Beruflich Dokumente
Kultur Dokumente
Real Property Is land and interests in land and subdivided into two groups:
1. Corporeal hereditaments tangible real property ie land
2. Incorporeal hereditaments intangible interests in land such as easements
or rights of way.
DOCTRINE OF TENURE
i) Split system - no land is owned absolutely, all land is held of the Crown.
Crown must give grant to individuals to use land and the right to use land
is vested in the form of an estate.
Historically, Crown exercised its prerogative to give first grant to James Ruse to
start farming for food.
Radical Title
- Legal fiction which supports the doctrine of tenure that the Crown has
notional interest in every piece of land.
- Is a notional, conceptual title that allows the Crown to control land of the land,
regulate and pass laws. It is not a real title and is similar to sovereignty (concept
in constitution/public law) but used in property law.
- On acquisition of the land, the Crown acquired sovereignty and not absolute
ownership called (beneficial ownership), because there were other owners (no
terra nullius).
Crown acquired radical title (or ultimate, final) which is the concommitant
of sovereignty
This gives the Crown the power to grant rights and interests in land.
Pastoral leases differ from exclusive possession.
Mabo beneficial ownership and
ESTATES
Estate Different bundles of rights and powers exercisable in respect of land.
Two types of estates, depending on the time in which they endure how long the
estate exists.
1. Freehold estates uncertain duration fee simple, life estate and
abolished fee tail
2. Leasehold estates - certain(definite) duration
Simultaneous Estates
Both exist at the same time, possession now is life estate. Possession in the
future is the reversion.
To A for life (reversion in the grantor)
To A for life remainder to B in fee simple
Both can be transacted at the same time so holder of the reversion can sell and
mortgage estate. B cant lease because A has possession. A can lease.
2. Failed on facts Justice Blackburn was not the way western property right is,
had a spiritual relationship with land and not economic, not alienable.
Different to Meriam people in Mabo case had marketed gardening plots and
whilst still spiritual, was more economic.
Definition of Native Title - Native title has its origins in and is given its
content by the traditional laws acknowledged by and the traditional customs
observed by the Indigenous inhabitants of a territory. The nature and incidents of
native title must be ascertained as a matter of fact according to those laws and
customs. at 58 (Brennan J)
1. Need to show laws and customs by traditional owners
2. Need to show it was substantially uninterrupted dispossessed indigenous
people will not be able to claim native title.
Native title determinations will be different in every case and very difficult to
prove.
Native Title Act
S223 contains definition of native title.
Two types of claim:
1. By indigenous people to claim native title
2. The governments claim of no native title existing Non-claimant
determination under s6(1) of the Native Title Act
Once native title is claimed, it is protected and the government cannot build or
do anything unless there is no native title or cleared through future provisions.
Far West Coast Native Title Claim v SA (No. 7) (2013) [38] Mansfield J
a recognisable group or society that presently recognises and observes
traditional laws and customs in the Determination Area.
(1) they must be a society united in and by their acknowledgement and
observance of a body of accepted laws and customs;
(2) that the present day body of accepted laws and customs of the society,
in essence, is the same body of laws and customs acknowledged and
observed by the ancestors or members of the society adapted to modern
circumstances; and
(3) that the acknowledgement and observance of those laws and customs
has continued substantially uninterrupted by each generation since
sovereignty and that the society has continued to exist throughout that
period as a body united in and by its acknowledgment and observance of
those laws and customs; and
4) The claimants must show that they still possess rights and interests
under the traditional laws acknowledged and the traditional customs
observed by them and that those laws and customs give them a
connection to the land.
Post Yorta Yorta case, Native Title litigation has dropped off due to its complex
tests and now consent determinations between affected groups are more
common to negotiate rights.
Extinguishment
Only the Crown can affect or extinguish native title, not individuals even though
it appears to be, eg mining leases are granted by the government
1. Fejo - Grant of a fee simple extinguishes native title, since it gives
exclusive possession.
2. Wik Effect of the grant of a pastoral lease. Doesnt confer exclusive
possession and is just Crown land allowed to be leased with limited rights
(generally for the purposes of grazing on rangelands) Native title yields to
the extent of the inconsistency.
