler’s interest

o Therefore Butler was postponedo Note, it did not matter that Fairclough did not even search

the register

8.7.2 Lappen v AbigailDixon said created, here, a requirement to caveat for protection of unregistered interests

8.7.3 J&H Bank v Bank of NSWNo-one else may register where you have the CT; a second or subsequent mortgagee must caveat or be postponed

8.7.3.1 Facts Josephson owned a property Borrows from Bank

o They have deedso Did not register a caveat



Josephson borrows money from J&H, tells J&H that the deeds were with Bank for safekeeping

They lend money to Josephsono Contact Bank, say they are now the first mortgagee, please

give hand over the deedso Bank refuses

8.7.3.2 Held Bank (Earlier Equity) v J&H (Later Equity) But did bank fail to caveat, which would be postponement, as in

Butler? This case was differentiated

o Here, Bank was the first mortgageeo They had the CTo No-one else may register where you have the CT

Thus, since J&H knew that Bank had the CT, there was constructive notice of the Bank’s first mortgage

Thus, a second or subsequent mortgage must caveat or be postponed (Butler, J&H, Person to Person Financial v Sharari)

8.8 The requirement for a purchaser to caveatA purchaser should caveat (Black v Garnock, obiter), and it is now standard practice in conveyancing to caveat after purchase (i.e. after exchange), for fear of Garnock.

Failure to caveat may constitute “one of the factors to be considered” when weighing up equities (Heid v Reliance).

8.9 The requirement for a beneficiary under a trust to caveat

Case law has not yet extended Butler to require that beneficiaries to caveat or be postponed:

S 82 of RPA allows beneficiaries to require RG to record a caveat to protect their interest, under s 74F, they may caveat themselves.

S 43, you deal with the person on the register (trust is unregistered), leaving the beneficiaries otherwise exposed

Garnock, as well, hints that it is imprudent not to caveat

Thus, if the beneficiary does not take possession of the CT, or register a caveat, this will most likely amount to postponing conduct.



Part 3 – Old System Title9 Old System TitleNOTE: Clogs and personal covenants

Note, priorities under old-system title are similar to U v U in Torrens Title – i.e. if the equities are equal (there is no notice or postponing conduct)

L v Lo Deed delivered earlier has priority (qui prior est tempore

potior est jure) L v E

o qui prior est tempore potior est jure E v L

o Later legal prevails, as long as the interest is bona fide, with no notice and for value.

E v Eo Earlier equitable interest prevails (qui prior est tempore

potior est jure)

Except failure to caveat does not exist under old-system title. Notice of earlier interests discoverable by a title search earlier than 30 years ago (the root title search) do not affect a purchaser unless they do such a search (Conveyancing Act s 53(3)).

9.1 Chain of titleTraditionally, old system title required, for certainty, the tracing of the transfer of title until the crown grant. England required 60 years, and good title before it (e.g. a conveyance or a first mortgage). In NSW, it is 30 years (Conveyancing (Amendment) Act NSW (1930)).

Older interests that are outstanding cause a “defect in title”, unless the interest is barred by a stature of limitations, which, if discovered after completion, make the purchaser subject to the defective interest.



9.2 Interests in old-system title land9.2.1 Legal interestsIn old-system land, legal interests are created by deed, which come into effect where delivered. The earlier deed delivered (rather than drafted, or come in to effect or anything) earlier has priority. Some legal interest include:

A purchaser who has exchanged contracts, but has not settled; A first mortgagee by deed who has the deed (Lloyds Bank v

Bullock); Other deeds (e.g. a deed of easement or a deed of lease) are legal

interests, less than the legal estate; and,o Other leases (i.e. without a deed of lease) which comply with

s 23D of the Conveyancing Act; a lease which: Is for 3 years or less; Is for the best rent reasonably obtainable rent; and The lessee has an immediate right to possession.

9.2.1.1 Who has the legal estate? The vendor pre settlement; The purchaser post settlement (after the executed deed of

conveyance is delivered); or, The first mortgagee before the completion of payments.

o M1 holds the deed subject to the owner’s right to reconveyance.

o When it is paid out, the property is reconveyed, and the legal estate foes back to the borrower.

9.2.2 Equitable interestsAn equitable interest in old system title land is held by:

A purchaser who has exchanged contracts, but not settled; M2, M3 … Mn; A person who holds a mortgage secured by the deposition of title

deeds (Cooney v Burns); A person who benefits from an agreement to grant a mortgage

(ANZ v Widen); A person who benefits from an agreement to lease; A beneficiary under a trust; A person enjoying the benefit of a restrictive covenant; A lease that is in writing that does not satisfy s 23D of the

Conveyancing Act (Chan v Creston); or,



A mortgagor who is exercising his equity of redemption:o Right that the mortgagor, when debt is fully paid off, has for

the reconveyance of the property. The “debt” includes the principle + interest +

reasonable legal costs/fees. The time in which the mortgagor can exercise their

right to pay in full is the contractual loan (/common law) period + the equitable period (Kregliner v New Patagonia Meat & Cold Storage Co).

This equitable timeframe expires:o When the mortgagee forecloses; or,o When the mortgagee exercises their right

to mortgagee sale (see o Any attempt at preventing reconveyance is a “clog on the

equity of redemption” and is, in the most part, held to be invalid by equity: that is, the right to reconveyance will remain (Kregliner v New Patagonia Meat & Cold Storage Co).

9.3 DeedsA deed must be (according to s38(1) of the Conveyancing Act):

Signed; Sealed; and, Delivered;

With at least one witness who is not a party to the deed. Note, the above may all be in writing: e.g. “signed, sealed and delivered”.

A deed does not come into effect until it is delivered (delivery defined as “any act or words showing that the party executing the deed regards it as ‘presently binding’, … any act [that shows] ‘an intention to be bound’”).

Delivery may be actual or constructive, unconditional or conditional (“in escrow”). Until the condition is met, the deed remains in escrow. A deed delivered, even conditionally, cannot be withdrawn.



9.4 Registration of deeds and s 184G of the Conveyancing Act

9.4.1 The register Deeds are registered under the Conveyancing Act Pt 23, Div 1

ss184A-184J. The registrar general maintains this register (The General Register

of Deeds) (s 184C) (which is separate to the Torrens Title register s 184B(1)).

Registered in order of “distinctive reference” allocated (s184E). Any instrument may be registered (s 184D).

o An instrument is a deed, will or act of parliament (s 7(1)).o Only instruments dealing with land affect priorities to land.

You are not required to register instruments.

9.4.2 S 184G of the Conveyancing ActS 184G of the Conveyancing Act confers priority to the first registered party iff (i.e. all four are not satisfied, this section does not apply):

1. The person first registered has taken an effective instrument;a. It must be in writing,b. It must not be void (e.g. not procured by fraud, or forged (Re

Cooper: son conveyed property owned by dad, who did not sign, and then registered the deed of conveyance; held – the instrument was not valid because the instrument was procured by fraud)).

c. Note, where the vendor, with knowledge, fraudulently conveys the property to two or more people, both instruments are valid, and whoever is first registered is valid.

2. The person first registered is competing with another interest created by instrument;

a. E.g. it is ineffective against oral agreements, including:i. Oral leases under s 23D of the Conveyancing Act;

ii. Equitable mortgages by deposit of deed (oral mortgages); and,

iii. Beneficiaries under trust (s 23C)3. The person first registered has paid valuable consideration; and,

a. The deed is not protected if it is given by gift, or where the consideration is nominal;

b. The consideration must be substantial (Bullen v Becket).4. The person first registered was bona fide.

a. An instrument is not bona fide if the person taking it had, actual, constructive or imputed knowledge of an earlier interest over which priority is sought by registration (Marsden v Campbell).



i. Note, it is only invalid if notice occurred before the interest was taken.

b. The requirement for “bona fides” is illustrated by the following cases:

9.4.2.1 Schoals v Blunt Facts

o Purchaser exchanged contractso Got notice of someone elseo Settledo And registered the conveyance they took at settlement

Heldo Not bona fide, since before settlement, purchaser had notice

9.4.2.2 Burrows v Crimp Facts

o Purchaser exchangeso Settleso Gets noticeo Registers conveyance they took at settlement

Heldo The purchaser was bona fide, it does not matter that they

got notice before registration, it has to be before the interest was taken

9.4.2.3 Moonking Gee v Tahos Facts

o Purchaser exchanged contracts,o Acquired notice of an inconsistent interest,o Registered their original contract for sale of land acquired at

exchange, since to settle would make them subject to the rule as applied in Schoals v Blunt.

Heldo The registered exchange was protected under s 184G, since

he was registering an interest that was created before the acquiring of notice.

o Note, if there were settlement, it would extinguish the exchange, thus disallowing its registration.

9.4.2.4 Equitable interests and s 184G – Darbyshire v DarbyshireThis case held: if an equitable interest gains priority through registration, they may acquire the legal estate. This was affirmed in Moonking Gee v Tahos.

9.4.3 Summary of how to answer an old system title priority question, in light of s 184G

1. Is anyone registered? If yes, who registered first?



a. If yes, do they get priority under s 184G (i.e. do they satisfy all 4 requirements)?

b. If so, s 184G overrides rules of priority, and earlier registered prevails

2. If no, go to priorities.

9.5 Converting old system land to Torrens Title landYou can convert old system land to Torrens land in three ways:

1. A primary application (not examined);2. A qualified folio of the register; and,3. A limited folio of the register.

9.5.1 A primary application (not examined)A primary application (not examined) must be accompanied by evidence of title, as registrar General requires (RPA s 14(4)), without sufficient evidence, it may be rejected (s 23(2)).

If the land is caveated by someone with a competing interest, it may prevent the land from becoming Torrens land (s17(3)(b)).

o Caveat lapses after 3 months unless the caveator gets a court order or begins court proceedings (s 74C(1)).

A court may extend the caveat if it “has or may have substance” or dismiss the application (s 74D).

o If the primary applicant serves notice on the caveator, it lapses after 21 days unless a court order is procured or court proceedings begin (s 74C(3), (4), (5)).

o If a caveat lapses, no subsequent caveat lodged by the caveator is valid unless the primary applicant consents or the Supreme Court gives leave (s 74R).

9.5.2 Qualified titleThere is a two-stage conversion process (RPA s28A-28R):

1. Initially, the land is only protected by Torrens principles against interests created after the land came to be under qualified title. Previous interests continue to be enforceable.

2. After the period of qualified title, indefeasibility is conferred and Torrens protection/principles become absolute with regards to the parcel of land

Under this process, the land goes from being old system, to being qualified, to being Torrens Title land.

When land is qualified land, it is still subject to subsisting interests (s 28P(1)(d)). This is for the duration of the caution period (s 28J).

If you have an old system interest, you have the time of notice to lodge your interest

This time lapses (the “lapsing of cautions”) between 6-12 years on, where (s 28M):



If: within the first 6 years, there is a dealing, for value, without fraud, then: on the 6th anniversary of the land becoming qualified title land, the caution lapses.

If: no triggering deal occurs for 12 years, then, qualification lapses at year 12.

If: dealing happens between year 6 and year 12, then qualification lapses on day of dealing.

Adverse possession has different rules (12 years after adverse possession began, may apply for removal of caution (s 28ME).

The registrar general may cancel the caution if he is satisfied that all estates/interests are free from any subsisting interest (s 28MC).

o To prevent this, an old system interest-holder may caveat (ss 74A(2)(a), 74H(2), (5)(k)).

9.5.3 Limited titleThis is a tool used for when boundaries are unclear.



10Mortgages10.1 Mortgages under Old System TitleA first mortgage, y deed, takes the form of a conveyance of the legal estate to the mortgagee, subject to the mortgagor’s equity of redemption

An equitable mortgage can also exist, it must:

Be in writing (s 23C of the Conveyancing Act); or Be supported by sufficient part performance (s 23E).

It may be a second or subsequent mortgage, or an agreement to grant a mortgage (ANZ v Widin). Further, it may be an attempted legal mortgage that failed by not having the formalities (Swiss Bank v Lloyd Bank), or a mortgage by deposit of deeds (Cooney v Burns).

