LLB 220

PROPERTY &
TRUSTS A
LLB220
COMPLETE LP
3-8
EXAM NOTES
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CONTENTS PAGES
Lesson Plan #3 Possession of Property
possession, adverse possession
page 3
Lesson Plan #4 Legal Estates and
Interests Absolute Fee Simple, Life
Estates
page 10
Lesson Plan #5 The Origin and Nature of
Equitable Interests Trusts, Legal and
Equitable Interests, Estoppel
page 14
Lesson Plan #6 Conditional Transfers and
Future Interests Contingent and Vested
Interests, Alienation, Uncertainty,
Perpetuities
page 20
Lesson Plan #7 Leases Licenses and
Bailments Landlord rights and
responsibilities
page 27
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Lesson Plan #8 Servitudes over Property

Restrictive Covenant + Easement
page 41

Lesson Plan #3
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Topic: Possession of Property

POSSESSION OF PROPERTY
Possession of land creates an interest in the possessor enforceable against the whole world,
except someone with a superior right to possession (ownership)
Two components:
Animus possidendi (an intention to possess)
Factum (physical control)

Types of possession:

Possession in law: possessory title and physical control

Right to possession: constructive possession

Custody: actual and physical control (de facto possession) and intention to control

Constructive possession:
Where one has a right to possession, but is currently not in possession
o Immediate possession: it is a right to possession, to enjoy it now
o Postponed possession: It is a right to enjoy in the future.
Constructive possession includes principal, employer, master
Actual possession:
Signifies physical control, without possession in law.
De facto possession:
Includes agents, employee and servant, these meet the requirements of possession but
law does not recognize it.
Test of control:
If you can direct someone how and when they perform the service then they dont have
custody, rather they are a contractor who has possession.
Requirements to extinguish the documentary owners title:
The possession must be open, not secret, peaceful, not by force and adverse, not by
consent of the true owner.
A claimant to possessory title must establish actual possession and an intention to
possess.
Finders: An Exploration of Possessory Title
Armory v Delamirie finders keepers principle, the finder of an object is entitled to possess it
against all but the rightful owner. Although note usually prior possession beats later
possession.
When Can a finder keep what they found?
Waverley BC V Fletcher:

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Where an article is found in or attached to land, as between the owner or lawful

possessor of the land and the finder of the article, the owner or lawful possessor of the
land has the better title.
o An object in the land is to be treated as an integral part of the realty as against
all but the true owner
o Removal of an object in or attached to the land would normally involve
interference with the land and may damage it
o Law looks for substitute owner if the object is in the land
Where an article is found unattached on land, as between the two, the owner or lawful
possessor of the land has a better title only if he exercised such manifest control over
the land as to indicate an intention to control the land and anything that might be
found on it.

Treasure Trove:
When gold or silver is intentionally deposited in the ground it will go to the Crown
unless the original owner can be found. (Waverly BC v Fletcher)

EXAMPLE
X holds a freehold estate in land and does not live there. Y comes onto the land and occupies the land
for three years. Y has occupied the land and is in complete control. After three years, X discovers Ys
occupation and seeks to have him removed.
Ys possessory title will be defeated by Xs proprietary title.
Y may have an enforceable title against other claimants other than X.
Y can claim adverse possession by proving a continuous adverse possession period of at least 12
Years.

Protection of Possessions
Penfolds Wines v Elliot Case
Penfolds sold wine on the condition that the buyer returns the bottles. Elliotts brother passed
on the empty bottles, and he filled the bottles with his own wine and sold it. The claim by
Penfolds was conversion.
The difference between conversion and trespass is physical interference with someone elses
right of possession, conversion is the interference with someones ownership. Right to
immediate possession is not enough to constitute trespass. For conversion it is.
Penfolds has the right to immediate possession, Elliott is just the custodian, the right to
possession lies with the brother.
Trespass:
A person who brings an action of trespass to goods must be in actual possession of
them at the time of the alleged trespass or entitled to immediate possession.
Trespass to goods is any direct infringement of the possession by another of corporeal
personal chattels by means of an asportation or other physical invasion; whether it is
intentional or not.
The remaining of a person on land after the expiry of permission. If trespass is so
extensive it may give right to adverse possession.
Concerned in protecting actual possession.
Bailment
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Is the delivery of chattels by the owner or a person with a right to possess, into
the possession of another person upon an expressed or implied promise that the
chattels will be redelivered or dealt with in a stipulated way Penfolds
Conversion:
This is the unauthorised assumption of the powers of the true owner.
The essence is dealing with a chattel in a manner repugnant to the immediate right of
possession of the person who has the property of special property in the chattel.

Detinue:
Used when someone withholding goods
True owner must be in possession or have an immediate right to possession
The defendants refuse to return the chattel on demand.

Innominate Action on the Case

True owner must have possession or an immediate right to possession or a right to
future possession
permanent damage.
Negligence:
If the person has breached a duty of care
Jus Tertii
Defendant claims third party has better claim than plaintiff to possession and title
o

Remedies:
Remedies include equitable remedy of discretionary injunction due to the inadequacies
of the legal remedy of damages.

Adverse Possession
Criteria
The possession must be open, not secret; peaceful, not by force; and adverse, not by
consent of the true owner, otherwise it will not extinguish the documentary owners
title Mulcahy v Curramore
Elements
o Factual Element
the character and value of the property, the suitable and natural mode of
using it, the course of conduct which the proprietor might reasonably be
expected to follow with due regard to his own interests: Lord Advocate v
Lord Lovat (1880)
o Mental Element
Intention, in ones own name and on ones own behalf, to exclude the
world at large, including the owner with the paper title... so far as is
reasonably practicable and so far as the processes of the law will allow:
Powell v Mcfarlane (1979)
o Intention:
There must be an intention to possess. ie to exclude the whole world from
the land including the true owner and to have a degree of exclusive
physical control of the land in question (Bills v Fernandez-Gonzales)
Open: possession would need to be noticed by a documentary owner
reasonably careful of his interests
Peaceful: Force can be used to gain possession but not to maintain it.
Permission: There can be no adverse possession if permission was given
by the documentary owner and thus time will not run unless it is revoked
(where time will begin to run from the revocation). If permission is given
during the limitation period then time stops
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Limitation Act NSW 1969

S 54 (4) states that an acknowledgment by the plaintiff must be in writing and signed by the
maker otherwise it will have no effect.
S 27 (2) Limitation period: 12 years from when new possessor commencing adverse
possession
Relevant Factors:
Shaw v Garbutt
o Enclosure of the land (ie putting up a fence). Strongest possible evidence
o Working on the property.
o Ousting all others from the land
o Intention of actual payment of rates and taxes for the land
o Can survive between long intervals of non use.

Seddon v Smith
o Erecting No tesspassing sign on land

Mulcahy v Curramore
o Factual possession present control of the thing, exclusion of others
Building on the property
Occupying a property or residing on it
Fencing the property
Allowing cattle to ageist on it

Newington v Windeyer
o Maintaining trees and gardens
o Paying rates and taxes
o Blocking access so other cannot use land

Possession must be inconsistent with the purpose for which the documentary owner
and titleholder intended Leigh v Jack

Abandoning possession

Time ceases to run if the adverse possessor abandons possession.

Mere non use is not conclusive (Nicholas v Andrew)
If abandonment occurs before limitation period documentary holder cannot regain
possession as title is extinguished (Mulcahy v Curramore)
Abandonment after the limitation period: has a right over land enforceable against the
whole world, whether or not possession continues (Allen v Roughley (1955))

Recovery by Documentary aka first/actual Owner

Within the limitation period the documentary owner must resume possession with the
intention of possessing. This is usually done by turning out the possessor (Randal v
Stevens). Commencing court proceedings usually stops time running or removal of
fences, structures or entry and survey of the property over several days (Hodgson v
Thompson (1906))
Even if repossession lasts for a very short period of time, time will still run from the
beginning.
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The fact that the adverse possessors threats of violence prevent the documentary
owner from physically retaking possession does not excuse less than physical retaking,
the alternative is to take court proceedings: Shaw v Garbutt (1996)
Onus proving acquisition lies on possessor on the balance if probabilities: Cawthorne v
Thomas (1993)

Limitation of actions

Limitations Act NSW 1969

o Chattels: s 14(1)(b), s 21 Six years
o Land: s 27(2) Twelve years
o Crown Land: s 27(1); s 170 Crown Lands Act 1989 (NSW) Thirty years
(S 170 of the Crown Lands Act removes most crown land from the
operation of adverse possession)

12 years starts to tick when the documentary owner cause of action begins to accrue.
Where another person begins to take possession of the land adversely from the
documentary owner

An adverse possessor cannot assign, give or devise away his or her possessory
interest.
Special Problems

Trust Property
o An adverse possessor (X) cannot take possession from A against the holder of
future interest (B): s 31
o When A dies and B has the interest, the limitation period will then begin. The
clock must re-start against the tenant in remainder on the death of the life
tenant
o Property held on trust is subject to adverse possession: s 47. The beneficiary
holding future interests may never claim property

Disability
o If documentary owner is under a disability, the running of the limitation period is
suspended during the disability. Disability includes under 18, reason by disease,
impairment or physical or mental condition, restraint or war: s 52(1) of the
Limitations Act NSW 1969

Fraud
o Time does not begin to run where the documentary title owners cause of action
or the identity of the adverse possession is fraudulently concealed: s 55
Limitations Act. Fraud requires consciousness that what is being done is wrong:
Seymour v Seymour (1996) Period also extended by an extra 3 years if the
disability would result in time running out.

Series of possessors:
o

It is possible to combine the period of occupation of a series of trespassers

who do not derive title from each other provided the possession is
continuous and adverse in nature. SHAW V GARBUTT

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Limitation period may be joined by a number of different, unrelated adverse

possessions provided the period is proven to be continuous and uninterrupted
(eg. By members of the family)
-A has been in adverse possession of Bs land for 7 yrs and dies, leaving her
possessory interest to C; C who immediately goes onto possession, may add As
adverse possessory period to her own.
- This means Bs title would be extinguished after a further 5 yrs

Where a series of adverse possessors claim through each other the possessory
title will be acquired by the person in possession when the statutory period
expires.

If there are a series of independent trespassers whose cumulative length of their

possession exceeds the limitation period. The documentary owners title is
extinguished (s 38(2) Limitation Act). The final trespasser who is in possession
when the documentary owners title is extinguished will have a title good against
all the world except the previous trespassers.

o
There is an ultimate statute bar of 30 years (s51).

Adverse possession of leasehold land

A tenant while in possession under a lease, cannot acquire a title by adverse possession
against the landlord. This is either because the tenant is there with the landlords
permission and so the possession is not adverse, or because a tenant is not permitted
to deny the landlords title (Tower Hamlets LBC v Barrett [2006])

Whittlsea City Council v Abbatangelo

Family had land surrounding a block of land that was not theirs but they utilized anyway + put
fences had animals etc for the extent of the limitation period. Council tried to claim the land,
however, Abbatangelos attempted to claim adverse possession
Held: Abbatangelos had exercised enough control of the land to be in possession
- Intent to possess, mere personal convenience will not constitute intention
- Fencing of land and payment of rates suggests intention to possess. Enclosure is the
strongest possible evidence of adverse possession
- Possession cannot be pursuant to a licence, lease or other grant
- Occupation by residence/ building on the property
- Leasing the property to others
- Planting trees, crops, livestock, employment of person to mow lawns
Sunny Corporation Pty Ltd v Elkayess Nominees Pty Ltd (2006)
Kelly family owned land adjacent to the disputed land. Land was actually owned by a
neighbour. 1972 Kelly acquired a licence from water authority to use the disputed land despite
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the fact they did not own the land. Kelly thought the licence was a lease and ran cattle on the
land
Held: Found that the Kelly family had sufficient intention to possess and factual possession
through various acts. This was not withstanding that Kelly had thought the exclusive
possession of the land was due to a lease.

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Lesson Plan #4
Legal Estates and Interests
Doctrine of Tenures and Estates
Estates:
Life Estate: An estate which ends on the holders death

Estate in Fee: Estate that descends to the holders heir.

o Unrestricted: simple.
o Restricted: tailed (no longer exists, becomes a fee simple).

Reversions and Remainders:

Reversions: a future right to possession of land. An interest remaining in a person who

has granted away less than the whole of his interest in the land. ie A grants a life estate
to B, and on Bs death the land will revert back to A. During this period A does not have
seisin (Possession of a freehold estate in land). During this period A has an estate in fee
simple in reversion and B has a life estate.

Remainders: For example, A grants a life estate to B and the Fee simple to X. Xs estate
cannot be classed as a reversion as this implies tenure. And so it is called a remainder,
because on Bs death the land remains away from A instead of reverting to A. If the fee
simple and the lesser grant are created via the same instrument then b would receive a
life estate and X receives As reversion.

Leasehold Interests:

A leasehold interest is of certain duration. It expires on a given date. A term is set

beyond which it cannot extend.