Extinguishment is a legal (not factual) test to be determined at the time of
the grant Brown HCA 2014
Certificate of Title
First schedule names of vendor and purchaser
Second schedule mortgages, leases, easements, restrictive covenants
Rules of Indefeasibility
1. Registered interests in the Second Schedule prevail over the registered person
in the First Schedule.
2. As between two interests registered in the Second Schedule, the interest first
registered has priority: s. 36 (9) of the RPA.
3. Registered interests prevail over unregistered interests.
Where a registered mortgage secures a forged loan agreement, the registered
mortgage secures NOTHING: Perpetual Trustees Victoria v English [2010] NSWCA
32
There is a distinction between this case and Mayer v Coe where there was a
mortgage for XYZ dollars and not as a loan agreement.
If the easement created under old system and is proven, it is omitted and still
enforceable under Torrens title. James v Stevenson (1893) AC 162. **Look at
actual easements topic
1. Registered v registered
2. Registered v unregistered
3. Unregistered v registered
OST Principles
Unregistered v unregistered
- An unregistered equitable interest is an interest enforceable in Equity by an
order for specific performance, either party can be compelled to complete
contract: Tanwar Enterprises v Cauchi (2003) 217 CLR 315
James v R-G (1967) 69 SR (NSW) 361 - If easement is registered under
Torrens and removed by mistake to the Registar, is an omitted easement.
Castle Constructions v Sahab Holdings v RG [2013] HCA 11; (2013) 247 CLR 149
If deliberately removed, can enforce implied or prescriptive easement if created
under old system. Cannot if created under Torrens.
Notice s164 of CA
a) Actual Notice
Actual knowledge of the leaser, must be personally within that persons
knowledge
b) Constructive Notice
Purchaser should have known as a reasonable person in this position and made
an enquiry or searched Registrar.
Marsden v Campbell (1897) 18 LR (NSW) (Eq) 33
Purchaser was aware vendor had a mortgage and vendors mortgagee land had
animal grazing on it. Purchaser was unaware that this land was leased by
mortgagee.
Held: If purchaser had made all the enquiries that a reasonable person in his
position would have made, such as asking the mortgagee the basis upon
property being grazed, then the purchaser would have had constructive notice of
the lease.
Usually, the occupation of land by person other than vendors family will amount
to constructive notice (Hunt v Luck 1902; Hodgson v Marks 1971).
c) Imputed Notice
Is the notice of an agent, whether actual or constructive and imputed to the
principal. May be notice of solicitor, spouse or employee of principal.
Although Barry did not create Heider, he armed Schmidt to create Heider by
executing the transfer.
Transfer (?)
Barry
Schmidt
(in
reality
only
a
mortgage)
(registered)
(unregistered)
Mortgage
Heider
(unregistered)
Held
Justice Meagher, in dissent, said that this was a case of pure Mayer v Coe and
that upon registration of the variation, it became indefeasible. He stated that
the fraud was between the bank and the third party, and that, thus, fraud did not
break indefeasibility (Mercantile was not aware of Mr. Gospars fraud).
Kirby, stated that Mercantile owed Mrs. Gospar a duty to inquire of her (rather
than of her husband), since it was her mortgage being extended.
The authoritative judgment comes from Marney:
This case challenged the authority of Gospar, but was differentiated factually and
held to be more similar to Mayer v Coe, since there was no pre-existing
relationship between the parties, unlike in Gospar.
Facts
Grgic was a registered owner
o Wife and son went to ANZ to negotiate a mortgage (unbeknownst to
Grgic)
ANZ says I would like to meet Grgic
o Wife/son brought an imposter
o Who signed mortgage
Mortgage was registered
Held
Since there was no pre-existing relationship, registration created indefeasibility.
If you are registered but do not have possession of property and another
person resides on your property for 12 years, on the 12th year, they may
register and may have a better claim to the property. S.45(d)
CAVEAT
a) Right to Caveat (Real Property Act, s. 74F)
A person who has an interest in Torrens Title land can put a caveat on the
property they may have an interest in. It is a claim that there is a possible
interest in the land. Once a caveat is lodged, blocks anyone else from
registering their interest. Particularly helpful if cannot be registered.