10.1.1 Equity of redemptionThe equity of redemption is the Mortgagor’s right to have to property reconvened after paying off the mortgage (see §9.2.2 - Equitable interests, above).

The equity of redemption expires when the common law period + equitable period (time until foreclosure) expires.

Note, if you miss a payment, this is a breach of contract, and the bank can demand the immediate repayment of the whole debt (i.e. the common law period can change with breach).

Any provision that blocks the equity of redemption upon payment is void as a clog on equity (Santley v Wilde; Noakes v Rice; Samuel v Jarrah Timber). This is even if the clog is in a separate document (Toohey v Gunther). It is only permissible where the two documents are truly independent (Kregliner: after mortgage, purchase of meat agreement still to be adhered to, not a clog).



10.1.2 ForeclosureForeclosure transfers title to the mortgagee, ending the equity of redemption. This exchanges the debt for the land: as such, it is only utilized when the debt exceeds the value of the property.

For the bank to foreclose, the following 8 steps must be satisfied (RPA ss 61, 61; Conveyancing Act s99A, 100):

1. The mortgagor must have defaulted (the common law right to redeem is expired);

a. Where there is no default, the bank cannot touch you.b. At this point, the bank may take possession.

2. A valid, statutory notice of default, requiring the default to be remedied within a month, must be given;

a. Torrens (RPA s 57(2)(b)).b. Old system or unregistered (Conveyancing Act s 111).

3. There must be non-compliance with the notice;a. At this point, mortgagee sale can occur.

4. There must be a properly conducted auction (Conveyancing Act s 99A) (RPA s 61);

5. The highest bid must be less than the mortgage debt (Conveyancing Act s 99A; RPA s 61);

6. The Supreme court makes a “decree nisi” where the mortgage debt is calculated and the mortgagor is given a specific time-frame (usually 6 months) to repay (RPA s 62);

7. The mortgagor must fail to repay;8. The court must order the foreclosure in absolute (RPA s 62(3)).

10.1.3 Early discharge of mortgageUnder common law and equity, there is no right to repay principle early.

S93 of the Conveyancing Act allows the early repayment of a mortgage, regardless of conditions. However, it also requires paying off the interest for the balance of the loan period, unless otherwise specified, this is not unconscionable (Knightsbridge).

Most mortgages have clauses that permit early repayment with 1-3 months notice or payment of inters in lieu, as allowed for in Steindlberger v Mistroni.

S 93(1) requiring payment of interest in full does not operate where the bank requires early repayment (Wanner v Caruana; approved in Odea v All States Leasing).



Wannero Facts

6 year mortgage with fixed interest Required to pay back early Bank demanded 6 years of interest

o Held Interest accrued up until that point was allowed, any

subsequent was unconscionable Odea

o Facts Lease Payments not made

o Courts applied Wanner

Thus, a mortgagor may be tempted to require a bank to demand full repayment: though the bank may preserve rights by suing for each month’s payment as a personal covenant.

10.1.4 Penalty clauses A mortgagee may demand a premium over amount loaned (Potter v

Edwards). He cannot raise interest retrospectively because of default (Strode

v Parker), but may raise interest going forward David (Securities v CBA).

o A discounted rate may be offered for on-time repayment. If a discount is offered and money demanded back immediately, the

discounted rate must be charged, and no future interest (only interest accrued until that point) may be charged (Wanner v Caruana; Odea v All States Leasing).

10.2 Remedies available to a mortgagee10.2.1 Foreclosure See § - , above.

10.2.2 The right to sue on a personal covenantA mortgagee may sue the mortgagor for any default under the mortgage contract. Only the original mortgagor, or his personal representative if he dies, will be liable this way.

If there is a mortgagee sale, and the sale does not cover the debt, the mortgagor may attempt to recover this difference by suing on personal covenant (s 100 Conveyancing Act).

10.2.3 The right to possessionWhen the borrower defaults, the mortgagee may take possession (s 60 RPA).



10.2.4 The right to appoint a receiver to collect rentsIn both old system and Torrens land, the receiver (appointed under ss 115A and 109(1)(c) of the Conveyancing Act) must act in good faith and not sacrifice the interests of the mortgagor.

He must manage the property, receive income in the name of the mortgagee or mortgagor, and exercise delegated powers of the mortgagee.

10.2.5 The right to leaseUnder old system, the mortgagee can grant a lease, even when the property is not in possession. Under Torrens, the mortgagee must be in possession.

10.2.6 The right to improve the mortgaged propertyThe mortgagee must account for rent/profit, including those that he would have received had he not been neglectfully out of possession (Fyfe v Smith).

He may improve the property to make it saleable, and may be reimbursed for this (Matzner v Clyde).

It must not change the character, enhance the value of the property and be justifiable at the time (Southwell v Roberts).

10.2.7 Mortgagee SaleMortgagee sale is preferred to foreclosure since it is simpler, any surplus may be sued for under personal covenants.

10.2.7.1 Requirements1. A default (either failure to make a repayment, or breaking a term

of the mortgage);2. Serving a statutory notice (RPA s 57(2)(b); Conveyancing act s

111); the notice must:a. Call for the default to be rectified;b. Be in writing, signed by mortgagee or agent; and,c. Describe the default in particular: if it is a non-payment, the

amount missed should be described, though inaccuracy does not invalidate it (Clarke v Japan Machine Tools; Network Finance v Lane)

3. Non-compliance with this notice for <30 days.

A mortgagee cannot sell to himself, though he may, under an obligation to enter into an independent bargain, sell to a related entity (Farrar v Farrars Limited).

10.2.7.2 Timing of saleAfter the requirements are fulfilled, the mortgagee can sell whenever he wants (Belton v Bass, Ratcliffe and Gretton Limited). Though the



mortgagor may require sale when M1 will get all of his money back (Palk v Mortgage Services).

10.2.7.3 Payment of proceedsThe order of payment of proceeds is as follows (RPA s 58; Conveyancing act s 112C):

1. Realtor/lawyer for mortgagee;2. M1’s debt;3. Subsequent mortgagees’ debts; and finally,4. If any money left, the mortgagor receives, if there is a deficit, the

mortgagees may sue under personal covenants.

10.2.7.4 The mortgagee cannot sell to himselfThe sale must be a true sale (i.e. not to oneself), but the mortgagee can sell to a company where the mortgagee is a shareholder, as long as the sale is “a truly independent bargain”, shown by achieving the best possible price (Farrah v Farrah’s limited).

10.2.7.4.1 ANZ v Bangadili Pastoral CoFacts:

Talga owned a propertyo Had two mortgages

Hall tried to buy, and paido Money did not go to propertyo Talga could not give title

Halco Products acquired first mortgage to protect their interest Talga defaulted

o Halco gave noticeo Halco initiated a mortgagee sale

Little advertising Auction not at a desirable time

Bangadili (owned by Hall) purchased the land for less than what a prospective purchaser was willing to pay

Held:

Not for best price, therefore invalid sale because to a related party and not at “arms length”

The closer the relation, the greater the burden

10.2.7.5 The obligation on the mortgagee when selling (redo)Note, s 111A of the Conveyancing Act would make this clear, and has been passed through both houses of parliament. It, however, is yet to be proclaimed, and is thus not yet valid law.

The two schools of thought on the obligation are:



1. The mortgagee must take reasonable care to obtain the best possible price; or the less strenuous test,

2. The mortgagee must act bona fide (in good faith, not in bad faith) and not recklessly.

The following cases illustrate the differing views:

10.2.7.5.1 Reasonable Care

10.2.7.5.1.1 Cuckmere Brick v Mutual Finance Limited Facts:

There was a block of lando With planning approval for 100 flats or 35 houses

Mortgagee advertised extensively, but did not advertise the council approval

Held:

The mortgagee owed a duty to the mortgagor to take reasonable care to get the best price,

Thus, the mortgagee was in breach

This case was followed by Standard Chartered Bank v Walker; American Express v Hurley; Bishop v Bonham.

State Bank of NSW v Chia said this rule is irrelevant to NSW.

10.2.7.5.2 Good Faith

10.2.7.5.2.1 Kennedy v De Trafford; Warner v JacobFollowed in NSW by:

o Burk v Beneficialo State Bank v Chiao Gomez v State Bank

10.2.7.5.2.2 Pendlebury v Colonial Life Assurance Facts

Mortgagee saleo Insufficient advertising

Caused:o Auction with little competitiono Land worth 2000 sold for 720o An emplouee of the mortgagee colluded with the purchaser

Held

Griffiths (Good Faith)o Applied Kennedy v De Trafford



“The mortgagee must not recklessly or willfully sacrifice the interests of the mortgagor”

o Obiter, where there is a misstatement in description, M1 will be liable to mortgagor for difference in price

Isaacs agreed Barton said good faith included reasonability

10.2.7.5.2.3 ANZ v Bangadili Pastoral Co (mixed)Obiter:

Jacobs Jo Good faith to get best price, not good faith in selling at all

Aicken Jo As Menzies in Forsyth v Blundell

Analogous to that case By setting a price of acceptable loss, there was a clear

leaving of standardso As Barton in Pendlebury v Colonial Mutualo That good faith requires reasonable effort to get best price

10.2.7.5.2.4 Forsyth v Blundell (mixed)Facts

Mortgagor (Mr./Ms. Blundell) sued Shell and Mr. Forsyth for a bad sale

o Property sold for 120 000o Property sold petroleum productso List price was 150 000, based on a higher valuation (other

valuations were less than 100 000) XL was a prospective purchaser

o Independent petrol sellero Mortgagor had negotiated with XLo Offered 150 000

Shell offered M1 120 000o M1 accepted

Held

M1 acted with calculated indifference, recklessly sacrificing the mortgagor’s interest

Walsh; Masono Different authorities, not necessary to decide

Menzieso Reasonable precautions are part of bona fides

10.2.7.5.2.5 State Bank v ChiaThe Cuckmere test is irrelevant to NSW, that is, “reasonable care to get a good price” is irrelevant.



10.2.7.5.2.6 Gomez v State BankFacts

Brief advertising, failure to present property1 for sale The M failed to present p2 for lease at market rate before sale Marketing on third property too small considering development

potential

Held

Cuckmere is irrelevant Menzies’ statement in Forsyth that the two tests can coexist might

be true

10.2.7.5.3 ConclusionHC has not yet decided which is correct:

Has decided arms length where the companies are related (Bangadili)

Not decided where totally unrelated, though s111A would clear it up

o Most judges are favoring less onerous good faith testo As long as the mortgagee exercises the power in good faith

and does not recklessly or willfully sacrifice the mortgagor’s interest, there is no reason to interfere with the power of sale, even if the property is sold cheaply

10.2.7.6 When the mortgagee is a controllerHe must sell after “taking all reasonable care to sell the property for not less than its market value … or the best price that is reasonably obtainable” (s 420A of the Corporations Act).

10.2.7.7 RemediesBefore a mortgagee sale, the only way to stop it is to come up with the full amount of money owed (Ingliss v Commonwealth Trading Bank – if amount is disputed, the amount claimed by the mortgagee must be paid). Sometimes a smaller amount may be paid in pending a trial on whether the mortgagee has breached his duty (Harvey v McWatters; etc.).

You can stop it if the validity of the mortgage or the breach is in issue (Allfox).

After sale (exchange) but before completion (a 6 week time period) you can go to the equity division and apply for an injunction pending a hearing on whether the sale was improper. An urgent hearing is heard within the time before completion (Allfox v Bank of Melbourne).

An injunction will prevent sale, and a purchaser cannot demand specific performance if the mortgagee knew of a higher seller, or some equal wrong (Forsyth v Blundell).



Where there is fraud, a sale may be set aside (Latec Investments – A wholly owned subsidiary of a bank bought a property for half price; after 5 years, mortgagor challenged – held – sale was improper, but purchaser had already created a third interest, thus, the sale could not be put aside – you should challenge before settlement).