Distinctions:
Under leaseholds the lessee has possession but was not seised. Seisin is retained by
the freeholder (lessor).

Fixed Term
Periodic Term
Tenancy at Will
Tenancy at Sufferance

The Absolute Fee Simple

This is the closest thing to absolute ownership.
Duration:
Unrestricted (lasts forever). Will come to an end when bona vacenti. If there is no will or
heirs then and the closest relative is less than a cousin the land reverts back to the
crown.
Alienable inter vivos (during life):
Yes (s 47 Conveyancing Act)
Devisable by Will (devise):
Yes. If a gift of real property it is known as a devise. Can also be divided in a will.
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Words of limitation:
Must contain the word heirs otherwise the livery of seisin only created a life estate.
Eg. To A and his heirs. s 47(1) of the Conveyancing Act allows to merely use the
words in fee or in fee simple or to A as long as there is no contrary intention by
the grantor.
Determinable and Defeasiable Fees:
Determinably Fee Simple (condition precedent):
o A fee simple that will automatically come to an end on the occurrence of a
specified event that may or may not occur. Eg. A fee simple for as long as the
land continues to be used for school purposes. When this occurs the land
automatically reverts back to grantor or his successors.

Defeasible Fee Simple (condition subsequent):

o fee simple qualified by a super added condition of defeasance. Eg. To A and his
heirs, but if the land ceases to be used as a school then it shall return to the
grantor and his heirs. If this occurs the grantor has the right to enter the land
and bring the interest of the fee simple holder to an end, otherwise it will
continue as it is not automatic.

The Fee Tail (no longer exists)

Duration:
o As long as there are heirs of the designated type then the fee tail will continue. It
is restricted to lineal descendants of the original donee.
o If that group became extinct then the estate tail came to an end
Variations:
o tail male, tail female, general tail (as long as grantee had children then would
pass), special tail (children must have a specified partner and must be their first)
Alienable inter vivos:
o Tenant tail can create a life estate
Divisible by will (devise):
o No, automatically passed to the heir of designated type.
Words of limitation:
o To create an estate tail the word heirs as well as words of procreation needed
to be used. To A and the heirs of his body and to A and the heirs begotten by
her would pass a fee tail to A.
No longer exists:
o In NSW. Will automatically convert to a Fee Simple under s 19(1) Conveyancing
Act.
Life Estate:
This is not an estate if inheritance
Upon death of the occupier of a life estate, possession passes to the grantor or tenant of
remainder
Ordinary life estate Sa vie
o To A for life (determinable by death)
Pur Autre Vie:
o Measure of occupancy is based on another person rather than the tenant to A
during the life of B
Dower:
o Widow to receive one third of husbands estate is fee simple or fee tail and had to
be in sole possession
Cutesy:
o Widower entitled to whole of wifes property
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Disposition by will
Succession Act 2006 s 38:
o a disposition of real property to a person without words of limitation is to be
construed as passing the whole of the estate or interest of the testator in that
property to that person.
Alienable inter vivos:
Yes, but under s 47 of Conveyancing Act must use To A for life or any other words
showing such an intention. If there is no limitation to life it will be considered a Fee
Simple.

Future Interests
Title immediately vested but possession deferred until a future date
Not a freehold estate as there is no immediate right to possession
Future interest exists to determine what will happen to the property once life estate
ceases:
By Means of revisionary or remainder interests

Doctrine of Wastes
The property must be protected and maintained in a proper manner for later interest
holders. This is to reconcile the conflicting interests of life tenant and remainderman
in circumstances where the activity (or inactivity) of the life tenant threaten to harm
the land.

Waste denotes any act that permanently alters the land. Usually implies deterioration
but may imply improvements. Under s 32 Imperial Acts Application Act the tenant may
be given special permission to commit waste. Categories of Waste:
o Permissive waste the life tenant permits property to decay
o Voluntary waste positive deliberate acts result in harm of property i.e. opening
up a mine or logging.
o Equitable Waste: although at common law is allowed to commit, at equity they
will be restrained as equity will not permit a person to exercise a legal right
unconscientiously as that abuses the legal right. Under s 9 of Conveyancing Act
can be exempted if the instrument conferring the life interest unequivocally
states so.
o Ameliorating Waste: acts that improve the land but where the whole character
of the premises is in jeopardy. Eg demolish a house.

Enjoyment by Life Tenant

Entitled to income from the property

Entitled to possession they may lease out the property
Emblements: allows a deceased life tenants legal personal representative (or the life
tenant personally when pur autre vie) to enter the land after the life estate ends and
reap the crops that the life tenant had sown:
o Applies only to cultivated crops such as corn, hemp, flax or potatoes which are
ready to harvest in 12 months.
o Applies only when life estate ends of the life tenants fault
o Applies only to crops sown by the life tenant.
Timber
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Where a timber estate the life tenant is entitled to the profits from the timber.
Entitled to Estovers such as for fuelling or housing. Must do so in a reasonably
manner.
o Unless timber estate the trees are regarded as part of the inheritance and not for
the enjoyment of the life tenant.
A life tenant is permitted to remove fixtures that he or she has attached for trade,
ornamental or domestic purposes. After the life tenants death, the right can be
exercised by the life tenants personal representatives.
o
o

Formal Requirements:
Under Old System land this must be done by Deed (otherwise it may only create an
equitable interest): ss 23B, 38 Conveyancing Act NSW 1919
o Must be on paper
o Sealed (CL) (s 38(3) Conveyancing Act NSW 1919)
o Signed. (s 38 (1) Conveyancing Act NSW 1919)
o Witnessed by a person not party to the deed. (s 38 (1) Conveyancing Act NSW
1919)
o Deemed to be sealed if expressed to (signed, sealed and delivered).
o Delivered (when it is intended to be operative)
o Need not be indented (s 38 (2) Conveyancing Act NSW 1919)
Substantive requirements
o Intention to confer exclusive possession for relevant time
o Statutory presumptions regarding intended duration, (creates fee simple) s 47
Conveyancing Act NSW 1919, s 24 Wills Probate and Administration Act 1898, s
36 Succession Act
Formal requirements
o Prior to statutory amendments correct words of limitation
o Inter vivos: deed, s 23 B Conveyancing Act NSW 1919
o Testamentary; will, s 27 Wills Probate and Administration Act 1898, s 6
Succession Act

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Lesson Plan #5
The Origin and Nature of Equitable Interests
Trust

There are two distinct jurisdictional origins of property rights: common law and equity
Therefore a party can have a legal or equitable interest
Legal Interest
o A legal interest in land is recognised by common law, and must be created and
transferred by deed to be effective at law. See Above
Equitable Interest
o Occurs when the common law is either deficient or provides no remedy.
o When the equities are equal, the first in time prevails.
o It will not assist a volunteer, and looks on that as done which ought to be done.
o Equity will not allow The Statute of Frauds to be used as an instrument of fraud.
o Remedies include specific performance, injunction, equitable compensation,
equitable damages, account of profits and equitable proprietary remedies.
o Equitable interests are recognised by the courts of chancery, but are better
understood as a jurisdiction. This allows equity to operate as a forum in which
certain types of claims will be heard and certain types of relief granted.
o Commissioner of Stamp Duties (Qld) v Livingstone [1965] AC 694 at 712
Equity in fact calls into existence and protects equitable rights and
interests in property only where their recognition has been found to be
required in order to give effect to its doctrines
o Creation and transfer of interests in land in equity trusts
Trusts are a relationship where the trustee holds property (real or
personal) for a beneficiary on certain conditions.

Enforceability of contract for the sale of land

Contract for sale in Land

o
o
o
o
o
o

Creation of transfer of land (to be effective in equity) (CA, s.23):

S 54A (1) Conveyancing Act 1919 follows the State of Frauds 1677 in the need
for a memorandum; aka MUST BE IN WRITING
description of the land
Identification of the parties
Reference to the transaction
Non incorporation of notes
Unless the document id signed by the defendant
An express or implies reference in that document to the second
A sufficiently complete memorandum when read together
Only possible for purchaser to have interest in property is a grant a
specific performance may be issued on breach

ANZ Banking Group Ltd v Widin

A mortgage document which did not include any details of the title was held to be an
insufficient memorandum under s.54A.

Doctrine of part performance: - AS PER 23E(d) of the Conveyancing Act

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Allows for enforcement of an oral contract for the sale of an interest in land when
the contract has been sufficiently acted up by the party seeking to enforce the
contract.
o Sufficient that the acts unequivocally and in their own nature were referable to
some contract of the general nature of that alleged.
o The acts did not have to be compelled by the contract but merely pursuant to it.
o Maddison v Alderson (1883) an act of a party that performs to his or her
detriment and the act must unequivocally refer to the alleged agreement.
o

EXAMPLES OF PART PERFORMANCE

Mere payment of purchase money is not sufficient (Britain v Rossiter 1882), but
payment of a deposit and forwarding of a deed of transfer is part performance
(Steadman v Steadman)
Taking possession of new lease premises is part performance (Kingswood Estate v
Anderson)
Making improvement is part performance (McBride v Sandland).
The owners of land offered to transfer it to their daughter and son-in-law who paid
off the mortgage, the mere act of taking possession was enough to establish part
performance (Regent v Millett)
Deposit of title deeds by the mortgagor counts as part performance by both

Doctrine of Proprietary Estoppel (Waltons Stores v

Maher):
o

Where the title holder induces another person to perform certain acts which
involve detriment in the belief that he/she will acquire rights over the property:
The title holders rights may be held in equity to be
restricted or extinguished in favour of the other person.

An equity arises in favour of the other person, the nature and extent of the
equity depending on the circumstances. Must establish 3 elements:

1. A representation is made by one person.

2. A second person relies on that representation to act to their detriment.
3. It wuld be unconscionable for the first party to deny the effect of their
representation.

Examples of Estoppel
Inwards v Baker 1965
A father made an oral offer to his son of staying in a parcel of land on which to build a house.
The son should have a life interest and could stay on the land as long as he desired to live.
Giumelli v Giumelli (1998)

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The son worked on an orchard property belonging to his parents. The son received no money
apart from pocket money and keep. Development of a property and working without wages,
not accepting work elsewhere give rise to Estoppel.
The son is entitled to equitable relief. The equity was created by the promise of the
parents. An expectation
had been created in the son that his work on the farm without the receipt of wages would be
compensated
by the subdivision of the orchard. The parents were ordered to compensate the son.

Specific Enforceable Contract (Lysaght v Edwards):

o

o
o
o
o
o

Where there is a valid contract (which is a contract sufficient in form and

substance so that there is no ground whatsoever for setting it aside as between
the vendor and the purchaser) and the purchase money is not paid the contract
is still valid and binding.
Under equity, it makes the purchase money a part of the personal estate of the
vendor (seller) and it makes the land a part of the real estate of the vendee
(purchaser).
Ownership of the land has changed in equity. The vendor is a constructive
trustee for the vendee from the moment the contract is entered into.
He has no rights apart from his right to the purchase money and to rent.
However, no equitable proprietary interest exists when there are conditions that
relate to the existence of the contract (e.g. council approval).
Money being classed as performance of obligations under the contract
(McWilliam v McWilliams Wines).

Auctions
o Contract is merely oral at the time the hammer falls so therefore this is no part
performance or equitable interest.
o S54 A Conveyancing Act 1919 applies the auction. Right to ensure that an oral
contract becomes a written one on the intervention of the auctioneer on the
event of either party refusing to proceed.
o The doctrine of part performance allows the enforcement of an oral contract for
the sale of an interest in land when the contact has been sufficiently acted upon
by the party seeking to enforce the contract.
It is at the moment you have a valid contract for sale the vendor becomes in equity a
trustee for the purchaser, the vendor having a right to the purchase money, a charge or
lien on the estate for the security of that purchase money, and a right to retain
possession of the estate until the purchase money is paid in the absence of express
contract as to the time of delivering possession. Walsh v Lonsdale

TRUSTS

Equitable
exist
with the

Express trusts depend on an

express intent;
Resulting trusts on presumed
intent;
Constructive trusts is imposed
to remedy
an unconscionable situation.

estates
simultaneously
legal estate
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and not as a substitute for part of it. Under trust, the interest is essentially the
(equitable) right to compel the trustees to hold and use their legal rights in
accordance with the terms of the trust. Legal interests created when all formalities
required have been followed.
Types of Trusts:

Express Trusts (actual intention) Formality 23C (1) Conveyancing Act

23C Instruments required to be in writing
(1) Subject to the provisions of this Act with respect to the creation of interests in land by
parol:
(a) no interest in land can be created or disposed of except by writing signed by the
person creating or conveying the same, or by the persons agent thereunto lawfully
authorised in writing, or by will, or by operation of law,
(b) a declaration of trust respecting any land or any interest therein must be
manifested and proved by some writing signed by some person who is able to declare
such trust or by the persons will,
(c) a disposition of an equitable interest or trust subsisting at the time of the
disposition, must be in writing signed by the person disposing of the same or by the
persons will, or by the persons agent thereunto lawfully authorised in writing.
o

Arises where the parties intend a separation of the legal and equitable
proprietary interests. Eg. To A and his heirs to the use of B and his heirs (A:
legal fee simple, B: equitable fee simple) or to A and his heirs to the use of B for
life (A: legal fee simple, B: equitable life estate).
No particular form of words, creator of trust must express a clear intention to
create it and meets documentary formalities. Can be made through:
Declaration:

Person seeking trust continues to own property but declares that

they are holding it as trustee for a stated beneficiary.