Sinclair v Hope Investments (1982) 2 NSWLR 870
The cheapest and most effective way to challenge ones caveat is to serve a
lapsing notice. Unless there is a Supreme Court Order to extend the caveat
within 21 days, it will lapse.
d) Formal Requirements ss74F(5)
-
Postponing Conduct
a) Failure to take possession of title deeds. OST case held that
purchaser/first mortgagee at settlement, need to take title deeds. If title deeds
arent taken, constitutes postponing conduct.
Walker v Linom (1907) - P1 failed to take title deeds. P2 had never taken
possession of title deeds and was not aware of P1s interest. Since the earlier
interest was guilty of postponing conduct, P2 will prevail.
b) Failure to retain possession of title deeds by an act of gross
negligence. Employee stole companys title deeds and Northern Counties v
Whipp (1884)
$15K
Vendor finance
$50K
Balance to Heid
$100K
$165K
Heid Tfr
Reliance
$12K
Stormar
$40K
Alexander
$20K
Reliance
$45K
Irving
$50K
$100K
Gibbs and Wilson JJ said it was a question of estoppel. Made a representation and
other party relied on it. Would be unconscionable to depart from this
representation.
Deed of Mortgage
Will
(in escrow)
N (trustee for siblings,
including Bullock) (E)
Deed of conveyance
C (dishonest solicitor)
By N
Deed of
Mortgage
Lloyds Bank
BuildingSoc.
v.
Bullockv Bullock (OST)
Lloyds
Bank
v.
Bullock
v.
H dies and N is trustee for his siblings including Bullock. C, Bs own solicitor is
H wishes to buy property
Deed of Mortgage
Building Society
(L)N signed
dishonest and
from
N. Deed of conveyance
to C,
Building Soc.
v.
Lloyds
Bank
receipt of payment despite
L not receiving
v.
Eany. C went to the Building Society to
re-convey. Then goes to Lloyds Bank to borrow money.
Lloyds Bank
Will
N (who
(trusteewas
for siblings,
Trustee signs receipt clause without payment,
to solicitor
acting as
purchaser, not as solicitor role) and knows he is handing it to other side. Bullock
including Bullock) (E)
is postponed as B is more innocent of the two.
Deed of
conveyance
Building Soc.
L
v.
Bullock
v.
C (dishonest solicitor)
Deed of
Mortgage
Building Soc.
L
Bullock
E
v.
v.
v.
v.
Lloyds Bank
E
Lloyds Bank
Lloyds Bank
E
Failure to Caveat
Failure to register and caveat to protect interest constitutes postponing conduct.
Butler v Fairclough
Good was registered, created mortage subject to M1. Good created second
mortgage to Butler, who lodged caveat. Good sells to Fairclough who is
unregistered but lodges transfer after Butler. Fairclough has later equity interest.
HC held second mortagee who fails to register or caveat immediately after
getting mortgage, will be guilty of postponing conduct against purchaser (who
has no knowledge of second mortgage).
*Read this in his textbook, he expands on postponing conduct
J & H Just ( Holdings) v Bank of NSW (1971) 125 CLR 546
Josephson borrowed money for mortgage with Bank of NSW. Bank was first
mortgagee who had neither registered or caveated, but had taken possession of
CT. J went to to borrow money from J & H and advised his CT was with the bank.
HC rejected Butler v Fairclough that failure to register or caveat as mortgagee is
postponing conduct, different facts as Bank was first mortgagee and had CT.
Second or third mortgagee cannot have possession of CT as it stays with first
mortgagee and must caveat.
Person-to-Person v Sharari [1984] 1 NSWLR 745
There were 3 mortgagees - second mortgagee was postponed for failure to
caveat so lost priority and third mortgagee takes place in priority.
(c)
Vendor
Vendor
Tfr
Tfr
Purchaser
Mortgagee P
Purchaser 1
(b)
Vendor
Mortgagee V
Tfr
Tfr
Purchaser
Mortgagee P
Purchaser 2
IAC v Courtenay
Austin
regd
Tfr
Courtenay
unregd
1
Mortgage
Tfr
C/S
(abandoned)
Denton
Sub-D
unregd
Courtenay
unregd
E
M1
M2
IAC unregd
Hermes / IAC
unregd
E
LECTURE 9: MORTGAGES
Unregistered mortgages enforceable by equity
They are either unregistered or unregistrable.