10.2.7.7.1 Protection for purchaserS 112 of the Conveyancing act allows protection against mortgagees’ adverse claims. This does not prevent mortgagor from brining an action to have the sale set aside where there was reckless disregard for the mortgagor’s interests or fraud.

Under Torrens, once registered, the purchaser is indefeasible, unless an exception applies. Before registration, if the purchaser knew the sale was improper, the mortgagor still has the right to bring an action (Luckass Investments v Markaroff).



10.3 TackingIn old system, the earlier legal or equitable mortgage prevails unless there is postponing conduct. In Torrens, a registered first mortgage will have priority over a second, or any unregistered mortgage unless there is an exception to indefeasibility.

10.3.1.1 Tabula naufragio – old system onlyIf M3 acquires M1, and didn’t have notice of M2 at the time of the original loan, it may tack onto M1, and have priority over M2.

Taylor v Russelo Facts

Mortgagor creates M1 Then M2 Then M3 (at the time, M3 did not know about

M2) M3 buys M1, and tacks their mortgage onto it in order

to get priority over M1o Held

Tabula naufragio applied, it could be tacked

10.3.1.2 Tacking further advancesWhere M1 makes further advances, even after the creation of M2.

M1 can only add further advances if M1 had no notice (actual, constructive, or imputed). If this is satisfied you had priority.

o If there was notice, you didn’t have priority, even if the original loan stipulated that there were to be further advances (Hopkinson v Rolt; West v Williams).

Where the loan allows subsequent advances, or where the loan says the first mortgage secures this and further loans, and there is no actual knowledge of M2, M1’s subsequent advances will be tacked (Re O’Byrne’s Estate – where M1 was obliged to lend more money).

Where the loan does not provide for further advances or security over further advances, then M1 will only prevail where there is no notice (actual, constructive or imputed) of M2 (Credland v Potter).

Torrens (Matzner v Clyde per Holland J):o Facts

A property in Kogarah Developer buys Knocks down house to start building

Borrows from M1 Building costs more and more, borrows from

M2 When ½ built (and worthless), Mortgagor goes into

liquidation



Since it is half built, M1 wouldn’t even get back their initial advance, thus, M1 decided to pour more $ into project to finish development, to be able to sell with enough money to pay off debt

After they finished their development Had knowledge/notice M2 said further advance was subject to second

mortgageo Held

There was authority that if M1 reasonably improved property, cost could be tacked (Southwall v Roberts)

It was held that old system cases were applicable; and indefeasibility did not count

M1 had notice, and, thus, should be subject to M2

But for the Matzner Exception: It is against conscience for M2 to prevail over

M1’s further advance since without M1’s expenditure, M2 could not have gotten a cent.

Central Mortgage Registry v Doneware; Westpac v Adelaide Banko Under Torrens, only actual notice of a further advance will

cause M1 to be subject to M2



11Co-ownership11.1 Types of Co-ownershipCo-ownership exists where there is either “Joint Tenancy” or “Tenancy in Common.” In either circumstance, each owner enjoys a right to possession.

11.1.1 Characteristics of Joint TenancyJoint tenancy grants aliquot (potential) shares in the property.

There exists in co ownership a right of survivorship – jus accrescendi:

If one joint tenant dies, his share in the property is divided equally amongst surviving shareholders.

Where it is unclear which party dies first (e.g. where both parties die in a car crash) it is presumed that the older predeceases the younger (Hickman v Peacey; Conveyancing Act s 35)

o Where a person disappears, he is said to have died 7 years after disappearance. If the other party dies before the 7 year period is complete, they are said to have predeceased the disappeared party (Halbert v Mynar)

Further, for a joint tenancy to be valid, the “four unities” must be intact:

Unity of titleo All joint tenants must derive their share of the property from

same instrument Unity of interest

o Each joint tenant must hold shares of equal proportion to each other tenant (i.e. 2 tenants: 50% shares, 3 tenants: 33.33% shares, 4 tenants: 25% shares, … n tenants, (100/n)% shares)

Unity of possessiono Each tenant has a right to possession of all of the property

Unity of time of vestingo Each tenant must have acquired their share at the same time

11.1.2 Characteristics of Tenancy in CommonWhere there is tenancy in common, there is no right of survivorship: where a tenant dies, his share is passed on in the tenant’s will. It will only pass to the other tenant if the will specifies such.

Shares are undivided, unity of possession exists, and the shares are alienable.



11.2 Creation of co-ownershipInterests in land may be created at law and in equity; interests may be held separately, e.g. law can hold a relationship to be joint tenants at law but hold as tenants in common in equity.

Some equitable maxims applied to creation:

Equity follows the law Equity treats as done that which out to be done Equity will not assist a volunteer One who seeks equity must do equity

Relationship between equity and the law:

Equity is engrafted onto the law, not carved out of the law Equity engrafts limits to the rights and interest of the legal owner

11.2.1 Creation of co-ownership at lawThere is a presumption of joint tenancy at law, unless:

The four unities are not present There are, in the document creating the relationship, words of

severance There is expressed, in the facts and circumstances of the case, an

intention contrary to joint tenancy

11.2.2 Treatment by equityEquity follows the law (i.e. affirms the result of the analysis at law) unless:

There is an unequal contribution to purchase price There is an unequal contribution to advance money on a mortgage There are unequal partnership assets

11.2.3 Statutory intervention (Conveyancing Act s 26)s 26(1) of the Conveyancing Act now enacts a presumption in favor of tenancy in common, unless there are clear words to the contrary (s26(2) Conveyancing Act i.e. where the contract states that the relationship is joint tenancy, and the four unities are present).

s 26(1) applies to equity, too (Delehunt v Carmody: the registered owner was found, at equity, to be holding the property on trust for him and his wife – When he died, s 26(1) was applied to determine that the relationship was one of tenancy in common in equity, thus, the deceased’s person’s will was valid)

Note: if a transfer is registered under Torrens, if the document is unclear, there is a presumption in favor of joint tenancy (s 100 RPA). However, the Registrar General’s office does not register instruments that are unclear, so this section is somewhat moot. Further, since a transfer is



preceded by a contract for sale, to which s 26 Conveyancing Act applies, it is very unlikely that s 100 RPA will apply.

11.2.4 Summary of creation:1. Work out legal interest – joint tenancy or tenancy in common

a. Apply s 26(1), 26(2) of the Conveyancing Actb. If s 26(2) applies, ensure the four unities are present

2. If they are tenants in common at law, then equity follows the law3. If they are joint tenants at law, then equity follows the law unless:

a. There is an unequal contribution to purchase priceb. There is an unequal contribution to advance money on a

mortgagec. There are unequal partnership assets

11.3 Severance (joint tenancy tenancy in common)An act of severance ends joint tenancy, turning it into tenancy in common by destroying one of the four unities (bar possession, which will not automatically result in severance).

Severance occurs where there is:

A unilateral act, including; o A joint tenant transferring his interest

As long as there is an enforceable contract with valuable consideration, severance will have occurred at equity

If the transfer is registered, there will be severance at law (Wright v Gibbons)

o A joint tenant mortgaging his interesto A joint tenant leasing his interest

A merger takes place; There is a court order; There is an unlawful killing; or, Bankruptcy occurs.

11.3.1 A Transfer

11.3.1.1 Wright v GibbonsFacts:

A, B and C are joint tenants, A and B simultaneously transfer to each other, attempting to create

a relationship of tenancy in common between A, B and C

Held:

The judge held that, if there was one transfer, followed by another immediately, severance would have been found to have occur

And this severance would have been valid no matter how small the time-frame



Thus, the simultaneous transfers still caused severance

11.3.1.2 Corin v PattonThis case states that a joint tenant can sever a joint tenancy unilaterally:

In equity where there is an enforceable contract for valuable consideration between a single tenant and a third party; or,

At law where a transfer from one of the joint tenants is executed and registered.

Facts:

A wife executed a transfer to her brother, who held the property on trust for the wife.

Held:

An executed transfer did not sever the joint tenancy at law, since it was not registered

There was no severance at equity, since the brother had no interest in equity (no valuable consideration, held on trust)

English authority (e.g. Burgess v Rawnsley) that states that joint tenancy is severed by conduct is not valid in Australia.

Equity will not complete an incomplete gift

She could have severed the relationship by contracting with valuable consideration to give 1/50th of the land to her brother, or, if without valuable consideration, registering a transfer as such.

11.3.2 A sale, prior to the receipt of the proceeds of saleUntil the proceeds of the sale are received and distributed, joint tenancy is not severed by an agreement for sale. Therefore, after sale, if there is a death, the surviving joint tenant is entitled to the full sale sum (Re Allingham).

11.3.3 A mortgageAn old system mortgage severs joint tenancy, since it is a conveyance (Re Pollard’s Estate).

A Torrens title mortgage by one joint tenant does not sever joint tenancy. Thus, such a mortgage has no interest in the land if the mortgagor predeceases the other joint tenant (Lyons v Lyons).

11.3.4 A leaseA lease does not sever joint tenancy, except for the term of the lease (Frieze v Unger).

11.3.5 Mutual agreementA transfer from all tenants to themselves as tenants in common is valid (Williams v Hensman; Conveyancing Act s 99; RPA s 99).



11.3.6 A mergerIf a tenant acquires a further interest in land (e.g. a joint remainderman acquiring a life estate), unity of interest ceases to exist, and there is severance.

11.3.7 A court orderA joint tenant may apply unilaterally to the Registrar General to sever a joint tenancy by registration of a transfer to himself, under s 97 of the RPA.

Sub-s (1) allows that registration of a transfer to oneself causes severance

Sub-ss (2)-(4) re: information required/which may be asked for Sub-s (5) requires the Registrar General to give notice to the other

joint tenants Sub-s (6) are exceptions to sub-s (5)

Note, the requirement for notice makes it inappropriate where one tenant does not the other one to know. In such a circumstance, it is best to sever in equity by transferring for valuable consideration a small portion of the property (thus severing unity of interest.

11.3.8 Unlawful killingIn common law, the position is a s follows: unlawful killing does not cause severance at law, but will require the surviving guilty party to hold their interest on trust for the deceased party in equity (Rasmanis v Jurewitsch).

The Forfeiture Act stops someone who unlawfully kills from benefiting from his or her crime, unless justice requires the rule to be modified (under s (5)).

Sub-s (1) allows anyone to apply for modification of the rule Sub-s (2) allows the supreme court to modify the rule if justice

requires it Sub-s (3) says the court may regard:

o (a) The offender’s conducto (b) The deceased’s conducto (c) The effect of the application of the rule on the offender or

otherso (d) Whatever else the court believes relevant

11.3.8.1 Leneghan-Britton v TaylorThis case applied s (5) of the Forfeiture Act, allowing a party guilty of an unlawful killing to benefit from the death.

Facts:

A sold her house to care for B A was depressed B wrote A into the will



A killed B, hid the crime scene with husband and subsequently (1/2 a year later) admitted guilt

Held:

The court held that, since:o A had diminished responsibilityo A sold her house to care for B, and didn’t have the proceeds

lefto A had already served time

It would be unjust for B’s will not to be honored: A received the house.

11.4 Ending co-ownershipA relationship of co-ownership may be brought to an end by the following:

An agreement to sell between partieso Co-ownership is only severed after the proceeds of the

agreed sale are received and distributed (Re Allingham) One acquires the shares of the others, or all shares are transferred

to the same person The operation of the right of survivorship Resumption

o A government resuming the property, compensation is usually paid

A court order for sale or partition under s 66G of the Conveyancing Act, and Part 4 of the Environmental Planning and Assessment Act.

o This entitles a co-owner to obtain an order from the court for the sale or partition of the property

A partition splits the property into sections, where each co-owner becomes the sole owner of a specific section

At common law or equity, there is no right to refuse an application for partition

o This section also allows for the creation of a statutory trust for sale or partition, appointing trustees and vesting the property in them

Under such a trust for sale, the land must be sold, and the proceeds held in trust for the co-owners

o For division of proceeds, rights inter se must be looked to, as they affect how much compensation goes to each co-owner

o As well as other rights, such as how one is compensated for improvements to land

11.5 Rights of co-owners inter seRights between co-owners are very limited until the relationship comes to an end. Before this time, that is, inter se, the following rights are enforceable:



Any enforceable contract or contract term between the owners The entitlement against other owners to be compensated for local

government rates paid (s 560 Local Government Act)

Ouster? Agreement contract term? Unlawful use of force to remove someone from the property. No occupation rent unless ouster.