If valid, the owner is now trustee with a legal interest while the
beneficiary has an equitable interest that is good against the whole
world.
Settlement:

Owner transfers the property to a trustee on condition that it be

held on trust for beneficiaries, and relinquishes any rights over
property.

Non-Express Trusts either resulting or constructive

23C(2) NO FORMALITY REQUIRED (AKA NONE OF
23C(1) ABOVE)
o

Resulting Trusts (presumed intention)

Arises by way of presumption of law from certain facts and are rebuttable.
There will be no resulting trust if parties clearly indicate that they did not
want a trust to come into operation. s 23C(2) Conveyancing Act 1919
Page 18 of 55

A resulting trust arises when the legal title to property is transferred to

someone but that person is not intended to be the beneficial owner of the
property.
Person is intended to hold for the transfer or for a person who has
advanced the money for the purchase or for a third party.
A resulting trust does not require written evidence either because of an
express exception to the Statute of Frauds or an exception implied on the
necessity to overcome fraud.
Needs to be an intention
Rebutted when:

When there is an intention by the party contributing the whole

purchase or when unequal contribution a common intention that it
was a gift.

Purchase price resulting trust:

Where distribution of legal title doesnt reflect contributions to

purchase price, then there will be a presumption of resulting trust or
presumption of advancement
Presumption of resulting trust
o where parties arent in a requisite relationship (considered
strangers) then beneficial title is presumed to reflect
contributions to the purchase price. If the presumption is
rebutted then beneficial title reflects legal title and there is
no trust
o Calverly v Green look at whats been put up front
Law is clear that a resulting trust arises in the favour of the person
providing the consideration.
Under the presumption of a resulting trust the parties held on trust
themselves in proportion to their original contributions to the price.
Calverley v Green
The presumption of a resulting trust arises from provision of the
purchase price by someone other than the transferee or by unequal
contributions between the joint owners.
These contributions are assessed at the time of purchase. The
presumption of a resulting trust may be rebutted by evidence of
intention to make a gift, but this intention must be that of the party
contributing the whole of the purchase price or in the case of
unequal contributions, their common and revealed intention.
Intention is judged at the time of purchase.
Examples:
o When O grants a legal estate to A but B provides the funds, A
will hold on trust for B.
o Where O grants a legal estate to A + B but C provides the
funds, A + B will hold on trust for C.
o O grants legal estate to A + B (who have equal shares) but A
pays 40% and B pays 60%. A + B hold legal title as tenants in
common and hold in trust for A + B I shares of 40:60.
o O grants a legal estate to A + B (who have equal shares) but
A pays 25% and C pays 75%. A + B hold legal title as tenants
in common hold in trust for A + C in shares of 25:75
Page 19 of 55

Presumption of advancement:

where parties are in a requisite relationship

o Husband to wife or fiance
o Father to child now parent to child due to Brown v Brown
and Nelson v Nelson
o Nelson v Henderson endorsed Mother to child but no case on
Wife to Husband.
This is where there is a prescribed relationship between the parties
where equity assumes that the proper inference is the contrary of
that giving rise to an implied or resulting trust. In such a
circumstance a trust does not arise but rather one party has
intended to benefit the other and that the latter was intended to
have both the beneficial and legal ownership of the property in
question. This can be rebutted by contrary evidence.
Beneficial title is presumed to reflect legal title and there is no trust.
Court presumes what is intended is a gift. Where presumption is
rebutted, then beneficial title reflects contributions to the purchase
price and there is a resulting trust

Constructive Trusts

Lysaght v Edwards
equitable doctrine of conversion, court imposes trust irrespective of intention
Common intention where the holder of legal title (trustee) in conjunction
with non-owner demonstrate common intention that the non-owner will
receive an interest
Unconscionable assertion of legal interests - where parties failed to
address a particular question of property rights, or if they did, they
intended a different distribution of rights from those which a commonintention constructive trust would have given them
A constructive trust arises whenever a trust must be imposed by the
courts to do justice between the parties.
It is a remedial device and operates independently of intention.
Because it operates to prevent fraud it is outside the writing requirement.
Traditionally it has been applied where an existing trustee makes a profit
out of the trust but the circumstances in which a trust will be imposed
have not been defined.
Equity imposes to preclude the retention or assertion of beneficial
ownership of property to the extent that such retention or assertion would
be contrary to equitable principle (Muschinski v Dodds).
The imposition of a constructive trust is that a refusal to recognize the
existence of the equitable interest amount to unconscionable conduct and
that the trust is imposed as a remedy to circumvent that unconscionable
conduct (Baumgartner).

Baumgartner v Baumgartner (1987) 164 CLR 137 de facto

couple bought house in mans name, both shared costs at ratio of
55:45 (man:woman). HC held that there was no common intention
that the woman would have a beneficial interest in the property
but where unconscionable conduct arises, the imposition of a
constructive trust my be warranted. If parties pool their earnings, it
is proper to regard the arrangement...as one which was designed to
ensure that their earnings would be expended for purposes of their
joint relationship and for their mutual security and benefit (149). It
was inappropriate to consider the womans contribution as a gift
Page 20 of 55

unconscionable use of mans legal title to deny her interest. Court

held that there was a constructive trust on terms that they had
equitable interests proportionate to their respective contributions
55:45.
Effect of Equitable Interest:
The beneficiarys interest in the trust property is essentially the right to compel the
trustees to hold and use their legal rights in accordance with the terms of the trust.
Equitable fees simple can be cut up into life estates, fees tail, remainder and reversions
in the same way as their legal counterparts.
Family Relationships:
Family Law Act (Cth): This act now deals with the break-up of property on the
dissolution of a marriage as classed under the Act.
Property (Relationships) Act (NSW): This act now deals with the break-up of property of
defacto relationships (which now included same sex couples) as defined under the Act.
In both of these cases legislative prevention has ensured that property disputes
between particular persons are not resolved according to general and legal equitable
principles of property.
Claims between Married people
o Legislation provide an equality in law between men and women but the social
context within which the relevant issues arose meant that the concept of
separation of property very often did not result in a equal division of property
upon separation.
Factors to be taken into account in determining property disputes:
Financial and non-financial contributions made directly or indirectly
to the acquisition, conservation or improvement of the properties
Contribution made by a party to the marriage to the welfare of the
family including any contribution in the capacity as a home maker
or parent
Number of prospective maintenance elements the age and state
of health of the parties, general needs of the parties, duration of
marriage and extent to which it has effected the respective earning
capacities etc.
Parties future entitlement to superannuation
Claims Between Unmarried Partners
o Property disputes arise between parties in a de facto relationship, parties to
homosexual relationships and other family circumstances.
Recent developments in the area of constructive trusts have increased the
range of circumstances in which the person without legal title may claim
an equitable interest. Availability of a remedy is entirely dependant on the
general rules of common law and equity.
Legislation has now been introduced in all jurisdictions and allows for an
application for the division of property an in some cases allows for limited
maintenance applications and authorizes the parties to enter a binding
cohabitation and separation contracts relating to the financial matters
between them.
Transfer to a Volunteer:
A simple transfer of land from one party to another without any consideration being
provided by the transferee would appear to be such a common situation that the
relevant legal principles should be well established.
Issue in this case is whether there is presumption against a gift. A presumption against
a gift leaves the beneficial ownership with the transferor: the transferee acquires legal
title subject to a trust in favour of the transferor.
A transfer of land to a stranger without any consideration and without any expression of
consideration, and in the absence of any evidence of intention, passes a legal estate
subject to a resulting trust in favour of the transferor.
Page 21 of 55

See s 44(1) Conveyancing Act 1919

Page 22 of 55

Lesson Plan #6
Topic: Conditional Transfers and Future
Interests
Conditions Subsequent, Conditions Precedent and Determinable Interests

Vested and Conditional Estates

Vested Remainder Estates Future Interest IMMUNE FROM RULES AGAINST
PERPETUTIES
It will exist where created by the grantor to vest upon the expiration of the life estate.
E.g. X (grandfather): To Y (son) for life, then to Z (grandson) in fee simple
Y acquires a life estate which is vested in possession.
Z acquires a fee simple remainder which is vested in interest
(possession deferred until Ys death).
Contingent Remainder Estates Determinable and Conditional interests SUBJECT
TO THE RULE AGAINST PERPETUTIES
A remainder estate can be made contingent upon the happening of a particular event.
All estates are capable of being contingent
E.g. Grandfather X confers a life estate to his son Y for life, then to grandsons, Z, in fee
simple provided Z has reached 21 years of age and has worked on the land for 2
years.
Until all the conditions are complied with, Z will not have
vested interest but merely the possibility of an estate.
Once the conditions are complied with, title will vest but the
possession will only vest when the previous estate expires
(Ys death).

Page 23 of 55

EXAMPLES
X makes the following grant:

to A for life

A holds a life estate vested in possession.

X has a fee simple in reversion vested in interest but not in possession.
When A dies, the interest reverts back to X or his heirs.

to C for life, then to D in fee simple

C has a life estate vested in possession.

D has fee simple vested in interest, but not in possession (deferred till C dies).
If D die before C, then his (future) interest will pass to his heirs.

to E for life, then to F for life

E has a life estate vested in possession.

F has a life estate a remainder interest (vested in interest but becomes vested in
possession when E dies).
X has a fee simple in reversion.

to H for life, remainder to J in fee simple provided J reaches 21

H has a life interest vested in possession.

J has a remainder interest attached with a condition (called a contingent interest until
J reaches 21).
J will take the interest (vested in interest) when he turn 21 and will be vested in
possession when H dies.

to K for life, then to L for life on reaching 18 for his life

K takes a life estate vested in possession.

L takes a remainder life interest. Ls interest is contingent until he reaches 18, then it
becomes vested in interest (but not in possession).
On L death, the interest reverts back to X.

To my husband for life, and then to my children who attain the age of 18 in fee
simple in equal shares

The husband takes a present life estate (vested in possession and interest).
The children take a contingent remainder interest in fee simple in equal shares (not
vested in possession and interest).
The first child, who reaches 18, takes solely the remainder interest, but not vested in
possession till the husband dies.
When the other children reach 18, the eldest child will be

DETERMINABLE AND CONDITIONAL INTERESTS

Page 24 of 55

The grantor may impose limits on the duration of the estate, by reference to the occurrence
of some event which might or might not occur.
Limits that are contrary to public policy (contra bonos mores) are void.
Nemo dat quod non habet: if A has a fee simple estate subject to one of these limits, A can
only give that limited estate.

CONDITION PRECEDENT Conditional fee simple

A requirement of the grantor which must be fulfilled
before the grantee receives an interest.
To B provided that he remains a barrister - a conditional fee
simple which takes effect immediately but if B is no longer a
barrister the grantor can reclaim the land.
Words used subject to, provided that, if, in the event that on, if, when, subject to,
provided that, on condition
Interest of grantor retains the interest until condition is met
Consequence of void condition real property, fail outright. If personal property the
interest takes effect absolutely (free of condition) unless it is bad in itself.
Grounds for holding a condition void
o Contrary to public policy Zapletel v Wright
o Uncertainty Re Lichtenstein
o Evidential uncertainty Re Tuck
o Repugnance to interest granted/restrain on alienation Re Mackay
Cannot deny the power to alienate i.e. cant sell the property or against public
policy i.e. to A as long as she converts to Catholicism - Trustees of Church of
the Diocese of Newcastle v Ebbeck 1960
Zapletel v Wright legal title 50% to man and woman, man had the purchase price. This
was rebutted as the man had intention for the woman to have a share, on condition that she
would continue to co-habit with him (condition subsequent???). Against public policy as it was
an immoral de facto relationship
Re Lichetenstein residuary estate
1. Wife for life absolutely remainder to family trust
2. Wife for life not re-marry, determined by solicitor remainder family trust
Gift defeasible by condition subsequent precise and distinct circumstances that will make
wife lose interest
Re Tuck - expert knowledge, third party approval. Solicitor didnt have expertise in
determining a de facto relationship. Test: can wife tell is actions will result in de facto
Re Mackay Company sold car to Mackay (hire purchase legislation) and they entered into a
contract with the company saying 1. Repay by instalments 2. Fetters on ownership 3.
Company could take car back on Mackays default.
M went bankrupt above restriction were void so company couldnt take car back e.g. insured
under company name and his, couldnt take it out of state, which is against rights of
ownership.