When a mortgage not signed but it is accepted and the title deeds have been
deposited. (Cooney v Burns 1922)
Under OST, a first mortgage by deed passes legal estate to the first
mortgagee
The mortgagor (borrower) retains an equity of redemption which
suggests that once the debt is paid in full, the mortgage is entitled to be
discharged so that the mortgagor can have their property reconveyed/title
returned.
Under Torrens title, a mortgage does not convey the title of the property
but merely changes under a statute of charge
Equitable principles
Foreclosure
Foreclosure
Mortgagee sales
Prerequisites
1.
2.
3.
Default
Statutory notice of one month (RPA s57)
Non compliance with notice
It is the mortgagees option as to when they will sell the property. They
can sell immediately after the notice or delay the sale in order to satisfy
the obligation of finding the best reasonable price under s.111A. (Belton v
Bass, Ratclifee [1922]
Pre-exchange, full payment of the debt to restrain the sale (Inglis v Cth
1972)
Between an exchange and settlement, there are certain terms in which a
court may restrain a mortgagee sale:
Expert evidence of improper valuation due to improper marketing,
improper valuations,
Court can make an order to make an early hearing. However, the
mortgagor must satisfy that they can pay enough as to compensate
the mortgagee if the re-evaluation does not change the value of the
property, so that the borrower must not be out of pocket for their reevaluation.
For example, If the value of the house is more than the owed debt,
the lender will not be out of pocket and there is no issue but if the
value of the house is less than the amount owed I.e. if the debt is
$1M and the house is to be sold at $800,000. Since the lender will
already lose out, the court will require that the mortgagor can pay
enough to compensate the bank if there was no interference.
Penalties
Tacking
Cases under OST
Taylor v Russell [1892] AC 244
Mortgagor borrowed from M1, M2 and M3. Questions posed to House of Lords:
1. Issue of whether M3 not aware of mortgage to M2, only first mortgage.
2. If M3 took assignment of first mortgage (paid off and transferred
mortgage), what was the effect of M3 becoming first mortgagee?
Held: Tabula in naufragio M3 gets priority over M2 as they are now the first
mortgagee from acquiring first mortgage and lack of notice of M2 at the time
of mortgage.
Tabula in naufragio
Mortgagor
Mortgagee 1
Mortgagee 2
Mortgagee 3
Hopkinson
v Rolt (1861) 11 ER 829
Mortgagor
Mortgagee 1
English OST authority followed inMortgagee
Australia
for when M1 and M2 made further
2
advances (increase borrowing). M1s further advance will only prevail over M2, if
Mortgagee 1
at the time of the further advance, had no notice of M2.
Tacking on further advances arise where:
can Mortgageeprovision
1 tack?
a) Whe
Asnmortgage
states that the mortgagee will make further
advances,
up to a specified sum, on the security of the mortgaged
Unde
r OST
property.
(a)
When Mortgagee 1 had no actual or constructive notice
b) (b)
As mortgage
does
provide
forthere
further
specific
advances being made,
When Mortgagee
1 had not
no actual
notice and
was an initial
provision
but for
does
provide
more
generally
that
the
security
secures
both the initial
further advances
advance
and
any
further
advances.
(c)
When it is against conscience for Mortgagee 2 to deny that Mortgagee 1 is
entitled (say the facts of Matzner)
In either
these
Unde
r TT two situations, if X subsequently grants a mortgage to B, and then
A makes
a
further advance, A is entitled priority over B and may tack on the
(a)
as above
further advance to the original UNLESS A had actual notice of Bs mortgage.
(b)
as above
West v Williams [1899] 1 Ch 132
(c)
as above
Re OByrnes
Estate (1885) 15 LR (Ir) 189
(d)
Arguably
also where
Mortgagee mortgage
1 is registered and
an indefeasible
right
If there is provisions
in original
forhasfurther
advances,
only actual
to all money, whenever lent
notice of M2 that will defeat M1s further advances. Thus, preferable to include
P.S as it will be easier to be tack further advance onto original mortgage.
provisions
MightvbePotter
able to (1894)
classify further
advance
a reasonable
improvement to the
Credland
LR 10
Ch as
App
8
property (C.f. Southwell v Roberts)
M1 lent
some money, M2 lent some money. M1 was prevailed upon to make
further advances. Where there is no provisions for further advances in original
mortgage, any kind of notice (actual or constructive) that M1 has of M2 will
defeat further advances of M2.