There is no right to compensation for improvements, or occupation rent, until the relationship comes to an end, where the Supreme Court, equity division, takes accounts (Luke v Luke; Leigh v Dickeson; Forgeard v Shanahan).

11.6 Taking accounts: after co-ownership endsThe cost of improvements of the property (which one party may claim against the other) is set off occupation rent to account for a net account.

11.6.1 Compensation for improvements when co-ownership comes to an end

Compensation for improvements is split amongst the co-owners. The value compensated for is calculates as follows (Brickwood v Young):

If the value added by the improvements are greater than the cost of the improvements, the full cost of improvements is split amongst co-owners

If the value added by the improvements are lesser than the cost of the improvements, the value added limits the cost of improvements

o Thus, maintenance that does not add value is not compensated for (Ryan v Dries) – economic costs? Not ok.

11.6.2 Mortgage paymentsRyan v Dries modified the law with regards to mortgage payments, cementing their position as “improvements” to land.

Mr. Ryan and Ms Dries were tenants in common o Ryan owned 6/7, Dries owned 1/7o Purchase price was $200 000o Ryan and Dries were equally responsible for a $120 000

bank loan The court held that Dries was entitled to 43% of the property (her

input amount + half of the mortgage amount she was responsible for)

Mr. Ryan paid off the loan (after interest, $195 000)o Without “set offs” (e.g. occupation rent), Ryan was to be

compensated for $97 500, the amount of mortgage repayments Dries was meant to pay

o However, there were set offs (Dries only lived there 10% of the time, and then, after a point, she didn’t live there at all)

o This set off part of the mortgage payment allowance granted in equity



11.6.3 Occupation rentHowever, this net cost of improvements is offset against a “rent” for an occupier if he is the sole occupier to the other owners.

This “rent” is only an offset, and cannot be independently charged.

11.7 Entitlements (occupation, rent and profits)11.7.1 Entitlement to occupyEach co-owner is entitled to possession; if they choose not to occupy, they cannot sue for compensation unless the contract expressly stated so (Forgeard v Shanahan).

If a co-owner is expressly excluded, there is a right to sue (Creswell v Hedges; Forgeard v Shanahan), this express exclusion may be behavior that is objectionable enough to amount to exclusion (Dennis v McDonald).

11.7.2 Entitlement to collect rentMoney collected by a co-owner was impressed with a trust to hold the rent on trust for all co-owners in their proportionate shares (Hutchins v Hutchins).

A co-owner collecting is an agent for the group of co-owners (Ryan v Dries, relying on Strelly v Winson (1685)).

11.7.3 Obligation to pay profitsThe obligation to divide profits is dependant on:

Whether the business was conducted on behalf of the co-ownership, or whether it was personal business?

o A question of fact Whether the profits were from the common property per se or from

the services of the co-owner conducting business?o See Squire v Rogers



11.7.3.1 Squire v RogersFacts:

There was a property in Darwino One co-owner lived on propertyo The other lived in the US

After Cyclone Tracey, the Darwin co-owner substantially improved the facility to provide accommodation to victims

This generated considerable income It was ordered that accounts be taken

o The active owner wanted the costs of improvement to be compensated

o The passive owner wanted a share or the profits

Held:

Re: cost of improvementso “He is entitled to an allowance for his expenditure on such

improvements to the extent to which they result in the present enhancement of the value” – Deane J at 346.

Re: profits to be sharedo If they were from the owner’s services, the owner can keep

themo If they were from the land, they are to be shared iff the costs

are also distributed, as was the case here



12EasementsNegative easements is closed look at the four types

An easement is a right annexed to land to utilize the land of another in a particular manner or to prevent another using his/her land in a particular manner.

12.1 Characteristics of an easementAn easement is:

An incorporeal hereditament A non-exclusive right A right in rem, rather than a right in personam

o It is attached to both the dominant and servient tenements (either in the register or via deed)

A right either in law or in equityo An equitable easement may come about because of an

imperfect grant; and,o Where specific performance would be ordered to complete it

in equity (ER Ives Investment Limited v High).o An equitable easement would be defeated by a bona fide

purchaser of the legal estate who takes the estate for value and without notice of the easement.

The requirements for an easement are as follows (Re Ellenborough Park – there were parcels of land adjoining a park, given access rights if they made proportionate payments form maintenance – it was held that this was an easement subject to an obligation to make payments):

There must be a dominant and servient tenement (though this is arguably modified by CA s 88A);

o If the servient tenement grants a right to a non-property holder, there is no easement, but, rather, a license (Ackroyd v Smith).

The easement must accommodate the dominant tenement;o There must be a nexus between the easement and the land

benefited (Bailey v Stephens).o A right is not an easement if it grants the dominant

tenement exclusive use of the subject land (Bursill Enterprises Pty Limited v Berger Bros Trading Co Pty Limited), which is closer to a transfer of proprietary rights.

o The dominant and servient tenements do not need to adjoin, but they have to sufficiently close that a real benefit accrues to the dominant tenement (Todrick v Western National Omnibus Co Limited).



o The easement must grant the dominant tenement an advantage it would not otherwise have (Bailey v Stephens).

o It is not enough that the benefit would go to the owner, the land itself must benefit (Hill v Tupper).

o If there is an obligation attached to the easement (as in Re Ellenborough Park), successors to the property are bound to perform this obligation (Frater v Finlay). If this does not happen, the grantee has a remedy (Frater v Finlay).

In Old System Title land, the dominant and servient tenements must not be owned and occupied by the same person (Metropolitan Railway Co v Fowler); and,

o Even if validly created, the easement is extinguished once the dominant and servient tenements are united in common ownership and occupancy (Coke upon Littleton; Buckley v Coles).

o If there is not unity of occupation (i.e. there is unity of ownership, but the property is leased), the easement remains enforceable (Maurice Totlz Pty Limited v Macy’s Emporium Pty Limited).

o This requirement has no application where the servient tenement is under Old System Title, or if the easement is created via an s 88B instrument (RPA s 47(7); CA v 88(3)(c)).

The easement must be capable of forming the subject of a grant; as such, it must be:

o A right within the general rights creatable as easements; For examples of things that have been held to be

rights capable of being created as easements, see s 12.1.1, below.

The following were rejected as rights capable of being placed in easements:

The right to put a boat on a lake (Hill v Tupper – the owner, rather then the dominant tenement, benefited)

The right to an unspoiled view (William Aldred’s Case)

The right to protection of a building against the weather (Phipps v Pears)

o Definite;o Made by a capable grantor (Mulliner v Midland Rwy Co);o Made with a capable grantee (Re Salvin’s Indenture).

An easement may be created for any duration (e.g. for the duration of a fee simple, for the life of a person, for a term of years, etc.).

An easement may be positive or negative:



A positive easement gives the owner of the dominant tenement right to do something upon the land of the servient tenement (e.g. using a right of way);

A negative tenement requires the owner of the servient tenement to be restrained from using his/her land in a particular way (e.g. not to build in the way of light to a window, where an easement for light has been granted).

12.1.1 Examples of easements (more on pp 247-249 TB) Rights of way (Drewell v Towler) All rights required to enable the grantee to get water from the

grantor (Re Simeon) Right to water from a spring, and the right to go onto neighboring

land to collect it (Race v Ward) Right to get water from a pump (Polden v Bastard) Right to discharge rainwater (gutters) (Harvey v Walters) Right to commit private nuisance by:

o Creating noise (Elliotson v Feetham)o Polluting water (Baxendale v McMurray)o Polluting air with smoke/scents (Crump v Lambert)

Right to use area alongside a wharf for loading/unloading vessels (Thomas W Ward Limited v Alexander Bruce (Grays) Limited)

Right of support of buildings:o From land (Dalton v Angus)o From other buildings (Lemaitre v Davis)

12.1.2 Easements compared to:Easements are different from:

Licenseso A license is a revocable right enforceable by contract.o Except where coupled with a grant, it is a right in personam

where an easement is a right in rem. Leases

o A lease is a temporary property right that changes right to possession, easements change property rights, but possession is usually maintained.

Natural rightso Natural rights (e.g. right to support of land in its natural

state) are enjoyed by the owner of land regardless of the existence of a grant.

o Easements may increase these rights (e.g. right of support of a building), but the natural rights do not require an easement.

Public rights on lando Anyone has a right to public roads, easements (usually)

modify rights on private land. Restrictive covenants



o Restrictive covenants are negative in nature, restricting the use of land. The covenantor is not bound to do anything positive. Equity treats them as quasi easements. They are an equitable interest in land.

Profits â prendre o Profits â prendre are a right to take something off land

(Duke of Sutherland v Heathcote).o They can be extinguished when the subject matter becomes

obsolete

12.2 Creation of EasementsEasements can be created by:

Express grant Statute Implied grant or reservation Prescription

12.2.1 Express grantIf the instrument (created 1931 or later) expressly creates an easement, it must comply with CA s 88(1) (a) land benefited (b) land burdened (c) the person who’s consent is required to modify the easement. Clearly indicate per Papadopolis (as long as it is pointed to in terms of the instrument, needs not be exact).

Under Old System Title:

An easement must be created by deed to be effective (CA s 23B)

Torrens Title Land:

An easement must be in approved form And registered, in order to be effective (RPA s 46) The details are to be recorded in the folio for both the dominant

and servient tenements (RPA s 47(1))

Where only the dominant tenement is under Torrens Title:

The statement on the CT is not conclusive (Cowlishaw v Ponsford) The servient tenement is only bound if there is a deed as well.

An equitable easement may be created where there is a document that is specifically enforceable (there is valuable consideration and writing complying with s 54A).



12.2.2 Express reservationAn express reservation occurs whereby, in a conveyance, an owner reserves an easement for the benefit of the land retained by the owner (St Edmundsbury and Ipswich Diocesan Board of Finance v Clark (No 2)).

Old System Titleo A separate re-grant need not be conveyed (CA s 45A)

Torrens Title Lando The reservation is made in the memorandum of transfer by

which the land is transferred.o It must comply with CA s 88(1).

12.2.3 Statutory creation of easementsStatutory easements may be created under the following:

Public Works Act s 4Ao An easement may be resumed by the crown over private land

Crown Lands Consolidation Act s 279o Every purchaser of crown land shall be entitled to road

access, and has an easement to the neared road through/over any crown land

Conveyancing Act s 88Bo Easements can be creation by registration or recording

(under CA s 196) of a plan setting out the details of easements created for the benefit of:

Any public roads Easements in gross under CA s 88A Easements belonging to/burdening land in the plan

Conveyancing Act s 88K

12.2.3.1 Conveyancing Act s 88BAll easements created under s 88B must be recorded in the property’s folio (CA s 88B(3A)).

If Registrar General fails to record this, it may still be valid:

Because it fits with the ratio of James v Registrar General, or under s 42(1)(a1) (as the next registerable dealing);

If it is created by statute, and is thus enforceable because of Pratten v Warringah Shire Council; or

If it is implied by a marking in the folio which properly depicts the easement (Dabbs v Seaman).



12.2.3.2 Conveyancing Act s 88KThis section provides

1. An easement may be imposed if it is reasonably necessary for the effective use or development of other land that will have the benefit of the easement.

2. It may be made if:a. The use of the dominant tenement will not be inconsistent

with the public interest, andb. The land is evidenced in the General Register of Deeds, or

the RPA Register, and the owner may be adequately compensated for any loss or disadvantage arising from the easement, and

c. All reasonable attempts have been made to negotiate an easement before.