Condition Subsequent
Page 25 of 55

A requirement which, if not met in the future, will

terminate the interest.
To A in fee simple provided that he does not cease to reside in
Australia. N.B. The grantor may chose to ignore the condition and
property remains that of the grantee.
Words used but, if, provided that, on condition that
Interest of grantor right of re-entry, must be positively exercised. Until this right of reentry is exercised, the fee simple estate continues. This is where it differs from the
determinable fee estate.
Consequence of void condition grantees interest absolute condition severed

Determinable Interest DETERMINABLE FEE SIMPLE

ESTATE
estate continues until automatically terminated by the
occurrence of some specified determining event, upon
which the estate reverts to the grantor.
E.G. To A until he marries A determinable estate which will
revert to the grantor automatically when A marries.

Concept determining event sets the natural boundary of the interest Condition is
inherently involved in the creation of the interest
Words used while, for as long as, during, until
Interest of grantor possibility of reverter self executing
Consequence of void condition grantees interest fails
Specified event may or may not occur.
E.G. To A in fee simple until he ceases to reside in Australia
If the determinable event occurs, the land automatically reverts to the
grantor.
The interest granted passed to the grantors heirs if he dies. The interest could be
devised or assigned (WPAA, s.5, CA, s.50(1)).

Remainders and Reversions

Contingent Remainders
Remainders
o Vesting depends on the occurrence of some contingency, e.g. specified events
might have to occur or specified persons must be ascertained.
Example the grant of to A for life , with remainder to B in fee simple if B
attains the age of 21 and assume that at the date of the grant B is not
yet 21. The grantor has purported to dispose of the whole fee simple
interest in the land, but there is no person in whom the remainder can yet
vest.
Page 26 of 55

Note it is said that no interest arises until the contingency is fulfilled and
seisin is postponed.

Rules governing remainders:

No remainder may be granted in future unless supported by a prior particular estate
A remainder must vest at or before the termination of the prior particular estate
No remainder may take into effect by cutting short a prior particular estate
No remainder after a grant in fee simple.

Contingent interests RULES AGAINST PERPETUTIES

Rules evolved in order to protect the fundamental principle that land must be freely
alienable.
Any attempt to obstructing the right of inheritance (alienation) must be struck down.

The Perpetuities Act 1984 31 October 1984

Interests created on or after 31/10/84
Transitional period for wills
Perpetuity period of 80 years s 7 - 80 years from the date on which the settlement
creating the interest comes into operation.
Presumptive validity wait and see s 8
Age reduction s 9(1)
Class reduction subject to class closing rules s 9(4)
Possibilities of reverter subject to rule [if void, gift absolute] s 14

4 ELEMENTS
1. The
2. The
3. The
4. The

perpetuity period begins to run.

interest must vest.
length of the perpetuity period
wait-and-see rule.

1. The perpetuity period begins to run when the instrument takes effect: (The
Perpetuities Act, ss.3(2), 7(1))
A will the date of the testators death
Inter vivos the time the instrument comes into effect, e.g. a deed
is executed and delivered.
2. The interest must vest in the perpetuity period: - A - The person entitled to
the interest must be ascertained. B. - The interest must be ready to take
effect in possession, subject only to any prior interests. EXAMPLES
A - To A for life, remainder to As first son On the date the deed comes into
operation, A has no son. As life interest is vested; but the remainder to As
first son is contingent it will not vest until a son is born. In order to be valid,
As first son must be born within the perpetuity period (80 years).
B To A for life, remainder to As eldest daughter (B) if she attains 30 When
the testator dies, B has not attained 30. Bs interest is therefore contingent
and will vest if and when she attains 30. If B attains 30 before A dies, she
cannot take possession until A dies. But Bs interest is vested because it is
Page 27 of 55

ready to take effect in possession subject only to As life estate. B has to be

30 within 80 years after the testator dies after the deed executed.
3. 80 YEARS from the date on which the instrument comes into operation
SECTION 7
4. The wait-and-see rule - Under s.8 of the Perpetuities Act, an interest is not
invalid merely because of uncertainty from the outset whether the interest
necessarily will vest within the perpetuity period.
The interest is presumed valid and remains valid if it vests within the
perpetuity period.
If it does so vest, it remains valid; if it does not, it fails.

Rule applies:
o Executory interests,
o Legal interests (depends on s 44(2) of C.A.)
o Equitable interests.
When it begins to run: when the instrument that created the instrument comes into
operation.
Vesting: For an interest to vest it must satisfy 3 conditions:
1. The person or persons entitled to the interest must be ascertained;
2. the interest must be ready to take effect in possession, subject only to any prior
interests; and
3. in the case of a class gift, the fractional share to be taken by each member of the
class must be known within the perpetuity period.

Under s 8(1) an interest is treated as valid until such time (if any) as it becomes certain
that is must vest (if at all) beyond the perpetuity period.

Class Gifts

This is where there is a disposition to a class who are uncertain in number when the
limitation is created and who fall within a common classification and who take the
subject matter in shares proportionate to the number of members. Eg. To such of my
grandchildren as attain 30.

Class closing rules: a class capable of further increase is made to close as soon as a
member becomes entitled to call for distribution of his or her share. They are applied in
four situations:
1. Immediate class gift with no contingency: to the children of A (alive). If there is a
child in existence at that time then the class will close. If no, child class will not
close until no more children can be born (ie to include all members).
2. Immediate class gift subject to contingency: to the child of A (alive) who attains 21.
When the first child reaches 21 then the class closes and includes all those in
existence at the time. If not, it will stay open until a child reaches that age.
3. Future class gift with no contingency: to A (alive) for life, remainder to the children
of B (alive). When A dies and there are children of B then the class will close. If
there are no children on the death of A then the class will remain open until B dies
(ie no more children).
4. Future class gift subject to contingency: to A (alive) for life, remainder to those of
Bs children who attain 21. If prior to A dieing a child of B has attained 21 the class
will close on the death of A. If no child on As death then the class will close when
the first child reaches 21.
Page 28 of 55

S 9(4): Where it becomes apparent that the inclusion of a class member or potential
class member will cause a class gift to infringe the rule against perpetuities, that member
or potential member is excluded from the class. Eg. To the grandchildren of A. We would
wait-and-see for 80 years after the death of A (testator) and then exclude any children
born after the 80 years. May not need to resort to this due to the class closing rules.

Statutory Age Reduction: Under s 9(1) Where

a) A provision of a settlement creates an interest and the vesting of the interest
depends on the attainment by any person of a specified age; and
b) It becomes apparent that the provision would but for this subsection, infringe the
rule against perpetuities but that it would not infringe that rule if the specified age
had been a lesser age,
The interest shall, for all purposes, be treated as if, instead of its vesting depending
on the attainment be the person of the specified age, its vesting depending on the
attainment by the person of the greatest age which, if put in place of the specified
age, would save the provision from infringing the rule.
Take note of s 8(1) as this certainty of vesting outside the 80 year period may occur
before the 80 year period. In such a case you can wait-and-see no longer and the
interest fails. s 9(1) only applies when it is apparent that the interest will infringe the
rule against perpetuities unless a lower age is substituted. Also, s 10 requires the waitand-see provision (s 8(1)) to be applied before age reduction (s 9(1)). page 174-175.

Successive Interests:

Interests followed by void interest: to A for life, remainder to As eldest great-great

grandson. The failure of the gift to the eldest great-great grandson does not invalidate
the gift to A.

Interests following void interests: to A for life, remainder for life to any widow of A,
remainder for life to any husband that widow may marry, remainder to such of As
children as attain 21. The life estate to A is valid, but the reminder to any widow
and any husband may be void if it does not vest within 80 years (wait and see).
The gift to the children is valid even if the remainder to the widow and husband is
invalid. The children must be 21 of age within 80 years after the testator dies.

Page 29 of 55

Lesson Plan #7
Topic: Leases, Licences and Bailments
WEEK 1 CHARACTERISITICS OF A LEASE
LEASE
Leases is a personal, contractual agreement between an owner of land (landlord or lessor)
and a tenant (or a
lessee), whereby the owner agrees to transfer the right to exclusive possession in the land to
the tenant for a specific and definable period of time, in return for the payment of a
nominated rent.
Leases are governed by a contract, but confer proprietary rights.
Interest granted is the right in possession.
Leasehold Estate (less than freehold): The duration of these estates is certain, or
capable of being rendered certain.
The lessor does not have to be the owner, e.g. sub-lessor, holder of life estate. (Street v
Mountford)
)

LICENSE - A licence is merely legal permission for entry and does

not constitute an in rem interest.
LEASE - A lease confers the exclusive possession on the lessee to
exclude all other including the lessor.

Radaich v Smith
Windeyer J:
Whether a licence amounted to a lease was ultimately a
question of intention. If the parties intended to confer exclusive
possession then a lease must have been granted and the fact that
the agreement may have been described as something else could
not prevent it, in substance, from take effect as a lease.
LEASE
Confers exclusive Possession
Interest in Land
Lessor cannot enter leased premises

LISENCE
Permission to enter premises
A personal right
Licensor is not trespassing if entering
property

Substantive Requirements of Leasehold Interest

1. Legal right to exclusive possession of land;
2. Certainty of Term For a period (term) less than the term for which the landlord
hold the land;
o Term is certain or at least capable of being rendered certain, Commencement
date must be certain at the time of agreement OR capable of being rendered
certain prior to commencement of the lease.
o Maximum duration must be certain (Prudential Insurance case).
Does not apply to tenancies at will or at sufferance.
Page 30 of 55

3. The intention of giving the tenant an interest in the land as opposed to a mere
personal privilege.
4. Formality

1. Exclusive Possession

The right to use premises to the exclusion of all others, including the landlord.
Without exclusive possession is cannot be a lease (a legal interest) but may be a lesser
interest (a licence or an easement).
If there is exclusive possession, it is a lease even if it is not called as such.
Whether the transaction has been defined a lease (but not conclusive)
EXAMPLE An agreement to confer exclusive advertising space over parts of a roof
and exterior wall did constitute a lease as the lessee held general control over those
areas (Claude Neon Ltd v Melbourne and Metropolitan Board of Works (1969)

2. Certainty of Term

Commencing date:
a. The date on which the lease commences must be certain or capable of being
rendered certain before the lease takes effect.
b. Where no commencing date is expressed, one might be implied under the
general principles for implying terms into contracts.
c. The failure to specify a date of commencement (or a means to determine) will
result in a lease being rendered void.
Duration:
d. the maximum duration of a lease must be certain or capable of being
rendered certain before the lease takes effect.
e. If the maximum duration of a lease is certain, the possibility that the lease
may end at an earlier time (as yet unknown) does not render it void. Eg. A
lease for 20 years or sooner ending of the war is valid (Prudential Insurance)
General: If a lease is void due to uncertainty of term, but the tenant goes into
possession and begins to pay rent, a valid tenancy at will may arise under s 127
Conveyancing Act 1919. Leases cannot act retrospectively.
Expiration:
It is not possible to grant a perpetual lease.
The term must be ascertained with certainty.
can be determined by a firm date or a precise method to ascertain
the time (Prudential Assurance Co Ltd v London Residuary Body).

4. Formal Requirements

Legal leases
o
o

Deed s 23B of CA.

Oral or writing other than a deed s 23D(2) where:
Term & option does not exceed three years; and
be a market rent/best rent reasonably available without taking a
fine (premium)
Must give immediate right to possession.

Page 31 of 55

Equitable leases Marshall v Council of the Shire of Snowy River

(1995).
o
o

The equitable lease will have the same effect as a legal lease. The only
disadvantage would be, if the equitable lease interfered with other interests,
than the lease would be invalid.
s 23C(1) - No need for a deed but must be in writing, signed by the
landlord/agent who is authorised in writing.

(i) a sufficient note;

(ii) a memorandum of the agreement, or
(iii) acts of part performance (CA, s.54A)
Otherwise it will be a tenancy at will only (s 23D(1)) unless it can satisfy s
23D(1).
o Writing is not required for an equitable lease where there are sufficient
acts of part performance - going into actual possession of
premises pursuant to an agreement to grant a lease - Kingswood
Estate Co Ltd v Anderson (1963) (s 23E (d)). The acts must be
unequivocally and in their own nature referable to an agreement for lease
of the kind alleged, although they need not be referable to the very
agreement alleged.
o Acts of part performance (s54A, CA): going into actual possession of premises
pursuant to an agreement to grant a lease (Kingswood Estate Co Ltd v
Anderson (1963)), and paying rent
o

o
o

Must be an enforceable contract (s 54A of CA) to grant a lease + part

performance.
Must be a contract which equity would give specific performance equity
regards as done as what is ought to be done

(Walsh v Lonsdale)
o Where there is an ineffective lease it may be treated as an agreement to
grant a lease. Further, provided the parties agreement was for value and
was evidenced in writing (s52A(2)) OR supported by sufficient acts of part
performance (s 23E(d)) equity would decree specific performance of the
agreement, compelling a grant of a formal lease complying with the
formalities for creating a lease effective at common law. Until this time equity
by injunction would restrain the landowner from acting inconsistently with the
agreement.
o However, this equitable lease suffers from the problem of being defeated by
a bona fide legal interest. There must first be an agreement for the court to
grant specific performance.