Cases under Torrens
Matzner v Clyde [1975] 2 NSWLR 293
Owner (mortgagor) borrowed money from first mortgagee to develop property
and subsequently borrows money from second mortgagee. Both mortgagees
were aware of each other so M1 had notice. The mortgagor went broke and
property was not completed. M1 got property surveyed which came back less
than half of mortgage lent so was not worthwhile selling. M1 made a further
advance and lent the mortgagor money to finish developing the property. Sale:
M1 is fully paid out and M2 gets a small amount.
Issue: Should M2s interest be paid out before M1s improvements, since M1 had
notice and thus could not tack his increased mortgage amount onto M1?
Held: OST authority that if M1 improves property reasonably, the cost could be
added(tacked) into original mortgage. (Southwall v Roberts)
Judge created equitable Matszner Exception - It is against conscience for M2 to
prevail over M1s further advance since, without M1s further advance, M2 would
not have gotten any money. However, is just a supreme court decision and may
not be binding on Westpac v Adelaide Bank case.
Mortgagee 2
Mortgagee 1
(b)
When Mortgagee 1 had no actual notice and there was an initial provision
for further advances
(c)
Under TT
(a)
as above
(b)
as above
(c)
as above
(d)
P.S
Might be able to classify further advance as a reasonable improvement to the
property (C.f. Southwell v Roberts)
Possessory Title
Governed by Pt VI A esp. s. 45 D
Limitation Act 1969 (N.S.W.) ss. 27, 38 requires 12 years of presence for a
squatter or trespasser (unlawfully) to be able to register for title of the property.
Possessory title under Torrens allowed for the whole block of land or none.
Contrasts to OST title of adverse possession which allowed for a strip of land.
Mulcahy v Curramore [1974] 2 NSWLR 464
1. The true owner of property(registered) must not be present for 12 years,
they will not be able to sue the trespasser after this period and loses
possession of property.
2. Possession must be open, not in secret
3. Must be peaceful, not by force
4. Must be adverse, not by agreement or consent
Purchaser exchanges
Purchaser acquired notice of an inconsistent interest
Purchaser settled
Purchaser registered
This purchaser was not bona fide, had notice before settlement.
Contrasts to Burrows v Crimp (1887) 8LR NSW 198
1.
2.
3.
4.
Purchaser exchanges
Purchaser settled
Purchaser acquired notice of an inconsistent interest
Purchaser registered
This purchaser was bona fide, had notice after settlement
Qualified Title
As a mechanism to convert OST to Torrens from remaining land, there is a
conversion process under qualified title to protect interests under OST. Torrens
title is subject to OSTs existing interest before being absolute Torrens title after
6-12 year period.
When caution lapses, qualified title becomes absolute Torrens title when:
On the 6th anniversary, where a dealing for value (absent fraud) was
registered within the first 6 years of qualified title
On the 12th anniversary, where no dealing for value (absent fraud) was
registered within the first 12 years of qualified title
Between the 6th and 12th anniversary, where a dealing for value absent
fraud was registered between the 6th and 12th anniversary
*Time of death is very critical. When one joint tenant passes, other tenant will
have sole interest and have full ownership and their heir will inherit the property.
The deceaseds heirs will not have priority.
*In death, presumption that older person will have passed first.
*If not stated on will, there is presumption that beneficiaries will be tenants in
common
Tenancy in Common
In absence of clear words, there is a statutory presumption in favour of tenancy
in common.
Unity of possession
Undivided shares interest can be different eg 60/40
No right of survivorship property will pass according to the will
Alienable
Scenarios:
A, B and C as joint tenants would originally have 1/3 shares, interest gets
enlarged and each will have shares
A and B are joint tenants (2/3 share), in tenancy in common with C (1/3 share).
When A dies, Bs interest is enlarged to 2/3 and C remains at 1/3. If C dies, will go
to heir D with 1/3 share.
Always look first if joint tenancy is affected, then tenancy in common.
Creation of Co-ownership
S26(1) In the construction of any instrument a disposition of the beneficial
interest in any property whether with or without the legal estate to or for two or
more persons together beneficially shall be deemed to be made to or for then as
tenants in common, and not as joint tenants.