3. The easement must be properly recorded/with specificity.4. The applicant will pay compensation appropriate.5. The costs are payable by the applicant, unless the court orders

otherwise.6. The easement may be:

a. Released by the benefiting owner, orb. Modified by deed between the parties (OST) or by a dealing

in an approved for (TT).7. This takes effect when:

a. Registered (TT)b. When the deed is registered in the General Register of

Deeds (OST)8. An easement created in this section has the effect as if it is a deed.9. The court, under CA s 89, may modify easements made under this

section.

12.2.3.2.1 Reasonably Necessary for the Effective Use of the Dominant Land

Reasonably necessary is determined objectively (Re Seaforth Land Sales).

Reasonably necessary does not require absolute necessity, something less will suffice (117 York Street Pty Limited v Proprietors Strata Plan 16123).

It must be reasonably necessary for the dominant land, not the particular proprietor (Hanny v Lewis).

The court is not to make an order under s 88K lightly, since it compulsorily takes a proprietary right (Durack v De Winton), and only if the servient tenement can be compensated (O’Mara v Gascoigne).

There are two views as to the meaning of “reasonably necessary”:



The first is that the court should not judge the reasonableness and that 88K is available to whatever development of the dominant land is allowed by law (Tregoyd Gardens v Jervis).

The second is that the easement is reasonably necessary for a use or development that is reasonable compared with possible alternative uses/developments (117 York Street v Proprietors Strata Plan).

Durack v De Winton – per Einstein J (summary of position):

Reasonably necessary is not absolutely necessary (117 York St) The use must be reasonable compared with possible alternatives

(117 York St) The easement is reasonably necessary if the development with the

easement is at least substantially preferably preferable to use without the easement (117 York St, Hodgson J)

Necessary is used, meaning it is more than merely desirable or preferable, it is a higher burden (Kindervater)

This is an objective test, in light of the circumstances, at the time of the ordered, rather than at the time proceedings were commenced (Coles Myer v Dymocks)

It should be approached with caution, because it takes away proprietary rights compulsorily (Nelson v Kalahara; re Worthston)

Khattar v Wiese – per Bretton J (summary of position):

As above, add that the easement may be necessary for all, or at least one or more proposed uses which are reasonable when compare to the alternatives (117 York St)

Thus, there are two questions:o Whether the proposed development is a reasonable one in

comparison with alternativeso Whether that development with the easement is

substantially preferable to the use without the easement The burner on the servient property is relevant: where the burden

is greater, the burden

Owner’s Strata Plan no 13625 v Ryan – Rein AJ

An example (Re Permanent Trustee Australia), a rear lane being the only means of access was a valid 88K easement.

The next past user was a relevant factor? Pp 259, 260

12.2.3.2.2 Not inconsistent with the public interestCA s 88K(2) requires the use of land to be consistent with the public interest: e.g. easement to allow for internal parking in a crowded area was consistent (Owner’s Strata Plan no 13625 v Ryan).



12.2.3.2.3 The owner of the servient land can be adequately compensated for any loss

The owner must (and it must be possible for) be adequately compensated for loss (CA s 88K(2); O’Mara v Gascoigne).

Compensation is determined with reference to loss incurred by the servient owner, not the benefit of the dominant owner (Goodwin v Yee). E.g. 117 York St, compensation was $23000, the benefit to the dominant was between $260000 and $430000.

Compensation is to be adequate, rather then generous or miserly (Mitchell v Boutagy).

Compensation is awarded for any loss or other disadvantage caused (as expressed in March v Stramare) by the imposition of the easement (Mitchell v Boutagy):

Value of the easement (Tregoyd Gardens v Jervis) The disturbance caused by building activities (Tregoyd) The disturbance caused by future access for maintenance

(Tregoyd) Loss of rent, even if the property is not tenanted, as long as there

is a disruption to occupation (Goodwin) The loss of peace and quiet (Wengarin v Byron Shire Council) The loss of business profit (Katakouzinos v Roufir Pty Ltd) The cost of having to temporarily vacate the premisis (Goodwin v

Yee) The cost of damage to the servient land (Katakouzinos) Diminished market value, including “hope value” of potential uses

that have been limited (Wengarin) Tertiary costs, such as moving expenses, will only be awarded if

there is proof that the costs will be incurred (Mitchell v Boutagy) The cost of defending the application, if reasonable (117 York St)

o Note, exorbitant demands for compensation demonstrate unwillingness to negotiate, and may be punished in costs (Coles v Dymocks)

Loss of bargaining power is not compensated for (Goodwin; 117 York st)

The onus of proof in a compensation case is the plaintiff (dominant tenement) (117 York St).

12.2.3.2.4 All reasonable effortsThe applicant under this section must have made “all reasonable efforts” to negotiate for an easement (CA s 88K(2)(c)). This is where, objectively, negotiations have proved fruitless and it is unlikely that further negotiation will produce a consensus (Coles v Dymocks – a large gap in ideas of quantum of compensation satisfied the court that further negotiations were to be fruitless; Tregoyd).



12.2.3.2.5 The discretion of the courtsAbove the requirements in the section, the court also has discretion, e.g. the court, in Owners Strata Plan v Ryan stated that the history of usage of a piece of land lead the court to decide that their discretion should be exercised by granting an easement.

12.2.3.2.6 Ancillary rights Under s 88K, the court may grant ancillary rights necessary for the enjoyment of the easement (117 York st).

12.2.3.2.7 Costs – probably notThe costs are payable by the applicant subject to any order of the court to the contrary (s 88K(5)).

This discretion has been exercised, and the costs, or part thereof (Owners Strata Plan v Ryan) allocated to the defendants where:

The defendant's conduct is unreasonable, unreasonably bringing up legal costs (117 York St)

Where the arguments maintained at the hearing by the defendant are unreasonable (Goodwin)

Unreasonableness includes:o Making false allegations of fraud, knowing them to be false

(Fountain; Thors v Weekes)o Commencing proceedings for ulterior motives (Ragata

Developments v Westpac)o Making allegations which ought never to have been madeo Causing the undue prolongation of a case by groundless

contentions (Ragata)o Imprudent refusal to compromise (Messiter v Hutchinson)

This is so that defendant’s would not go into a case thinking there is nothing they could do that would not be on the applicant’s tab (Goodwin; Owner’s Strata Plan v Ryan).

The following were taken into account in Ryan:

The facts were spurious and manufactured for the purpose of the case;

The plaintiffs offered a settlement amount of a similar quantum, which the defendant’s refused;

The history of use of the land; and, The misuse of valuations.



12.2.4 An implied grant or reservation under Old System Title land

An easement by implication usually occurs when land under common ownership is severed, for example a right of way for a subdivision created as an “island” surrounded by property (Corporation of London v Riggs).

An easement by implication:

Is a legal interest; Cannot be defeated by a subsequent purchaser of the servient

tenement; Is not created by instrument.

Easements by implication are not created “for all purposes”, but, rather, for the limited purpose of allowing enjoyment of the land as it is at the time (e.g. if the land is agricultural, the easement could not be relied upon if the land is turned into an industrial estate).

In Wheeldon v Burrows: (there is no easement here?)

Facts:

A workshop and adjacent land belong to the same owner Both are offered for sale at auction

o The land was sold, but the workshop was noto Subsequently, the workshop was sold to another persono The workshop was on-sold to another

The workshop had windows facing the land

Held:

Since there was no reservation of right of access to light in the sale, no right passed to the purchaser,

Thus, the land could be built up to block the windows This might have been different where they were sold at the same

time

12.2.4.1 Creation of an easement where the vendor retains the “quasi-dominant” tenement

Where the vendor retains the benefiting land, an easement will not be implied in favor of the vendor because they could have reserved the rights (Wheeldon v Burrows). Note, easements of necessity, common intention, or s 88K can still occur here.

12.2.4.2 Easements of necessityWhere otherwise the grantor would be landlocked (with no means of access), an easement of necessity may be implied (Gibson v M’George).

For example:



An easement of necessity for a chimney was implied, even where, at the time of the grant, the necessity was not realized (Wong v Beaumont)

The party entitled to the right of way may choose the land to be affected (Bolton v Bolton); it must be reasonable (Pearson v Spencer) and cannot be changed once selected (Deacon v Southeastern Railway).

How does this interact with s 88k? common law when absolute, 88K, the standard is lower (reasonably v absolutely necessary)

12.2.4.3 Easements of common intentionEasements that are necessary to implement a common intention will be implied in favor of a grantor (Perth Corporation v Halle).

12.2.4.4 Creation of an easement by implication where the vendor retains the “quasi-servient” tenement

Where the grantee acquires the dominant tenement, easements are more readily implied: definitely where there is necessity or common intention.

An easement will be implied where (Wheeldon v Burrows):

The use is continuous and apparento Continuous implies permanent, rather than temporary

rights, it does not require absolute continuity (Suffield v Brown)

o Apparent implies that it is directed at something which is discoverable on inspection (e.g. a drain (Pyer v Carter), a road (Brown v Alabaster), windows with light (Phillips v Low), more e.g. see p 272)

It is necessary to the reasonable enjoyment of the lando The requirement is reasonableness, not necessity (Wheeldon

v Burrows) It is (and was at the time of the grant) used by the grantor for the

benefit of the part of the land granted

12.2.4.5 Where the dominant and servient tenements are sold at the same time

Where they are sold simultaneously, they gain any easement that they would have gained if the vendor kept the other parcel (Swansborough v Coventry).

The date is the date of the contract, not the conveyances (White v Taylor (No 2)).

12.2.4.6 Implied easements under Torrens TitleA holder of estate in fee simple under Torrens title enjoys indefeasibility (RPA s 42) against any interest that is not on the register (bar the exceptions to indefeasibility), except where there is “omission or



misdescription […] of any easement created in or existing upon the land (RPA s 42(1)(a1)).

RPA s 42(1)(a1) protects:

Easements which existed at the time when the land is brought under the RPA, but which were not recorded in the register (James v Stevenson)

Easements created under the RPA, which were omitted or misdescribed in the Register (James v Registrar-General)

An easement by implication created over a servient tenement when it was OST is still enforceable when it is converted to TT (Australian Hi-Fi v Gehl).

An easement cannot be implied on to a TT property (Australian Hi-Fi).

The exception to this is Dabbs v Seaman where a transfer referred to an easement (20 foot lane), echoed in the CT, which was not express. This easement was found to be valid.

12.2.5 Easements by prescriptionEasements by prescription used to require proof of enjoyment from time immemorial (1189), but are now created through the fiction of a “lost modern grant” – juries are required to presume, if there have been 20 years of uninterrupted enjoyment of a right, that an easement was granted expressly, but lost (Dalton v Angus).

This has been applied in Australia (Delohery v Permanent Trustee), and requires that the servient owner:

Had a knowledge of the acts which created the easement (Lloyds Bank v Dalton).

A power to stop or sue in regards to these acts and a failure to exercise such a power (Dalton v Angus).

Note, if there was a license to do the act, the action to create the easement will be defeated (Gardner v Hodgson) (the act must not be by force, secrecy, license or permission).

12.2.5.1 Easements by prescription under Torrens Title When the easement is made when the servient tenement is OST, it remains valid if converted to TT because of s 42(1)(a1) (Australian Hi Fi v Gehl). An easement by prescription cannot be made when the servient tenement is already under TT.

12.2.6 Easements in GrossAn easement can be created without a dominant tenement under CA s 88A(1). The crown can create an easement in favor of the crown (a). Also, by registration of a plan of subdivision (s 88B(3)(b)).



12.3 Ancillary rights to an easementWith the grant of an easement comes a grant of all rights reasonably necessary for its enjoyment (Jones v Pritchard). In Torrens Title, as long as the easement is recorded or otherwise valid, ancillary rights exist (i.e. even if they are not explicitly recorded in the register (Hemmes Hermitage v Abdurahman).