Effect of non-compliance with formal requirements:

o The effect at common law is that the lease takes effect only at will (s 23D(1)
of CA), unless lease falls within exemption of s 23D(2) (see above) in which
case the lease takes effect according to its terms
Page 32 of 55

o The effect at equity is to order specific performance

Types of Tenancies Sufferance, at Will, Fixed Term,

Periodic
Tenancies at Sufferance
o

o
o

Arises where a person who entered into possession under a lawful right
remains in possession after that right ceases, and without either the assent
or dissent of the person entitled to the property. Most commonly occurs when
a tenant remains in possession after the tenancy has come to an end,
without landlords assent or dissent.
The landlord can eject a tenant at sufferance at any time, without prior notice
Natural Gas and Oil Corporation Ltd (in liq) v Byrne.
Assumes a lack of agreement between L and T only arises by operation of
law, doesnt create any obligation to pay rent, but T liable to claim for use
and occupation.

Tenancies at Will

Arises when a person, with owners consent, occupies land as tenant on

terms that either party may determine the tenancy at any time. May occur
through express agreement Hagee (London) Ltd v Erikson and Larson, but
usually occur through implication
Where a tenant holds over under an expired lease
o Have landlords consent but yet to pay rent on an agreed or periodic basis
Where a prospective tenant is let into possession
o Pending a concluded agreement for the grant of a lease
o Without yet having paid rent on an agreed or periodic basis
Where a purchaser under a contract of sale is allowed into possession
before completion
o Once rent is paid on a periodic basis, tenancy at will ceases and there arises
a periodic tenancy, except if parties intended a tenancy at will only. L and T
both have the right to terminate it at will, without prior notice
o

A tenancy at will is broken, by operation of law, if the:

Tenant commits waste against the property;
Tenant attempts to assign his tenancy;
Landlord transfers his interest in the property;
Landlord leases the property to another person;
Tenant or landlord dies.

Fixed-Term Lease
A lease expressly created to exist for a defined period of time (days, weeks, months or
years). Duration must be defined, certain and express. A long term fixed lease (300
years) may be transformed into a fee simple. (CA, s.134)

Periodic Leases:
o
o

Expressly or implied, it is renewed at the end of each interval, it can be

terminated with relevant notice to each period; week, month, 6 months.
Moore v Diamond (1929) where the fixed term leases exceeds one year, after
expiration a yearly periodic lease is presumed. OVERRULED BY CA s127.
Yearly tenancies should not be implied by the payment of rent and
that any tenancy which does not set out its duration will be
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presumed as a monthly tenancy at will by one month notice in

writing expiring at any time.

Tenencies for a term of years:

o Where a landlord who has already granted a lease grants another lease of the
same land to a different tenant for some or all of the term of the first lease.
Operates concurrently during overlap.T2, who has a lease of the reversion,
becomes the landlord of T1 and T2 is entitled to all the rent and the enforce
the covenants under the agreement. During this time L is deprived of the
rights that T2 now has. When the second lease ends T2 gains possession and
L becomes landlord.
Concurrent leases:
o created where a landlord who has granted a lease grants another lease of the
same land to a different tenant for some or all of the term of the 1 st lease.
The second lease does not deprive the tenant under the first lease of the
right to possession of the property, for the second lease is, in reality a lease
of the reversion.
Reversionary Leases:
o has two meanings, first meaning is a lease, granted now, but with the term to
commence in the future. The second meaning is a lease to commence when
some existing interest end, such as a lease to commence when the existing
lease ends.
o This is a lease to commence when some existing interest ends, that is a lease
in reversion as distinct from a lease in possession. This creates an existing
leasehold estate between landlord and tenant, not merely a set of
contractual rights and obligations.
o S 120a(3) allow for 21 years.
Tenancies by estoppels:
o Landlord having no title: this is where the landlord, who has not title to grant
a lease, grants a lease. The tenant is estopped from denying the landlords
title and the landlord is estopped from the denying the tenants title. There is
no lease but rather a tenancy which gives the parties and their successors
the rights and liabilities of a legal tenancy on the terms that they created. If
legal title is gained then the estoppel is fed and the tenant acquires a legal
tenancy.
o Estoppel by convention: where parties conduct themselves on the
assumption that lease exists between them and the detriment caused to one
if the other were allowed to depart from that assumption makes it
unconscionable to allow the departure.
o Equitable Estoppel (Waltons v Maher): Where a landlord induces in a
prospective tenant an assumption that a lease will be granted, and the
tenant acts to this detriment on that assumption, and to allow the landowner
to depart form that assumption would be unconscionable, then the landowner
will be estopped from denying the existence of a lease and vice versa.

The Rights and Duties of Landlord and Tenant

IMPLIED, STATUTORY AND EXPRESS
COVENANTS
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When there are no express terms in the deed, the covenants will be implied into the
lease:
If there is an express term, the express applies.

Lease Covenants

Give rights to landlord and tenant and the obligations on them [terms of
lease]. Commercial agreements last a long time.

o In a problem Q (express overrides

statute, Statute overrides Common Law)
o Express
o Implied

By statute Conveyancing Act

Common law
Express Covenants

o
o
o
o
o
o

Effect if implied s 74(2) CA, can negative, vary, extend

Overrides unless you cant contract out e.g. s 129 notice express (cant
contract out)
Where is this significant? E.g. statutory covenant to repair: s 84(1)b
Good and tenantable repair
Onerous on T
Doesnt take into account state of premises when possession gained

Covenants implied by common law

o To Tenant
Quiet Enjoyment Residential Tenancies Act 1987, s.22: As
the tenant has a right to possession during the term and thus
the landlord cannot substantially interfere with the tenants
exercise of that right. Applies to third parties if they are acting
on the landlords behalf. Requires an act or omission that is
deliberate of that is negligent in the sense that its
consequences were reasonably foreseeable E.G. The landlord is
liable if the lease (with another tenant) contained a clause that
the offending tenant not to cause a nuisance to any other
tenant. The landlord is liable if he does not enforce the
covenant and solve the plaintiffs problems. (Aussie Traveller
Pty Ltd v Marklea 1998)

Non derogation from grant : LL must not allow anything

inconsistent with the purposes for which the premises are
leased, unless this has been expressly/impliedly agreed to.
There is not need for complete frustration; the test is whether
the premises for practical purposes are to be fairly regarded as
having been rendered unfit. There is no breach where the
premises remain reasonably fit for practical purposes for their
intended use, even though less fit then before. The question is:
are the premises unfit from a reasonably point of view for the
purposes for which [they were] granted (Gordon v Lidcombe
Developments). LL must also take care of ancillary premises to
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allow proper enjoyment of the tenant (Hargroves) e.g. Not

making the tenants premises unfit or materially less fit for its
designated purpose - The landlord could not prevent the free
flow of air through the merchants drying sheds- The landlord
cannot stop the escalator service used to access - the rent
restaurant located on the sixth floor.

Reasonable habitability of furnished dwellings at

commencement of term 1) only applies to furnished dwelling
houses. 2) Applies only to condition of house when lease begins
3) only applies to the condition of the premises (house and
fixtures). Breach would allow termination of lease be tenant The
landlord breaches his duties if he does not let premises in a
habitable state (e.g. infested
with bugs Smith v Marrable 1843)

To Landlord
Use in tenant-like manner:(Warren v Keen). Additionally a tenant
cannot commit voluntary waste (positive acts of injury to the premises)
unless allowed by statute or by agreement with landlord. For tenancy at
will this will terminate the lease. Permissive waste (allowing the premises
to fall into disrepair) is also not allowed. Tenants are able to make
improvements to the premises with the landlords consent. The Landlord
cannot unreasonably withhold consent ( s 133B(2))

Delivery of possession to landlord at end of tenancy: tenant must

leave at end of tenancy as well as possession being restored to the
landlord. Ie, a landlord may seek damages for loss of rent and legal
expenses incurred in evicting a sub tenant

Cultivation in husband like manner (farms): the tenant of a farm

must cultivate the land in a good and husband-like manner according to
the custom of the country (the usage which is prevalent in the
neighbourhood where the land lies and which has subsisted for a
reasonably length of time).

COVENANTS BY STATUTE

Rent:
o s 84(1) CA the tenant must pay the rent reserved by the lease and must pay
it on time. The rent is to abate if the premises or part of them become unfit
for occupation due to fire, flood, lightning, storm or tempest
o Legal tender required
o Remedies for breach
Keep lease on foot and sue for rent as debt: no duty to mitigate
If repudiation, can terminate lease and sue for damages: obligation to
mitigate
o Doesnt include advance payment of rent usually express in lease
o Can tenant withhold rend for breach of landlords obligations?
Generally no
Exceptions:
Right of recoupment [T + L have mutual debts to each other usually
damages]
Legal set off
Equitable set off p 345
o Equitable set off for rent:
Page 36 of 55

Where the tenant is in arrears of rent, but has claim against the LL for the
LLs breach of a covenant under the lease, the tenant may be able to
invoke an equitable right to set off the LLs claim for arrears against the
tenants claim for damages.
The tenants claim against the LL just be so closely connected with the
landlords claim for rent that it would be unjust or inequitable for the LL to
proceed with that claim without giving credit for the tenants claim. The
court must decide that it would be manifestly unjust to allow the LL to
recover the rent in the face of the tenants claim.

Right of entry: s 85(1) CA

o 1)to enter and view the state of repair at a reasonable time of day and giving
two days notice.
o 2) To require the tenant to repair and in default to enter and repair
o 3) To enter to carry out the requirements of competent authorities or to make
structural repairs
o 4)To re-enter and terminate the lease for failure to pay rent of for breach of
some other covenant in the lease
o 5) Can contract out of these CA requirements be an express declaration.
Covenant to Repair
o The standard of repair is that the premises must be put into such repair as,
having regard to the age, character, and locality of the premises would make
them reasonably fir for the occupation of a reasonably-minded tenant of the
class who would be likely to take them (Proudfoot)
o When the lease obliges the LL to repair, but entitles the LL to pass the cost
on to the tenant, the standard of work that the LL can carry out at the
tenants expense cannot exceed that for which the tenant can reasonably be
expected to pay.
o Unless otherwise stated in the lease, the obligation to repair extend to the
replacement or repair of subsidiary parts of the premises but not to the
reconstructing of the whole or substantially the whole of the premises.
o If something new and beneficial is provided it is an improvement, but if
something is replaced because it has deteriorated it is a repair even if it is
better and more modern. Cannot change the character of the item.
o No need to repair an inherent defect (Graham v Markets Hotel)
o No obligation to repair for damage caused by fire, flood, lightning, storm or
tempest
o Fair wear is deterioration caused by the reasonably use of the premises. Fair
tear is deterioration caused by the ordinary operation of the forces of nature.
No obligation to repair such things
o Remedies for breach of repair:
Damages What will L get back? whichever is of lower value decrease
in value of reversion (diminution) or cost of repairs
s 133A CA regarding measure of damages
overrides C.L tenant like manner unless lease excludes s 84(1)
(b)

Tenants rights
1) To be given a report concerning the condition of residential premises at the
commencement of the
lease (RTA, s.8(4))
2) To be informed in advance of rent increases (RTA, s.45)
3) Exclusive possession and quiet enjoyment (RTA, s.22, CA, s.78)
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4) Make urgent repairs Up to $500 to be reimbursed by landlord within 14 days (RTA,

s.28(2))
5) Assign and sublet the lease with the landlords consent (RTA, s.35)

Tenants obligations
1) Pay rent (CA, s.84(1)(a)) - Rent must be paid on time (CA, s.84(1)). No advance payment
is required by statute but can be overridden by express covenants. Remedies for nonpayment of rent (Common law)
2)The landlord may sue for rent as it falls due no duty for the landlord to mitigate loss
(e.g. finding a new tenant)
3) The landlord may terminate the lease if nonpayment constitute a fundamental breach
(repudiation) the landlord has to mitigate the damages for loss of the lease
4) The tenant has no right to withhold rent for the landlord's breach (obligation to pay rent
is
independent from landlords other obligations), except:
Right of recoupment: the tenant has advanced money that
is the landlords obligation to pay such as repair expenses
The tenant must pay money properly, andThe landlord must
be given prior notice of disrepair.
Equitable set-off: a right to set-off the arrears against the
damages for the landlords breach of covenant under the
lease or other liabilities (Lee-Parker v Izzet 1971)Arrears of
rent against breach of repairing obligation (British Anzani
(Felixstowe) Ltd v International Marine Management (UK)
Ltd).
5) 2) Keep premises and yield them up in a state of good and tenantable repair (CA,
s.84(1)(b)) a duty of
care
USUAL COVENANTS

Most likely those from ss 84 and 85 of CA

o Applies where:
1) the parties agree to enter into a lease, sublease etc on the basis that
the usual covenants will apply; or
2) the parties agreement is silent as to what covenants are to apply. The
usual covenants cannot be applied in the face of the parties contrary
intention.
FIXTURES

The common law permits tenants to remove their fixtures that they had brought
onto the land, however they cannot remove them if they are so firmly fixed that
removal would destroy their essential character on value, or would substantially
damage the realty (called landlords fixtures). If a tenant removes LL fixtures then
they commit waste. Repairing the damage makes no difference.