For example (more on pp 275, 276):

Easement for the passage of power lines includes an ancillary right to place electricity poles (Ventral Electricity v Jennaway)

A right of way includes an ancillary right that the way be kept clear of danger (Prospect County v Cross)

An easement of support includes an ancillary right to have access to carry out repairs (Jones v Pritchard)

A right of footway includes a right to build stairs where it is slippery (Hanny v Lewis)

12.4 Obligation on the owners of the dominant and servient tenement; deviations of a right of way coming from obstruction

Where the grant does not specify, the owner of the servient tenement:

Does not need to actively do anything to keep the right of way in repair, the dominant tenement’s owner has this obligation (Newcomen v Coulsen)

If the easement allows for uninterrupted use, there is an obligation to make it suitable for such use (Jones v Pritchard)

If the owner of a servient tenement obstructs a right of way, is it is not easily removable, the owner of the dominant tenement may deviate around the obstruction (Selby v Nettlefold), reasonably (Selby v Nettlefold). If this amounts to substantial interference with the dominant tenement-holder’s rights, damages/an injunction may be sought (Saint v Jenner).

12.5 Changing an easementThe ability to change an easement depends on its type:

Easement by implicationo It is not possible to change the use of an easement by

implication (Corporation of London v Riggs – Easement by necessity for an agricultural property could not be changed to allow for increased use of the easement for building/industrial land)

Prescriptive easemento A right of way by prescription cannot be changed or

extended (Wimbledon v Dixon – an agricultural right of way



could not be extended when the land became heavy residential; RPC v Rogers – a right of way to agricultural land was not extended where the land became a caravan park)

o A mere intensification of use of the land is not regarded as a change of use, provided that there is no increase in the burden on the servient tenement (British Railways v Glass)

E.g. a house to a hotel (Lloyds Bank v Dalton), a camping ground that became more heavily used (British Railways v Glass) (see age 277, 278 for more examples)

o The right of use of an easement by prescription is limited to that which was necessary for the purposes of the dominant tenement at the time of creation (British Railways v Glass)

Express Easemento An express easement is not limited by original use, and will

be given the full meaning of the berth of its grant by the court.

o An easement “for all purposes” will not be limited by original context: the use may change and the right of way will continue to be valid (White v Grand Hotel – a residency became a hotel, the easement was held to still be valid)

This is limited: if the use is so excessive so that an ordinary man would not adopt this on his own land, an injunction may be sought to limit the use (British Railways v Glass)

o This doctrine is much of a “facts and circumstances” one

Cases illustrating this doctrine:

Todrick v Western Nationalo Facts

Easement was used for agriculture Dominant tenement was bought by a bus company Who built a ramp to carry heavy vehicles up the right

of way The vehicles had minimal clearance (2 cm)

o Held The new use was excessive because of the ramp, and

the lack of clearance White v Grand Hotel, Eastbourne Limited

o Facts A right of way was granted A new owner purchased the dominant tenement, who

turned it into a garage attached to a hotel And used the right of way to allow an entrance to

hotel visitors, and built a larger gate to accommodate



o Held It is a right of way claimed under a grant: unless there

is some limitation in the grant, full effect must be given to the grant

The right of way was valid, but building the new gate on the land of the servient tenement was excessive

Jelbert v Daviso Facts

There was a right of way, used for agricultural purposes

The right of way was as follows: “right of way at all times and for all purposes … in common with all other persons having the like right”

Turned the land into a camping ground for 200 camp-grounds

o Held The court held that the amount it would be used was

limited by “in common with all other persons having the like right”

Since the excessive use would limit their usage, it was to be limited

Bulstrode v Lamberto Facts

The vendor reserved an easement for his tenants and others authorized to pass over the yard

Someone else bought the dominant tenement Wanted to bring vans to unload furniture

o Held The object of this reservation was to give the plaintiff

an alternative means of getting to his business … e.g. for moving furniture for sale

Thus, the vans were fine, and could be unloaded if they couldn’t get to the garage

This did cause hardship, thus the vehicles could only stay as necessary for unloading, no longer

VT Engineering v Richard Barland & Coo Facts

A landlord granted a tenant a right of way at all times and for all purposes

The tenant used them to transport structural steel onto trucks

The landlord wanted to build over the easement, building a tunnel to allow for it

o Held The tunnel would restrain the use of the easement (it

was only 3m high)



And thus, it was restrained: the right of way should remain free from obstruction as is reasonable in all the circumstances

CA s 89 regarding modification? I have notes only on extinguishment. S 89 is modify OR extinguish.

12.6 Extinguishing an easementEasements can be extinguished by:

Express release; Implied release; By operation of law; or, By court order

12.6.1 Express releaseExpress releases:

Under OST, a release must be by deed (CA s 23B(1)). Under TT, a release requires a registered transfer (RPA s 47(6)). Under equity, an easement is released by writing for value (CA s

23C(1)(c)).

12.6.2 Abandonment under Torrens Title: If the easement has not been used for 20 years (RPA s 49(2)), the

Registrar General may cancel the recording of the easement in the register (RPA s 39(1)).

Before cancelling, the Registrar-General must consider submissions made by an interested party during a notice period (RPA s 49(4)).

The Registrar General may also cancel the easement if the easement has no practical purpose because separate properties have been consolidated into one property (RPA s 49(5)).

12.6.3 Implied Release within 20 years (i.e. before abandonment)

An easement may be released within 20 years if there is evidence that the dominant tenement intended to release the right (non-use is not sufficient to prove such intention (Ward v Ward), unless it is for a sufficiently long period (Tweweeke v 36 Wolseley Rd), or combined with surrounding circumstances indicating intention (Swan v Sinclair)).

Cases illustrating this doctrine:

Treweeke v 36 Wolseley Rd Pty Limitedo Facts

The dominant tenement was granted a right of way to water access



The owner of the servient tenement built a pool and other obstructions on the path without complaint made against him

The owner of the dominant tenement had used a different way to the water, which was easier

The other way closed The owner of the dominant tenement wanted access to

the easement again, but the other party said it was impliedly released, and wanted release via CA s 89(1) (See below)

o Held: Walsh J in dissent In looking to abandonment, the following must be

considered: The length of time the right of way hadn’t been

used The effect of obstacles at the time of the grant The effect of further obstacles created The failure of the respondent (the servient

tenement?) to take action to make the right of way available for use

The effect of availability of another patho Held:

In its entirety, the inference of abandonment should not be made

The Strata Plan caseo That the purchaser bought a TT property with an easement

on the register, recently, made implication of abandonment impossible

12.6.4 Operation of LawWhat about RPA s 49(5)?

Where common ownership and occupancy of the dominant and servient tenements exists, there can be no more easement (Coke Upon Littleton):

Except where the easement was created by the recording of a plan under CA s 196 (CA s 88B(3)(c)(iii))

Unless the land is TT, and the easement is registered (RPA s 47(7))



12.6.5 Order of the court (CA s 89(1))The section goes:

(1) Where there is an easement or profit a prendre, the court may on application modify or extinguish it, if satisfied that:

o (a) The reason for the creation of the easement or profit a prendre is obsolete, and would impede the reasonable servient tenement unless removed,

o (b) The owner of the dominant tenement (who is sound) agrees, or by their actions/omissions imply abandonment of the easement in whole or part

o (b1)(i) that the authority benefiting from the obligation agrees, or may reasonable be seen to have waived benefit; or (ii) that the obligation is unreasonably onerous or expensive compared with its benefit

o (c) the proposed modification/extinguishment will not substantially injure the dominant tenement

(2) I don’t understand? Requirement to have tried to get an easement that is 88K

Cases illustrating an application of CA s 89(1)

Pieper v Edwardso CA s 89(1)(b) could be applied where a previous owner

agrees to surrender the easement, even if this was not recorded on the register

Manly Properties Pty Limited v Castrisoso The court should not unduly restrict CA s 89

12.7 RemediesRemedies can come in the form of abatement, injunction, or damages; specific remedies are available to specific types of easement.

12.7.1 Abatement (self-help)You can remove an obstacle to a right of way, but the courts don’t like this (Lagan Navigation v Lumbeg). No notice is required, but a breach of peace may occur if care is not taken (Perry v Fitzhowe). Must not be excessive force, must not injure 3rd parties.

12.7.2 InjunctionThis is the most common remedy: an injunction against continuing interference with the easement (Andale v Goetjens). This won’t be granted if the interference is small or temporary (FCA Fincance v Moreton Sugar Mill).

12.7.3 DamagesYou can get damages where there has been substantial interference with the enjoyment of the easement (Saint v Jenner).



12.7.4 Remedies specific to rights of supportThere is a natural right to support of land in its natural state (Backhouse v Bonomi), additional support requires an easement (Dalton v Angus).

If removal of support would have damaged the land as is, and damages the buildings too, this is actionable without an easement (Redland Bricks v Morris).

12.7.5 NuisanceWhere servient tenement is blocking right of way, requiring damage (not necessarily physical).

If dominant tenement uses easement too much: but more likely to use declaration.



13Restrictive Covenants 13.1 IntroductionCovenant A term of a contract that relates to

the land (there is some proprietary interest (i.e. an interest in land) that is in the clause: it is connected to land, not person)

Covenantor The burdened party (the party restricted by the covenant)

Covenantee The grantee, benefited party

The questions in covenants are as follows:

When does a covenant run with the land – when will privity be overridden?

Can the covenantee’s heirs claim benefit? Can the covenantor’s heir be burdened?

13.1.1 A restrictive covenantA positive covenant will not be enforced by equity. Thus, for the covenant to be a proprietary interest, it must be a restrictive covenant (Re Nisbet and Potts’ Contract). Further, a covenant must be restrictive in substance (as apposed to merely in words).

A positive covenant requires the covenantor to do something, most commonly, to expend money (Haywood v Brunswick Permanent Benefit Building Society). E.g.:

o A covenant not the let the premises fall into disrepair (negative in form, positive in substance)

A restrictive covenant prevents the covenantor from doing something. E.g.:

o Don’t carry on a certain type of businesso Don’t build a house worth less than a certain amount (Collins

v Castle)

A covenant that has positive and negative provisions will be enforceable to the extent that it is restrictive (Shepherd Homes Limited v Sandham; Tulk v Moxhay).



13.2 Requirements for a binding covenant under OST1. The covenant must be restrictive in substance (Tulk v Moxhay)2. The purchaser must have taken with notice of the covenant (Tulk v

Moxhay; Wilkes v Spooner for someone claiming through such a purchaser)

3. The covenant must “touch and concern” the land benefited (Rogers v Housegood; Tulk)

a. The interest must be annexed to landb. The interest must not be personal (i.e. it must be for the

benefit of the land, not the specific owner)4. If the land has been subdivided, the covenant is only binding on the

subdivisions (rather than to the block of land as a whole, which is the assumption) if there are words to the effect of “benefit of the land and every part of it that may lawfully be subdivided” (Tulk; Ellison v O’Neil)

5. CA ss 70 and 70A may not be rebutteda. CA s 70 implies that the benefit of the covenant is binding on

the successors of the covenanteeb. CA s 70A implies that the burden of the covenant is binding

on the successors of the covenantor6. The covenantee must own the land benefited at the time of creation

(Kerridge v Foley – land sold lot by lot, land sold subsequent could not get a covenant from land already sold since the vendor no longer owned the land), unless there is a valid scheme of development (Elliston v Reacher)

a. There must be a reciprocity of covenants (each must be burdened by the others)

b. Others are suggestions (Re Application of Poltava Pty Ltd)i. Common vendor (may be two or more vendors acting

in concert (Re Dolphin’s Conveyance))ii. Plan must have been laid out (size may be changed

according to the requirements of each purchaser (Baxter v Four Oaks)

7. There must be compliance with CA s 88(1).a. Must be created by an instrument (after 1930)b. Benefiting and burdened party must be stated (sub-sub-ss

(a), (b))c. The person able to release or change the easement (sub-sub-

ss (c), (d))



13.2.1 Enforcement At law:

Burden does not run with the covenantor (Austerberry v Corporation of Oldham)

Thus, will only be enforceable against original covenantor

At equity:

If the above 7 are satisfied, there may be a claim in equity against the equitable proprietary interest created (Tulk)

13.2.2 Building SchemesA valid buiding scheme (Elliston v Reacher):

Removes the assumption that a covenant is not meant to benefit subdivisions

And allows a covenant to be enforceable irrespective of the sale dates of each lot

For a building scheme to be valid (Elliston):

There must be a common vendor The vendor must lay out a plan before selling The restrictions are consistent only with some scheme of

development of the land The common vendor intended the restrictions to benefit all of the

lots soldo Purchasers bought on the basis that they would benefit from

this retriction

Thus, extrinsic evidence is required to prove a building scheme.