EXPRESS COVENANTS

A lease may contain express covenants but if it silent on certain issues, the usual implied term
will be added.

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ASSIGNMENT
General rule The lessor and lessee can agree to almost
anything in a lease.
If no mention of rights to assign or sublet in the
agreement: The party may assign at will.
The lease may contain a covenant not assign or sublet
without consent.
Consent cannot be unreasonably withheld
(CA, s.132)

Transfer of Leaseholds and Reversions

What are Assignments and Subleases?

Assignment:
o

Where the whole of the tenants interest the lease is transferred. Parties are
assignor and assignee

Sublease:
o

A transfer less then the whole of the tenants interest in the lease. Parties are
sublessor and sublessee

Test:
o did the purported sublease create and interest that was certain to last as long as,
or longer than, the tenants own interest? If yes, it is an assignment, even though
intended as, and described as, a sublease. If no, it is a sublease.
Right to Assign or sublease
o Can be done for every leasehold interest except common law tenancy at
sufferance and tenancy at will (does not apply to statutory tenancy at will under
s 127 of CA). Any attempt to do so will terminate the tenants interest and
confers no interest on the purported assignee or sublessee.
Formalities
o Must be by deed and effective at law (s 23B), whether the term was created by
deed or writing or parol. To be effective in equity, mere writing will suffice (s 23C)
or sufficient acts of part performance. Under Walsh v Lonsdale an assignor and
assignee may be estopped from denying that there has been a valid assignment,
even though no deed or writing has been executed.
Covenants against assigning or Subleasing
o Absolute:

Page 39 of 55

completely forbids assigning or subleasing. The LL cannot be compelled to

consent no matter how unreasonably the refusion is; if he does consent
then he can add any conditions that he likes.
Qualified:
permits subject to landlords consent. Under s 133B(1)(a) of CA the LL
cannot unreasonably withhold consent, unless otherwise expressed Does
not apply to tenancies at will.
If the LL does withhold consent unreasonably the tenant can either:

1) proceed to assign without consent (having been careful to ask

initially) and take the risk in any proceedings; or

2) Before assigning the tenant can seek a declaration from the court
that the consent was withheld unreasonably
o In both cases the onus is on the tenant to prove that is was
unreasonable. LL is allowed to use any grounds that existed
on the day including ones that were found out subsequently.
Withholding consent 3 tests:
o Narrow test (Re Gibbs and Houlder Brothers and Co Ltds Lease): reasonableness
judged according to personality of proposed assignee or sublessee, or by
reference to effect proposed assignment or sublease will have on use or
occupation of premises
o Broad test (Bickel v Duke of Westminster): whether the landlords refusal is
unreasonable in all the circumstances (page 315 for Lord Denning)
o intermediate test: whether landlords refusal was designed to gain a collateral
advantage for landlord, an advantage not contemplated by lease
o

International Drilling Fluids (1986) a combination of the tests:

purpose of ability to withhold is to protect landlord from having premises
used or occupied undesirably
landlord cannot refuse on grounds unconnected with landlord/tenant
relationship
tenant bears onus of proving consent withheld unreasonably
landlord does not have to justify conclusions if they are conclusions a
reasonable person could have reached
reasonable for landlord to refuse consent because of the proposed use of
premises by proposed assignee
landlord need only consider their own interests
whether withholding was unreasonably is a question of fact

Landlord is not liable in damages for wrongfully withholding consent if the tenant
suffers damages.
Covenant against subleasing/assigning does not render sublease/assignment
ineffective. Unless LL elects to enforce a right of re entry the assignment or
sublease remains effective. May also apply for damages.

What Covenants are enforceable upon Assignment or Sublease?

Privity of Contract:
o exists between the original landlord and the original tenant, and so the
covenants between the lease are enforceable between them as a matter of
contract law. Can enforce even after they have disposed of their respective
interests
Privity of Estate:

Page 40 of 55

exists between parties who stand in the relationship of LL and tenant. Thus, it
exists between the original LL and the original tenant. Extends to persons who
succeed to the interests of the original parties.
Whether the Covenants are enforceable
1)Where privity of contract exists between the parties, the covenants are enforceable
as a matter of contract law
2) Where privity of estate exists between the parties the covenants are enforceable if
they touch and concern the land. In other words there must be a connection between
the covenant and the leased land a connection sufficiently close that, in defiance of
privity of contract, the covenant ought to travel with the land.
3) Where neither exist then the covenant cannot be enforced unless see page 322-323.
Running of Tenants covenants (Spencers Case)
Common Law
Burden of covenants
o The burden of a tenants covenant binds assignees of the lease if the covenant
touches and concerns the leased land
o Touches and concerns leased land means a covenant which inherently relates to
the land or to the way in which the land is used or if it affects the landlord in
their capacity as such and the tenant in thir capacity as such.
o s 70A(1) provided that a covenant relating to any land of the covenantor is
deemed to be made by the covenantor on behalf of himself and his successors in
title and has the effect as if such successors were expressed, even though the
subject matter may not be in existence when the covenant is made
o The original tenant is liable after the lease is assigned but assignees are only
liable for breaches that occurred while the lease was vested in them. LL can sue
both the tenant and the assignee (contract and estate respectively).
o The assignee of the lease can enforce against the LL all those LLs covenants
that touch and concern the land. That is the benefit of those covenants
passes to assignees of the lease
Equity:
o Equitable leases are not subject to these rules as privity of estate as it is a
common law rule.
o There can be no privity of estate between a landlord and a tenant where the
lease is equitable as it does not comply with the formal requirements for creating
a legal lease or must have entered and paid rent in circumstances which give
rise to lease at common law.
o Where there is a legal lease from the LL to Tenant and then the tenant assigns
the lease, in equity, to assignee there would be no privity of estate and the LLs
only remedy would be against the original tenant.
Running Of Landlords Covenants(i.e Assignment of reversion) (Spencers Case)
Common law

o s 117 deals with the running of the benefit of covenants when the reversion is
assigned
o As a result of s 117 assignor of reversion loses all right to the tenant for
breaches of covenant. This is true even where the breach occurred before the
assignment. However, the assignee may assign the original assignor the right to
enforce the covenant. For the covenants to run they must still touch and
concern the land. (328 text)
o s117(1) CA
Examples: rent and all benefits of lessees covenants are annexed to and
go with the reversion
Benefit of every condition of re-entry is annexed to and goes with the
reversion
s117(2) CA Benefit of condition of re-entry or forfeiture for breach of lease
can be enforced
o

Page 41 of 55

Benefit
s 118 CA
Burden of landlords covenant with reference to the subjectmatter of the lease (ie touch and concern the land) is annexed to
and runs with reversion and may be enforced by the tenant. LL is
not liable for breaches that occurred before the assignment
Equity: ss 117 and 118 apply to equitable leases evidenced in writing and thus
do not apply to oral leases.

Termination of Leases and Remedies

Forfeiture by Re-entry
o Landlord cannot re-enter and forfeit unless the lease allows or there is a
statutory right.
o If no express proviso then s 85(1)(d) of CA implies into the lease the right of a
landlord to re-enter and determine the tenants interest if rent is in arrears for
one month, or if the tenant defaults for two months in performing any stipulation
in the lease, or if the tenant fails to comply with a notice to repair.
o Procedure:
must show that breach has triggered right to exercise power.
Must not have waived the breach.
Must comply with procedural requirements of lease or statute; notice
under s129 CA.
Must actually exercise power by re-entering or serving a summons for
possession.
Normally tenants breach does not have to be fundamental to permit reentry.
o Repudiation/re entry:
Where their has been repudiation the landlord can either terminate under
contract law or re-enter and forfeit the lease by exercising an express
right of re entry in the lease. Either way the LL can recover damages for
loss of bargain under the general principles of contract law which allow
damages for loss of bargain where repudiation is established.
Repudiation or fundamental breach is where there is a breach of a
condition or breach of another term or terms which is so serious that it
goes to the root of the contract, and thus deprives the other party of
substantially the whole benefit of the contract. This entitles the innocent
party to rescind the contract and sue for damages for loss of the bargain
(Progressive Mailing House) What needs to be established in order to
constitute a repudiation is that the party evinces an intention to no longer
be bound by the contract or that he intends to fulfil the contract only in a
manner substantially inconsistent with his obligations and not in any other
way (Shevill).
Waiver of Breach: (Page 339)
Breach does not automatically result in forfeiture of lease; renders
it voidable at landlords option. If landlord elects not to void the
lease, cannot forfeit the lease later for the same breach. Waiver
may be express or implied. If landlord accepts or demands rent due
after breach, a waiver results as a matter of law
Merger
o At common law, if the reversion and the leasehold interest vest in the one
person, the leasehold merges in the greater (reversion) and is destroyed.
Regardless of persons intention.
S 134 conveyancing act
Surrender
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A lease can come to an end by surrender. Surrender may be express or by

operation of law. It puts an end to parties future obligations but does not release
them from liability for breached occurring before the surrender. Example of
surrender is abandonment of possession.
Frustration
o Leases are subject to general principle governing frustration of contracts,
however there is no frustration where the tenant is left with something he could
use
Fundamental Breach:
o Goes to the root of the contract.
o Breach of an intermediate term (not a condition)
o Seriousness of breach and if breach impinges on landlords benefits.
o

What are the Formal Requirements of Termination?

Rent:
o 85(1)(d) implies into lease power for landlord to re-enter without formal demand
for payment when rent is in arrears for one month
Other then rent:
o s 129(1) requires prior notice of breach of covenant other than rent. s 129(1)
cannot be contracted out of. If does not comply with the section the re entry is
ineffective
o When re-entering physically:
a landlord cannot use more force than is reasonably required to re-enter: s
18 Imperial Acts Application Act
o Re enter by court proceedings:
summons claiming possession in an unequivocal fashion and served on
the tenant operates as a re-entry and brings about a forfeiture from the
date of service.
What are the Remedies of the Tenant from Termination?
Relief against Forfeiture
o Non-payment of rent:
If the rent is paid (even late) and if the landlord is compensated for loss
that followed the tenants default, then the security has served its purpose
and the tenant ought to have the lease restored .
o Other then rent:
s 129(2) of CA . Under this section a tenant can apply for relief against
forfeiture either: a) Where the landlord is proceeding by court action or
otherwise to enforce the right of re entry; or b) Where the landlord has re
entered without court action.
Relief against forfeiture of Sublease
o As a general rule allowed where a headlease is forfeited, and sublease falls with
it. (Exception see page 354 text)
Relief against loss of option to renew
o An estoppel may be given denying that the option has been duly exercised.
What are the Remedies of the Landlord at Termination?
Damages following termination (Progressive Mailing House v Tabali )
o where terminated for tenants breach, but falls short of repudiation, landlord can
only recover damages suffered up to date of termination
o where terminated for tenants repudiation then landlord can recover damages for
loss of future benefit under the lease
o provisions in leases that particular covenants in the lease are essential or
fundamental terms are broken then entitle the landlord to sue for loss of future
benefits under the lease.
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Note the extent of the landlords damages is subject to the landlords obligation
to take reasonable steps to mitigate the loss eg attempting to find another
tenant.
Compensation
o Use and occupation: Where there is an agreement to pay a defined amount for
rent, the landlord is entitled to recover the rent accrued in the same way as any
other debt. If no rent amount has been agreed upon then the LL will be awarded
whatever is a reasonable sum for the tenants use and occupation of the land.
The tenant must have in fact used or occupied the premises, although
constructive operation is sufficient. Also, there must have been an agreement,
express or implied, that the tenant would pay for the use of the land
Mesne profits:
o If a tenant refuses to leave the premises they are a trespasser and the LL is then
entitled to damages for rent which would have been obtained on a re-letting but
for the tenants continued occupation. Does not need to prove that the premises
would have been leased. Will receive money for the whole period of trespassing
(page 334 text at bottom).
Damages and Injunction: (335 336 text)
Loss of bargain damages: the landlord can get this if the lessee has repudiated the
contract or if the lessee breaches an essential term or from a funderamental breach.
o The lessor must mitigate damages, by either finding a new tenant
o Discounted
Re entry and Repudiation:
o Even where the landlord purports to exercise the common law right to terminate
for repudiation (as distinct from exercising an express or implied right of re
entry), re entry nevertheless remains necessary to put an end to the lease. This
expresses the dual role of contract and property law.
o

Bailment

Definition
The owner of personal property delivers that property to another for a limited duration
of time, the possessor will have bailment in the property. The bailee (transferee) has a
legally enforceable right to retain the goods but the bailor (transferor) has a right to
regain possession. During the term of the contract, the hirer is the baileeand bailor will
regain possession when the contract is breached.
Hire when A hires a car for a month from B, the contract of hire is the bailment.
An essential element of a bailment is the passing of possession. Walton Stores v
Sydney City Council
Examples
o ANY HIRE PURCHASE
o

Fixed Term Bailment return of possession at end of term

At will the bailor has immediate right to possession.
Rules of Bailment
o The primary legal duty of the bailee is to redeliver the goods/chattels bailed to
the bailor or as the bailor may direct. While in his possession the bailor is liable
to take reasonably care especially if this is for a bailee for reward. The onus of
proving reasonable care lies on the defendant. In the case of conversion by
misdelivery notions of care are irrelevant.
Page 44 of 55

Expressed simply, a bailee is liable for loss or damage resulting from his dealing
with the goods bailed in a manner not authorised by the bailor. (Jackson v
Cochrane)
o A bailee does not have to act as insurer, just act reasonably (take reasonably
care)
o if item is stolen, bailee must show that he acted reasonably to prevent
intruders who might steal goods. Bailee must take positive action to deter
thieves and prevent them from accessing bailed goods.
o Law does not look kindly on exclusion clauses unless notice is given
(Tottenham Investments Pty Ltd v Carburettor Services Pty Ltd)
What is a Sub-Bailment?
Definition
o A sub-bailment is where there has been a bailment by the owner of goods to a
bailee, followed by a sub-bailment by the bailee to a sub-bailee.
o The sub-bailee has an obligation to take due care of the bailors goods and is
liable if they do not do so. Same standard of care as the original bailee
Rules of Sub-bailment
o A sub-bailment is where there has been a bailment by the owner of goods to a
bailee, followed by a sub-bailment by the bailee to a sub-bailee.
o The sub-bailee has an obligation to take due care of the bailors goods and is
liable if they do not do so. Same standard of care as the original bailee.
o Once it is recognised that the sub-bailee, by voluntarily taking the owners
(bailors) goods into his custody he then becomes the bailee of those goods. It
follows that the owners rights against the sub-bailee will only be subject to terms
of the sub-bailment if he has consented to them. Ie. If the bailor has authorised
the bailee to sub-bail to the sub-bailee on those terms. Such consent may be
express or implied.
o The sub-bailee must be aware that he is holding goods for the original owner as
opposed to the bailee. (The Pioneer Container)
o

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Lesson Plan #8
Topic: Servitudes Over Property
Easements: Basic Features
What are Easements?
Definition: a right enjoyed by the owner of one piece of land to carry out some limited
activity (short of taking possession) on another piece of land, e.g., right to cross one
piece of land to provide access to another. Easements are a right which are not natural;
they must be acquired by either agreement or operation of law. Profits a prendre) also
fall into this category of rights

Distinction between Profits a prendre and easements: Easement may give rights
of entry, but never to take away part of the land, Profits a prendre always gives a right
to enter, and always a right to remove some part of the soil or produce.

Personal rights: if As right to cross Bs land is an easement, it binds all future owners
of Bs land, if it is simply a licence, personal to A and B; it does not bind the land and a
later owner of Bs land may ignore it
Positive easements: rights of entry onto anothers land to enable something to be
done on the land, e.g., right of way
Negative easements: rights to prevent something being done, conferring no right of
entry; categorise from Phipps and Pears; light, air, support of buildings on land, right to
receive water.
What are the essential Characterisics of an Easement?
(Re Ellenborough Park)
o There must be a dominant and servient tenement: an easement is exercised over
land (servient tenement) for the benefit of other land (dominant tenement). The
easement will run with the land (both benefit and burden)
o Easement must accommodate the dominant tenement: It must benefit the
dominant tenement and be connected with its enjoyment. Whether it
accommodates the land depends on whether it has a necessary connection
with the land, in the sense of being reasonably necessary for its better
enjoyment as a parcel of land. Question of Fact. Usually will need to be
contiguous. Easement will survive subdivision but will only benefit that part of
the larger whole that was the former dominant tenement
o If an easement benefits a business on the land it doesnt necessarily
benefit the land unless the business profits are connected with the
land. Clos Farming Estates v Easton & Anor
o The same person must not own and occupy the dominant and servient
tenement: except under s 88B of CA which allows the registration and recording
of a plan of land, indicating an easement intended to be created, creates the
easement even though the land benefited and the land burdened are in the
same ownership
o the right claimed must be capable of forming the subject matter of the grant
Easements lie in grant
grantor must be capable of granting an easement, grantee must be
capable of receiving it
right must be of the type that is capable of being granted by deed
grant must not be too vague or indefinite

Creation of Easements
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Creation by express grant

Legal Must be by deed (s 23B CA). No particular words are necessary. Person who
holds an equitable interest cannot create a legal easement.
Equitable Mere writing will suffice (s 23C). If no writing can be enforced by sufficient
acts of part performance (ss 23E(d), 54A). Subject to above a binding agreement to
grant a legal easement creates an equitable easement, since equity regards as done
what ought to be done. An agreement that fails for want of formality creates an
equitable easement.The grant of an option to acquire an easement also creates an
equitable easement. What sort of easement will be determined by the terms of the
agreement. To create an easement the agreement must display on intention to impress
qualities on the dominant and servient tenements of a permanent nature
Enforcement against third parties s 88(1) CA an Easement is unenforceable against
a person not party to its creation unless the easement clearly indicates:
o a) the land benefited;
o b) the land burdened; and
o c) the persons whose consent is required to release, vary or modify the
easement.
Creation by express reservation
A conveys or transfers the fee simple to B; and B grants an easement to A.
Statutory Easement and Exstinguishment
s 88K allows the Supreme Court to make an order imposing an easement if it is
reasonably necessary for the effective use or development of the other land
s 88K(2) no order can be made unless the court is satisfied that the use of the
benefited land will not be against the public interest. The owner of the burdened land,
and those with registered interest in the burdened land, can be adequately
compensation (s 88K(4)). The applicant has made all reasonably attempts to obtain an
easement, without success. The easement takes effect when it is ordered.
s 88K(2)(b): Court cannot grant easement unless the owner of the servient land can be
adequately compensated for any loss. See page 393 text for amount. Compensation
determined solely by reference to the loss incurred by the servient owner, not the
benefit to the dominant owner.
NOTE Easement cannot be granted that is more extensive than the grantors own
interest in the land. It is possible to grant easements for duration of a lease

Problems of Scope and Location

Easements expressly granted or reserved:

o This is a matter of construing the instrument where the normal rules apply in
that it will be looked at according to the normal meaning of its words, read in the
light of circumstances existing at the time of the grant.
o An easement cannot be used in a manner beyond the use which the
terms of the grant and the surrounding circumstances indicate
objectively was contemplated by the parties at the time of its creation.
Where words are clear and unambiguous there is no need to resort to
surrounding circumstances.
Where a grant is clearly expressed in wide and unrestricted terms it will be
inappropriate to limit the extent of permissible use by reference to the use
made of the dominant tenement at the time of the grant.
Mere alteration of the nature or use of the dominant tenement does not
affect the right to the easement, unless as a result the extent of use of the
easement is substantially enlarged.
General Rules
o Easement cannot be used in a manner beyond the use which the terms of the
grant and surrounding circumstances allow for
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Easement cannot be used in a way that unreasonably interferes with the

rights of others who are entitled to share its use
o Cannot cause avoidable damage to the servient tenement
o Use of easement may change to keep up with technology, e.g. change from
horse and carriage to cars.
o Grant of easement carries with it ancillary rights reasonably necessary for its
exercise and enjoyment
o Grant of easement does not traditionally impose on the grantor an obligation to
keep it in repair. However, where expressed in agreement s 88F of CA will allow
them to be acted upon. Otherwise, it is for the grantee to do the work needed to
ensure that an easement can be exercise
o a floating easement is an easement which is not limited to any specific area
on the servient tenement
Interference with Easement:
o There must be a real and substantial interference.
Does not necessarily need to cause present physical impediment.
o Remedy: Substantial interferences are actionable in nuisance. Two courses are
available:
Abatement: the interfered with may enter the land and put an end to the
interference.
May seek damages or an injunction
Short v Patrial Holdings Pty Ltd (1995): Ratio
o Easement is not a personal right; it is attached to the dominant land for the
benefit of the land.
o Any part of the dominant land may benefit from the easement unless, on proper
construction, easement only benefits land in original form.
o If the land is subdivided, dominant tenements cannot impose additional burden
on servient tenement just because there are more users.
o Presumption that an easement is intended to be appurtenant to the dominant
tenement and every part of it.
Harris v Flower
o prohibited the rule that the owner of DT could use the right of way to transit
from the DT to another parcel of land that doesnt have the benefit of the
easement
National Trust v White
o permissible to use the right of way to gain access to land other than the DT if
the purpose of access was ancillary to the enjoyment of the DT
Westfield Management Limited v Perpetual Trustee Co Ltd
o court held that the rule prohibited the use of the easement in a manner that was
not contemplated by the parties at the time of the grant
o

Termination and Modification or easements

How may an Easement be terminated or Modified?
Express release:
o an express release by the owner of the dominant tenement. Must be by deed (s
23B(1))
Abandonment:
o There must be shown on the part of the dominant tenement owner a fixed
intention never at any time thereafter to assert the right himself or to attempt to
transmit it to anyone else.
o Failure to assert an intention to use an easement is very different from asserting
an intention to abandon it.
o Mere non use it not abandonment
Common ownership and possession:
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Where both pieces of land are fused by coming into common ownership and
possession of the same person, they are extinguished. Exceptions (page 420):
o NOTE
No extinguishment when the tenant, B, of A (A being the dominant
tenement and B being the servient tenement) is in possession of the
servient land.
Also the easement will only be suspended if A owns and occupied the
dominant land but is only a tenant on the servient land.
Easements created under s 88B of CA are not extinguished by common
ownership and possession.
Order of Court:
o (Durian Holdings v Cavacourt (2000)) under s 89(1) the Supreme Court can
modify or wholly or partially extinguish an easement if satisfied:
a) its continued use would impede the reasonable use of the servient land
without practical benefit to the person entitled to the easement
b) those entitled to the easement have agreed to the easement being
partially or wholly extinguished, or may be considered to have abandoned
the easement
c) Modification or extinguishment of easement would not substantially
injure those entitled to the easement.
NOTE:
Court may declare whether land is affected by easement, nature
and extent of easement, and who may enforce it.
An Easement may be treated as abandoned if it is satisfied that it
has not been used for at least 20 years (Real Property Act s 49(2)).
Cannot move an easement but can extinguish the old one and
create a new one.
o

Durian Holdings v Cavacourt (2000): see page 370 SM for reasons or extinguishment and
below,
easement has not been used for the purpose it was created for since November
1971
the easement was originally granted because the dominant tenement was
landlocked, that is no longer the case
it is impossible to use the dominant tenement for its original purpose
the owner of the servient land has been using the site of the easement for different
purposes since 1981
the use of the tenement for its original purpose is now impossible, and illegal
Profits a Prendre
What are Profits a Prendre? (Clos Farming)
Definition:
o A right to enter another persons land and take away part of the soil or the natural
produce of the soil. They may exist in
Common:
exercisable in common with others or
Severability:
exercisable to the exclusion of all others. This is determined by
construing the grant of the profit
Example
Plant products that are part of the soil and a natural produce of the soil
can be subject to profit a prendre.
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Some are the product of cultivation and are not the subject of a profit a
prendre: Fructus naturales v fructus industrials. For distinction see page
423.
How Are Profits a Prendre created?
They may exist in perpetuity or for a limited time only.
It must be created by deed (s 23B) but in equity mere writing is sufficient (s 23C) as are
acts of part performance.
Can also be made via a registration of a plan under s 88B. In order to be enforceable
the instrument must indicate the land to be burdened and the land to be benefited (s
88A)
How are Profits a Prendre Extinguished?
Released in a similar fashion to easements.
Also Termination of Lease or mortgage.
s 89 court order to modify or extinguish.
Or when subject matter becomes exhausted, or
there is common ownership.
Forestry Rights: see page 426

What are Rentcharges? Definition: Is an annual or periodic payment charged on

land and payable by the landowner. It gives rise to no tenure or privity of estate
between the parties; the owner of a rentcharge has no tenurial relationship with the
land on which it is charged. It is incorporeal property in gross, enjoyed by the owner
personally and not in the capacity of proprietor of land.Creation Rentcharges may
be held in fee simple, for life, or for a term of years. Must be by deed to create legal
interest inter vivos. In equity may be granted by a contract to grant them; deed is not
required.Enforcement: see page 429.
CASES:
Clos Farming Estates v Easton & Anor [2001]: find the difference between
Moody v Steggals: where the sign advertising the business accommodated the inn
which thus accommodated the land; and
Hill v Tupper: where there was no connection between a monopoly pleasure boat
business on the canal and the ordinary use of the small piece of land on the bank.
Did not accommodate the dominant tenement.
Introduction to Covenants
A freehold covenant is essentially a promise made by an owner of land to a third party.
Generally they have arisen in relation to the sale of part of an estate, where (for example) the
purchaser of the part promises not to use the land except for a private residence, so as to
protect the value of the land being retained by the vendor. As it forms a contract between the
land owner and the third party, it can be enforced between those two parties. Problems arise
where either of the parties sells their interest. At common law the benefit of a covenant can
pass on the sale of land, although the covenant must touch and concern the land that is, it
must be of importance to successive owners and enhance the value of the land. A covenant
not to be a nuisance to the covenantee would seem to fall within this definition.