13.3 Restrictive covenants on TT landSimilar to OST (except for additional requirements for proving a building scheme and the application of CA s 88B instruments), a covenant requires the following to be valid:

1. The covenant must be restrictive/negative in substance (Tulk v Moxhay)

2. The Purchaser must have taken with notice of the covenant (Tulk v Moxhay)

a. Note, in TT, if the interest is on the register, notice is implied (CA s 88(3))

3. The covenant should be recorded on the register in accordance with CA s 88(3)

4. The covenant must “touch and concern” the land benefited (Rogers v Hosegood; Tulk v Moxhay)

5. There is a presumption that a covenant does not apply to a subdivision. If it is to apply to a subdivision, this needs to be expressly stated (Tulk v Moxhay; Ellison v O’Neill)

6. CA ss 70 and 70A may not be rebutteda. CA s 70 implies that the benefit of the covenant is binding on

the successors of the covenanteeb. CA s 70A implies that the burden of the covenant is binding

on the successors of the covenantor7. The covenantee must own the land benefited at the time the

covenant is created (Kerridge v Foley)

7A. UNLESS you satisfy the elements of a building scheme (Elliston v Reacher)

8. There must be compliance with the formal requirements of CA s 88(1) (Re Louis)

a. Must be created by an instrument (after 1930)b. Benefiting and burdened party must be stated (sub-sub-ss

(a), (b))c. The person able to release or change the easement (sub-sub-

ss (c), (d))

8A UNLESS there is a CA s 88B instrument (after June 1964) registered containing a covenant

a. Registered under CA s 196b. Complies with the requirements of CA s 88(1)

13.3.1 A s 88B instrumentThis instrument is a method of subdivision (CA s 196), which if it complies with CA s88, is enforceable whether or not the other requirements of easements have been satisfied (e.g. they can both be owned by the same party). It needs to be valid under CA s 88, therefore, must touch concern,



describe benefited etc. The covenant is to be recorded under each burdened CT, the covenant. Ommited is still enforceable.

13.4 Remedies/defencesAn injunction may be sought for breach, alongside damages.

Unless the following defences apply:

The plaintiff’s inactivity has justified a reasonable belief that the plaintiff no longer intends to enforce the covenant (Chatsworth v Fewell)

The character of the neighborhood has so completely changed that the covenant is valueless (Nwakobi v Nzekwu)

13.5 Extinguishing a covenantExtinguishment may be done by:

Express release Implied release A CA s 89 court order A Environmental Planning an Assessment Act s 28(2) order

13.5.1 Express release Express release under OST must be by deed (CA s 23B(1)) Express release under TT must be by registered deed

Where a third party is given right to change/release covenant (under the CA s 88(1) instrument) , the owners retain little control (Elliston v Reacher).

13.5.2 Implied releaseAn implied release may occur when:

There has been usage (for a long time) wholly inconsistent with the use of the covenant (Hepworth v Pickles)

The owner of the benefited land has shown continued disregard for breaches, making the owner of the burdened land reasonably believe that the covenant has been waived (Chatsworth Estates v Fewell)

The neighborhood has changed in such a way that there is no longer any value left in the covenant (Application of Fox)

13.5.3 CA s89(1) (1) Where there is covenant, the court may on application modify

or extinguish it, if satisfied that:o (a) The reason for the creation is obsolete, and would

impede the reasonable servient tenement unless removed,o (b) The owner of the land benifiting (who is sound) agrees,

or by their actions/omissions imply abandonment of the easement in whole or part



o (b1)(i) that the authority benefiting from the obligation agrees, or may reasonable be seen to have waived benefit; or (ii) that the obligation is unreasonably onerous or expensive compared with its benefit

o (c) the proposed modification/extinguishment will not substantially injure the benefiting party

13.5.4 Environmental Planning an Assessment Act s 28(2)Local councils, not interpersonal contracts, are meant to control land use and development.

An environmental planning instrument may say a restrictive covenant does not apply (Ludwig v Coshott). It will only override this covenant to the extent required for development (Doe v Cogente).

For more, see pp 321-333.

For RG’s discretion to remove covenants, se pp 333-334.

13.6 Etc.Touch and concern

Benefit land owned by ee Touch and concern if reasonably regarded as capable of being

affected by the performance of the covenant (Hosegood) Land as a whole, not each part (Ellison) Benefited land is too large, covenant may not touch and concern

(Re-Ballards, Rogers, Ellison)



14Leases14.1 Introductory issuesLessor Person who grants the lease: the

landlordLessee The person who takes the interest:

the tenantLease A proprietary interest in landAssignment Transferring your interest to a third

partyDemise A lease

14.1.1 Leases in comparison to other interestsBare licenses

Bare licenses are a privilege granted to do something which would otherwise be unlawful

They are a personal interest (not an interest in land) They cannot be transferred to a third party

Contract license

It requires consideration (e.g. hiring a hotel room) Cannot be assigned or bind third parties It is revocable or breach of terms or with reasonable notice

Profit a prendre

Is a property interest, which can be defeated by indefeasibility

Leases

A property right (proprietary right; incorporeal hereditament) Capable of assignment (either landlord or lessee can assign

interest) Can bind third parties It is better than contract because it gives better protection with

better remedies It grants exclusive possession (if this is not granted, it is not a

lease)

14.1.2 Lease regimesThere is the general law of leasing, which informs the other areas and applies to non-retail commercial leases. This is supplemented by:

Common law Equity Conveyancing act



RPA Retail (retail leases act) Residential (Residential tenancies act) Crown land (Crown lands act)

14.2 Essential characteristics of a lease1. A right of exclusive possession of the premises2. For a definite period3. In the appropriate form

14.2.1 A right of exclusive possessionThe substance, rather than the form, of the lease, determines whether a right to exclusive possession is satisfied.

It is a facts and circumstances test:

In the words of the agreement, what rights are conferred? Is intention relevant?

o Before, it waso Radaich said the intention to create a lease was irrelevanto Intention is just one of many factors in determining whether

possession was exclusive

Intention may be relevant where the primary relationship is not tenant/landlord (e.g. son/father).

14.2.1.1 Radaich v Smitch (central for license v lease)Facts:

Document described them as license License deemed to be a lease (court says this is not relevant, the

words describing are not important)o It is a lock-up shop (keys looked after by the tenant)

Part of a larger building License

o For sole and exclusive right … for milk-baro Right to passage and toileto No poultry etc.o Requiring to open/close at certain timeso Gas/electricity/water providedo Stock can be kept on premises



Held:

The issue was: how far was the right exclusive? To what extent has it been infringed?

McKiernano Substance that is central

Tayloro Either a grant in interest of land, or noto Exclusive possession is the determining factor

It was held to be a license (central: possession has to be handed back)

14.2.2 Certain durationFrom the instrument creating the lease must be able to ascertain the starting date and maximum duration of the lease. If you can’t, the instrument is uncertain.

e.g.

Lace v Chandlero There was a lease “until the end of the war”o Which was rendered uncertain

Penut cropo Time can be deduced, but only in the rougho A specific time is necessary

21 years or until A leaveso Certain, isho It would be read down to mean 21, or, if A leaves earlier,

that date

14.2.3 Formalities (Torrens) See TT notes A lease of 3 years or more must be registered, and in approved

form (RPA s 53) Leases of less than 3 years may be registered and are an exception

to indefeasibility (RPA s 42(1)(d)) The benefit of indefeasibility (RPA s 42) Torrens unregistered interests

o Legal CA s 23D(2) Oral/deed/writing No lump sum payment Right to immediate possession

o Equitable Enforceable agreement to lease Writing under CA s 54A Consideration (equity will not assist a volunteer) Or, complies with CA s 23C(1) + consideration



Or equitable estoppel (Walton stores)

14.2.4 Formalities (OST) Under CA s 23B(1) deeds

o Exception in CA s 23B(2) Unless it is a CA s 23D(2) (legal, unregistered, in OST, just legal) Or equity, as in Torrens

14.3 Types of leases Fixed term

o E.g. 99 year lease Breach of term can kaput the lease

o If it is not of certain time, it is void ab initio Periodic (express/implied)

o E.g. lease fortnight to fortnight (sometimes by agreement, sometimes because a lease has expired and rent has continued to be paid)

o It arises by reference to a time term which you pay rent (a periodic “n” week tenancy will arise)

o Certain term? Term fixed, option to renew Therefore an ongoing series of leases

o Generally, the rent period is the notice period Tenancy at sufferance

o This is when you “hold over” – where the fixed term comes to an end but the tenant doesn’t lease

o This isn’t really a lease (you cannot assign or transfer) but it is called a lease

o Compensation may be payable for use and occupation (but this is not rent since there is no lease)

o If you pay and he accepts, it may become a periodic tenancy Tenancy at will

o This is not a tenancy at allo This is really a bare licenseo It basically means “you can use my house until I tell you to

go away”o No money changing hands periodicallyo Can be determined (ended) at the whim of the other party



14.4 CovenantsNOTE: different law rules leasehold covenants and restrictive covenants

Obligations in lease:

1. Express clauses2. Clauses implied by common law (and inherent in T/LL relationship)

(e.g. non-derogation and quiet enjoyment)3. Clauses implied by statute4. Clauses which are a necessary implication

An oral/express lease is a contract, but may become an estate: thus, you may use contractual or real property remedies.

14.4.1 Covenant of repair (either on LL or tenant)This is a big deal in leasing; who has the duty to repair?

When on a tenant:

“to keep and deliver up the premises in a satisfactory state of repair”

limitation as to fair wear and tear (this is allowed, and not covered by the covenant

Problems with this duty:o It looks to the future (prospective)o To put into repair, rather than to repair (so if you leased

crappy, you’ll have to bring it up to scratch) Note: you are not liable for inherent defects, which is not the same

thing as something worn over time and requiring repair, but, rather, it must have been faulty from the start

You are not required to repair to the extent that you give the LL something he didn’t have (but this is quite a long way)

For natural disasters, the contract is considered frustrated

When on LL

LL must have notice of the defect to be required to repair the item

14.4.2 Quiet enjoyment (on LL)Note: this is not the same as the everyday meaning of quiet (i.e. it does not relate to noise).

It means: the LL cannot interfere with the tenant’s right to possession (e.g. intimidation, harassment, etc.)

This is not an absolute covenant; you just have to minimize the impact.

14.4.2.1 Martin’s camera cornerFacts



LL upstairs Tenant downstairs Water leaks from LL’s house to tenant’s

Held

This was a breach of the covenant of quiet enjoyment

14.4.2.2 Other examples LL needs to repair outside of the building, puts up scaffolding and

hurts business

14.4.2.3 Southwark CaseFacts

British council flats Flimsy, and old When tenants move in, whenever anyone flushed, everyone wakes

up because of the thin walls

Held

There are two possible causes of action:o Nuisanceo Breach of covenant of quite enjoyment

Neither were valid here, since the use of the toilet was normal and they would have discovered this had they looked (Caveat Lessee)



14.4.3 Non-derogation from grant (on LL)This may be similar to the covenant of quiet enjoyment, and is often a parallel cause of action (well, the breach is).

This act protects the lease by providing an action against any act that prejudices the successful fulfillment of the purpose of the lease, although the interference must have been substantial.

14.4.3.1 The Nordon Case Facts

LL leased the third floor of a buildingo To PANDA (computer shop)o The LL consented to the assignment of the fourth floor lease

to a brothel (which was still criminal at the time) PANDA’s customers complained of:

o Unsavoury smells, whips, moaningo Vomit in the lobby

Was there a breach of the covenant of non-derogation from grant?

Law

If premises has been rendered unfit or materially unfit for the purpose for which they are granted, there has been a breach of the implied common law covenant of non-derogation from grant (Gordon v Lidcombe Developments Pty Ltd)

There must be more than intereference, but it doesn’t have to amount to impossibility of use

Application

Here, the stigma of the illegal business was what rendered the property materially unfit

However, the covenants of quiet enjoyment and non-derogation are between the tenant and the LL, here, other tenants, rather than the LL, breached (like in Southwark)

Here, LL consented, thus, the covenant was breached



14.4.4 LL’s liability for breach of covenant where the action is by a third party (e.g. other tenants)

This area of law is not yet certain, and the law will not automatically impute a tenant’s actions onto the LL.

However, if LL consented, authorized, adopted or allowed the offending activities, there may be breach of covenant.

This must be more than mere notice, there has to be consent, or higher.

14.4.5 Furnished apartments (on LL)If LL leases an apartment as a furnished apartment, the furnishings must be fit for their purpose (but there is a higher standard in the Residential Tenancies Act).

14.4.6 Tenant’s obligations implied by the common lawThe tenant must:

Use the land in a tenant-like manner (common law and CA)o It must be kept in tenantable repair (this is a lower burden

than the covenant to repair)o Be a good tenant (e.g. clean after parties, change light-

bulbs, etc.) Yield up possession at the end of the lease

o If there is a sub-lease, the sub-tenant must be gone before the end of the head-lease

Not commit waste (the tenant must preserve the reversion)o The LL retains an estate in fee simple in reversion for the

period of the leaseo The tenant has an obligation not to commit waste:

Voluntary waste may be excluded expressly or impliedly

Equitable waste may only be excluded expressly



14.4.6.1 BP OilFacts

BP had a refinery on land owned by the ports of Auckland There was a spill

o Oil seeped into the groundo And was only partially cleaned

Port of Auckland alleged breach of covenant of repair, and waste (there was a permanent change of the character of the land)

Held:

BP had a wide duty to repair, which was not the same as the duty not to commit waste

So it was OK to sue on both: express repair clause did not remove obligation not to commit waste

Was there waste? Here, no, since it was barred by the tort statute of limitations

14.4.7 Statutory covenants (CA ss 84, 85) Lessee covenant to repair (CA s 84(1)(b))

o Keep the property in tenantable repair having regard to the age and character of the house (Proudfoot)

Lessee requirement to pay rent at the time specified (CA s 84(1)(a)) LL may enter the property to inspect/repair with two days’ notice

(CA s 85(1)(a), (b)) The LL may re-enter the property if rent has been forfeit for a

month (CA s 85(1)(d))o Two months of breach of covenant (CA s 85(1)(d))



14.4.8 Other obligationsContract law may imply a term for the business efficacy of the lease, or a duty of good faith (Renard Constructions; Alcatel – whereby a lessor pressured a council to make orders against a lessee, this was not a breach of good faith, but the implication is there).

Tort law may make a LL liable for injury on their property:

Is LL or tenant liable for negligence to a person on your property? Is there a duty of care for the LL?

o Yes (Northern Sand Blasting; Jones v Bartlett) What is its scope?

o Circua v Williams Facts

Respondent brought proceedings against the LL of a residential property (apartments, respondent on the ground floor)

Building built in the 1950’so And it complied with 1950’s building

standardso Not 2000’s standards

The stairs leading from the entrance had no landing and no handrails, there was a tree at the bottom of the stairs

Respondent trips, hits the stump Is LL liable?

Duty? (yes, see above) Scope? (Jones v Bartlett)

o Comes down to the facts: is LL responsible for the defect? Must the defect be inherent?

Law: Majority (Mason, Brownie JJ)

o Lessor (LL) owes a duty of care to incoming tenants

o Involves a duty to repair which does not go beyond addressing defects of which he is aware or ought to be aware of

Beasley Jo LL under obligation to ensure the

premises is reasonably safe for the proposes which they are leased

This is assessed at the day of letting Application

Defect came down to the visibility of the defect and the relevance of building standards

Majority



o It was in compliance with 1950’s standards, just because standards upgrade, there is no obligation to upgrade

o You could take into account history (had their been previous complaints or injuries)

o The stairs weren’t unsafe, since the defect was visible and obvious (the lessee should have taken care)

Beasleyo The building standards are irrelevanto The question was: were the stairs

reasonably safe at the time of letting?o The design was contrary to good practice

for 20+ yearso History irrelevanto There is no duty to upgrade to current

standards, but there is a duty to renovate where the defect is visibly unsafe

Summary of law: The LL does not need to hire a professional to

assess the safety of a property The LL does not need to upgrade to the newest

building standards But, if the LL sees something dangerous, he

should fix it



14.5 Assignment and subleasingAssignment is the transfer of a whole interest in land (you step out of the picture).

Sub-leasing creates another lease out of your lease. This does not dispose of you lease, but carves out a lesser estate. At common law, the sub-lease must end at lease one day before the lease ends.

14.5.1 Assignment of a leasehold covenantBoth the estate in fee simple in reversion, and the leasehold estate are alienable (they may both be assigned).

A lease may prohibit assignment (where there is such a prohibition, it will be strictly construed: if it prohibits subleasing, it will not be found to prohibit assignment)

A lease may be subject to a qualified covenant against assignmento Where the tenant may only assign with consento Consent cannot be unreasonably withheld (CA ss 133B(1),

132) It will be found to be unreasonable where the

proposed assignment would cause the lessor financial detriment

Un-consensual assignment will still transfer an interest to the assignee, but the lessor has the option to give notice and terminate the lease

o The test is: would a reasonable person anticipate an adverse effect on the property or future lease ability if the assignment is allowed

Residential tenancies are not allowed to be assigned

14.5.2 Privity of Estate and ContractPrivity of contract survives assignment (Ahern v LA Wilkinson)

Privity of contract is not passed on (a good assignment will, however, indemnify the first lessee against actions by the second and subsequent lessees)

o E.g. The original LL may sue the old lessor for rent in arrears (195 Crown st v Hoare), unless a new lease is granted by the LL (195 Crown)

But privity of estate may change (it survives disposal by assignment), if the covenant is held to “touch and concern” the land, then the covenant passes

Touch and concern:

Similar test to covenants (Rogers v Hosegood)



At common law, covenants did not run with the reversion (tenants interests could be assigned, but not LL’s interest. However:

CA ss 117 (benefit) and 118 (burden) allows the assignment of the reversion

RPA ss 51, 52 – it is possible to assign part of the reversion

14.5.3 Past breachesYou have to differentiate between continuing (continues until remedied, e.g. repairs) and complete breaches (breach is complete at the time, e.g. failure to pay rent).

If complete breach, sue the bastard who did it If it is continuing, sue where it started, until a point, and then the

other guy for continuing it

14.6 Terminating/ending a lease (breach and consequences)

A lease has dual character as a proprietary and contractual agreement: so, the question, in contract, is what will create a repudiation/fundamental breach so as to end the contract? What will end the privity of title?

Leases may end by forfeiture by re-entry, through contractual repudiation or frustration (e.g. natural disasters).

Leases may also end by forfeiture, surrender subject to terms of the lease (TT need a memo and registration, OST you need a deed, etc.)

14.6.1 Forfeiture by re-entryForfeiting the lease giving the LL a right to the remedy of re-entry.

This may occur where:

There is an express clause “on breach, LL has a right of re-entry”o Express clause may give notice period (but not reduce the

notice period to zero)o CA s 85(1)(d) specifies a notice period

Rent 1 month in arrears serve notice under CA s 129 (maybe not ss (8)?)

non-rent 2 months in breach serve notice under CA s 129

o Notice cannot be contracted out of (CA s 129(10)) Or if there is an implied statutory right under CA s 85(1)(d)

How to re-enter:

Least appropriate



o Actually physically re-entering the propertyo If the tenant is still there, this may give rise to civil/criminal

action Appropriate

o Apply for a court order for re-entryo It will be granted as long as

There was breach For an appropriate length of time With adequate notice served (CA s 129)

There is an equitable jurisdiction to refuse forfeiture (the most common cause is failure to satisfy the above-listed requirements.

If there is a situation of subleasing:

CA s 130 applies The right to re-enter kills the sublease But CA s 130 gives the court power to continue the sublease, but

remove the intermediary (the lease is now between the LL and the subtenant, now tenant)

If you end the lease by re-entry, you are limited in damages to rent in arrears or whatever damage is caused by the non-rent covenant’s breach.

14.6.2 Contractual remedies (repudiation and fundamental breach)

This would give rise to loss of bargain damages (not only will you be able to end lease and claim rent owed, you would be able to claim rent lost as a result of the breach – not until the end of the term, but until you re-let, whilst trying your best)

Fundamental breach

This would only occur when there is a breach of a term which goes to the heart of the contract

In a lease, there is no such term (rent is not an essential term) Almost impossible

Repudiation

An event which precludes the ability to abide the contract, or to abide by it effectively

Since rent is not an essential term, it alone will not be a repudiation

Must be more than a mere breach (unless the contract is worded otherwise), must include other elements (like damage done or disregard for other clauses (e.g. parking and subletting))

14.6.2.1 Chevville BuildersFacts



There is a 3 year leaseo Incorporated a guarantee by third party for performance by

lessee (tenant)o Lessee was often in arrears in rent

Got behind, caught up, got behind …o Eventually LL got sick of it

Attempted to terminate Argued that failure to pay rent on a regular basis was a

fundamental breach or repudiationo On these facts, there is no doubt that the LL would be

allowed re-entryo But the property was difficult to let, so he went for

contractual remedies (to claim loss of bargain damages)

Held:

Gibbs CJo Failure to pay was a breach, but there was no intention not

to perform the contract (they always cought up on payments), so there was no repudiation)

o Was there a fundamental breach? Non-payment of rent does not make further

commercial performance impossible No, there was no fundamental breach

o You could, in writing, stipulate in an agreement that rent is an essential term and that failure to pay would lead to consequences

Now a lot of leases include such a clause, but the courts construe these terms very strictly

o Failure to pay is not unimportant, it is just not enough on its own

14.6.2.2 ProgressiveFacts

Re-entry, here, was possible. The question was about damages (the LL wanted loss of bargain damages for the 6 months the land wasn’t leased)

The rent was unpaid for 5 months Other covenants were breached

o Covenant of repair Roof Electrical fittings Fire doors Staircases

o Breach of some agreement related to parking Tenant argued he hadn’t paid rent because LL was in breach of

lease agreements



o LL was meant to do certain work on the propertyo Tenant argued this was a condition precedento Thus the lease did not come into operation

Held

Court disagreed with the appellant: the work the LL was meant to do was not a condition precedent, and did not excuse tenant’s breach

Court agreed that the breach of rent covenant was not enough for fundament breach

o Further, that a breach of repair covenant was not enougho Further, even if done together, alongside parking breach,

this still wouldn’t have been enough But:

o Since the appellant didn’t just “not repair” – but carelessly (rather than deliberately) damaged the property (roof, wiring, fittings, pipes)

o And they sub-leased when they shouldn’t have Although a mere breach is not enough, the sum of the breaches

here showed an intention not to perform or not to perform according to the terms of the contract, which is enough to satisfy repudiation

14.7 WaiverWhere there is a breach, it may be “waived”: where you indicate that you do not intend to do anything as a consequence of the breach.

It may be express or implied (implied by doing something that unequivocally recognizes the continued existence of the lease – e.g. rent missed, “its fine, pay me next week”).

If there is a waiver, the person waiving loses the right to forfeit, terminate or claim for breach.

The person waiving must know of the breach or the waiver is ineffective.

14.8 Remedies14.8.1 DamagesForfeiture by re-entry

Easiest Allowable where there is an express or implied statutory right (CA

s 85(1)(d)) Damages are rent in arrears or the damage because of breach of

other covenant apparent at the time of re-entry

Contractualisation



Repudiation (or fundamental breach) Damages are for loss of bargain You must mitigate by re-letting as soon as you can

Note CA s 133A: the amount of remedies cannot exceed the reversion’s value

14.8.2 OtherAny party may apply for injunction or specific performance to stop breach of covenants.

One party’s breach does not excuse the other party from breaching

-- have to give notice for a rental clause … or not



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