Positive covenant (easements): will not bind 3rd

parties or successors. The contract will allow the
parties to sue: privity of contract
Negative covenant (restrictive covenants): can bind
3rd parties or successors in equity, based on the rules
of unconscionability
Covenanter: the party subject to the burden of a covenant (Subservient land)
Covenantee: the party entitled to the benefit of a covenant (Dominate land)
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remedies are seen in contract law. However only nominal damages are recoverable,
because the covenantee who has parted with the land has suffered no meaningful loss
At law: only the covenantee must own the land
In equity: both parties must be owners of land
The original parties continue to be bound even after having left the property
After the original parties to the contract have sold their estates, then only the benefit
can be imposed on 3rd parties, and the burden if it is a positive covenant, not if it is
negative
The enforceability of covenants may be extended to 3 rd parties at Common Law, in
equity, or by statute covenants at law

The Running of Covenants at Law

How do Covenants affect Freehold Land? (Rhone v Stephens)
Common Law
o Burden:
of a covenant does not run at common law.
Under s 70A(1) the covantor remains contractually liable to the
convantee even if the land has already been sold to X.
Devices to make the burden run

Personal Covenants: Each successive covantor will enter into an

identical agreement with the original covantee.
Enlarging a long term lease: include covenant in a long term lease
which is then converted into a fee simple under s 134 of CA.
Benefit/Burden principle: the obligation to contribute in return for
accepting the benefit is an intrinsic part of the rights acquired by the
successor in title. Whether an obligation of this kind has been created is
a question of construing the instrument that created the interest. The
more closely the obligations are linked to the right acquired, the easier it
is to construe the instrument as granting a conditional right. Only
applies where the successor is free to reject the benefit
Repairing: under s 88BA it allows the imposition of a positive covenant
requiring one or more of the persons having the benefit or burden of an
easement to maintain or repair the site of the easement. If by deed it
will then run with land to successors in title.

Benefit
For the benefit to run at common law it must satisfy two
requirements
1) Touch and concern the covantees land:
o the covenant must either affect the land as regards its mode of
occupation, or it must be such as per se, and not merely from
collateral circumstances, affects the value of the land.
o Cannot touch and concern the land if so large that it cannot in fact
reasonably benefit the land. Parties and the court have the right to
sever land.
o S 88(1) requires the instrument creating the covenant to clearly
indicate which land is benefited, otherwise the covenant is not
enforceable against the covantors successors in title.
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A covenant which is entered into for the benefit of a parcel of land,

benefits the whole of the land and not the individual parts which it
may later be subdivided into.
o Can be rebutted when the terms of the covenant viewed in the
light of surrounding circumstances indicate that the covenant was
intended to benefit not only the land as an entirety but also its
subdivided parts.
2) Both parties must have the intention, when creating the covenant,
that the benefit should run with the covantees land.
o The words must be found in the document creating the covenant,
construed in the light of surrounding circumstances if necessary.
o s 70 CA implies this intention (NB: There are contrary views as to
whether you need to express annexation or not; better off just to
express it ). Once annexed the benefit runs.
o Intention that the benefit of the covenant run with the dominant
land (s70) page 523!!
o

The Running of Covenants in Equity

How do Covenants affect Freehold Land? (Rhone v Stephens)
Equity (Rhone v Stephens)
o Burden to run

Covenant must be negative: It must be negative (ie restrictive).

In determining negativity equity will look at substance and not merely form. It
is essentially a term which can be achieved by doing nothing. Eg. Dont build
a house.
Must benefit covantees land: the covenant must be intended to, and must in
fact, benefit land the covantee owns at the date of entering into the
covenant. The required benefit will be absent if the covantees land is too
large to be in fact benefited by the covenant. Land needs to be near but not
contiguous.
S 88 clearly indicated
To enforce against successors
Indicates land benefitted, land burdened = intention to run

Intention: at the time of creation their must have been at intention that the
burden of the covenant should run with the covenantors land so as to bind
successors in title. Ie. Covantor should covent for himself, his heirs and
assigns, or similar.
S 70A will presume that the covenant runs with the land unless rebutted
by an expressed contrary intention; would the section be inconsistent
with the purport of the instrument
o Benefit to Run
Enforcement by original covantee:
is in contract.
Enforcement by successor to original
covantee when
o a) The benefit has been annexed to the covantees land; or
o b) although not annexed, the benefit has been assigned
Tulk v Moxhay 4 conditions:
a. Covenant must be negative or restrictive:
Positive covenant would impose financial burden not just for refraining from doing
something.
Negative covenant is one that prevents the owner from doing something
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b.

Whether the covenantor is required to incur expenditure, if so then it is positive

Would the covenantor have to put his hand into his pocket in order to carry out the
covenant? Haywood v Burnswick Permanent Building Society (1881)
Examples: to keep As land as an open space is negative, to erect a fence is positive,
not to divide As land in flats is negative, not to let As land fall into disrepair is positive
If the covenant is partly positive and partly negative, the court will sever the positive
parts, and only the negative parts will go with the land: Pirie v Registrar-General
(1962). For example, keep the property as residence only: can be positive, but may
have a negative nature. Maybe you have to maintain residential buildings, keep in
habitation conditions so people can live in it
Covenant must touch and concern the land of the covenantee:
Must benefit the land, rather than a person
The covenantee must have held the benefited land at the time the covenant was made
The covenantee must still not part with the land before seeking to enforce the
covenant: Clem Smith Nominees Pty Ltd v Farrelly (1978)
A restrictive covenant will not benefit land if the benefited land is situated at some
distance from it

c. Intention to bind the land

If it is personal only, the benefit will not run
S 70A: presumes that the burden is intended to run with the land, unless the covenant
indicates to the contrary
Burden on land, not the estate
d. Notice of burden
Must have knowledge of existing restrictive covenant before he binds his interest
The equitable interests will not bind a bona fide purchaser who takes for value and
without notice of the restrictive covenant
Those who take the burdened land without notice (C), the covenant is automatically
extinguished. If this person then transfers the land to another party (D) with notice, the
covenant cannot be revived. In other words, the covenant will still have no effect on
the 3rd party (D) because C would already have unlimited rights with no covenants
attached
Notice has to be knowledge of the existing covenant, it does not have to be written

Annexation:
Annexation will arise if the following conditions are met:
Touch and concern
o Must benefit a person as owner, not as an individual
o It must affect the mode of use or occupation of the land, or affect the value of the
land
o Obstructing sea view will decrease the value of the land, not increase it and
therefore does not touch and concern the land
o Examples: to improve and keep river banks in repair (Smith and Snipes Hall farm
Ltd v River Douglas Catchment Board (1949)), to build no more than one dwelling
house on the covenantors land (Rogers v Hosegood), keep the property as a
private residence, to repair a road, not to carry on a particular kind of business on
land, to supply pure water to the covenantees land and a covenant not to use the
covenantors land for the retail sale of goods.
o Benefited land must be ascertainable (clearly identifiable): s 88(1). A land too
large is deemed unclear (1, 700 acres was ineffective: Re Ballards Conveyance),
unless intention is made on each and every part of the land. Where the
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covenantees land is a considerable distance from the burdened land, it was held
not to touch and concern the land: McGuigan investments v Dalwood Vineyards
o Need 1 piece of land the benefited land, but in equity you will need 2 pieces of
land
Intention that the benefit should run with the land
o The parties must intend that the benefit of the covenant is to run with the land
and benefit the 3rd party; look at the facts
o Rogers v Hosegood: it may ensure to the benefit of the vendors, their successors
and assigns and others claiming under them to all or any of their lands adjoining
o s 70: intention is presumed if such successor and other persons are expressed in
the instrument; eg. the benefit of Eastend Farm is sufficient. Whoever owns the
Eastend Farm will benefit, doesnt have to be a specific name. This presumption
may be rebutted expressly in the covenant. It is also possible to exclude certain
persons who derive title from receiving the benefit, such as tenants, while
allowing the benefit to run with others.
The benefited land must be identified, or capable of being identified
In order for the benefit of the covenant to run with ownership of the covenantees land
the benefited land must be identified by the covenant, or be identifiable by means of
extrinsic evidence
Assignment: see page 454. NOTE: ss 70(1) and 88(1) of CA will almost always result
in the benefit of any covenant that touches and concerns the land necessarily being
annexed to that land and automatically passing with it dispensing with the need for it
assign

Creation, modification, suspension and discharge of covenants

What are the Formal Requirements for Creating Covenants?
Legal Covenants must be created by deed.
A restrictive covenant is an equitable interest not a legal one it need not be
created by dead (s 23B).
o However, writing is necessary (s 23C) in absence of sufficient acts of part
performance (s 23E).
S88B: when a plan is lodged with the Registrar-General, plan must indicate
restrictions intending to benefit or burden land comprised in the plan.
o Any covenants made this way are annexed to the land benefit (88B(3)) S88(1)
Covenants must comply with this section. See page 458 text.
o Concerns only covenants enforceable in equity, since burden of freehold cannot
run in common law.
o Concerns only restrictions contained in an instrument.
o Concerns the persons against whom the restriction may be enforced, not by
whom it may be enforced, applies only when a person not party to the creation
seeks for the enforcement. S88(3)
What are the Remedies for Breach of Covenant?
Injunction
o To succeed the owner will have to prove that the breach will cause imminent
and substantial damage. Where breach of a covenant already exists, the owner
of the benefited land may seek an injunction to restrain continuance of the
breach.
o In equity, injunction may be available if:
The injury to the plaintiffs legal rights is small
The injury is capable of being estimated in money
The injury can be adequately compensated by a monetary payment
The case is one where it would be oppressive to grant an injunction
Damages
Can be sought at common law where the action is taken by the original convantee (or
by a successor to whom the benefit has run or been assigned) against the original
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convantor. Where the action is against a successor of the original covantor, damages
must be sought in equity, for only in equity does the burden of a covenant run.
How are Covenants Extinguished?
Operations of Law: Extinguished if land benefited and land burdened come into
common ownership. Where only parts of the benefited and burdened lands come into
common ownership (and possession) the covenant is extinguished to that part. Do not
revive if land later goes back into separate ownership. Under s 89 common ownership is
a ground for the SC to extinguish the covenant.
o Older system title, with no notice of the covenant, purchaser is not bound by the
covenant. Hard to prove because the covenant is part of the title deeds
Release:
o Express release: owner of land benefited may release the covenant expressly
o Implied release: if owner of land benefited submits to a long course of usage which
is inconsistent with the existence of the covenant, or has disregarded breaches to
justify that a reasonable person would believe that future breaches would be
ignored. Mere inactivity does not in all cases result in an implied release, e.g., if
the breach is infrequent.

s 89(1) of CA allows the Supreme Court in specified circumstances to modify or wholly

or partially extinguish easements and restrictive covenants. It will do so when satisfied:
a) The existence of the covenant is useless because the land use has changed
(obsolete), or continued existence would impede the reasonable use of the
burdened land without practical benefit to the unburdened land (must have
sterilised the land);
b) The person entitled to the easement or benefit have agreed to the modification
or extinguishment, or by their actions might be seen to have abandoned the
easement/covenant;
c) The proposed modification or extinguishment will not substantially injure the
benefited party.

Two considerations need to be taken into account:

1) The proposal before the court cannot be merely reasonable to an impartial
planner; and
2) It was not designed to enable a person to expropriate the private rights of
another purely for his own profit.

Town Planning considerations: these can be taken into account in determining whether
the grounds prescribed by s 89 have been made out, and also (where they have been
made out) the way in which the court should exercise its discretion. Even if a
modification or extinguishment is necessary to enable the development to proceed the
court will not be deterred from denying the application.

Discretion: Even if the Supreme Court has made out more than one of the grounds in s
89(1) it reserves a discretion to refuse to make an order modifying or extinguishing a
covenant
Environmental Planning and Assessment Act: s 28 allows the act to override private
covenants that would otherwise stand in the way of development. Only override the
covenant to the extent necessary to allow the development to proceed. The extent of
the overriding is a question of construction.

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