S 26(2): default rule in s 26(1) does not apply where the instrument expressly
provides they are to take as joint tenants (as long as they are joint tenants
ie four unities are present)
S 100 Real Property Act to be interpreted in light of s 26(1) Is a language
provision where joint proprietors = joint tenants so will not change that.
Under Torrens, the Registrar will not accept registration without specification of
joint tenancy and percentage of shares of interest.
Creation in Equity
1. Unequal contribution to purchase price/deposit
Eg A contributes 70%, B contributes 30% and elect for joint tenancy. At law, will
be joint tenants with share each in interest (registered as joint proprietors). In
equity, will be tenants in common in 70/30 shares.
2. Partnership Assets
A and B go into business. They purchase premises from which to run their
business. They are registered as joint proprietors. At law they are joint tenants
(proprietors). In equity they are tenants in common in proportion to their
contributions to the purchase price.
Note: this assumes they have entered into a partnership as legally defined.
3. Advance money on a mortgage
A borrows money from B and C, secured by mortgage. B and C are registered as
joint proprietors of a mortgage. At law B and C are joint tenants. In equity B
and C are tenants in common in proportion to their contributions to the
money lent.
Severance
Conversion of joint tenancy to tenancy in common. Ends the right of
survivorship to allow for any interest of heirs. It does so by destroying one or
more of the 4 unities (except possession).
Eg. A and B are joint tenants. A transfers to C later one. This destroys the unity of
title as they do not share one same instrument, there is two there is a contract
for sale of land between A and B and a transfer from A to C.
Mrs Patton did not want the interest to transfer to her husband after her
death, Mrs Patton executed a transfer of her interest in the land 5 days before
her death to Corin [Appellant], her brother.
To register the transfer, Mrs Patton had to obtain a duplicate copy of the
certificate of title from the Bank of NSW. She took no steps to do so before
dying.
Issue: Whether Mrs Patton had effectively disposed of her interest in the land
prior to her death, thus severing the joint tenancy and defeating her husbands
right of survivorship.
Equitys rule of gifts:
If an intending donor of property has done everything which is necessary for him
to have done to effect a transfer of legal title, then equity will recognise the gift.
1. Signing and executing memorandum
2. Producing CT for registration can only be done by the individual, was
not done here
3. Register the transfer (can be done by solicitor)
Therefore, Mr. Corin failed as gift was not recognised by equity.
McCoy v Caelli
The son attempted to transfer his interest in the joint tenancy to himself. The
transfer was not registered before the son died. Mother lodged notice of death at
the Department of Lands to be registered as the sole proprietor of the property.
Court held equity rule under Corin v Patton does not apply for transfer to self.
There is no second chance so if there is no registration, severance will FAIL. Since
the transfer was not registered before the son died, therefore the joint tenancy
was NOT severed at law.
2. Severance by Mutual Agreement
Agreement by every tenant and needs to be in writing (only in equity). Need to
change at Registrar to reflect at law.
3. Court Order
Court can order severance of joint tenancy eg. Family Court
4. Bankruptcy
Bankruptcy will be an involuntary alienation which will sever joint tenancy.
5. Course of conduct/dealing
When tenants through act of conduct, show intention to sever joint tenancy. Is
only applicable in equity and a very weak argument.
6. Homicide
When there is a joint tenancy and one party kills the other, the right of
survivorship allows that party to enlarge their interest and gain ownership.
However, equity will not allow for the party to profit from their crime and the
perpetrator holds on trust for victims next of kin to be a tenant in common. Read
in geoffs book
Ending Co-ownership
Action of the parties
Sale
Under s66G of Conveyancing Act, can request court for an Order of Sale to sell
own interest of co-ownership. Read geoffs book on this part
Partition
Can subdivide property and request court for an Order of Partition. More common
on commercial blocks or larger land.
Accounting in Equity
Accounting needs to be sorted out which takes into account financial things that
happen during the ownership in relation to improvements: Types of accounting
include:
Brickwood v Young
Lesser of the value added or the cost
Forgeard v Shanahan (1994) 35 NSWLR 206 *
Allowances
Squire v Rogers
One party built units for a caravan park on the property. Was this business
personal or on behalf of the co-owners? Does this income represent profits on
from the skills of the party or from the nature of the property? So were the
profits from the property per se or from services of the individual co-owner?
Argue the facts. If nature of the property, then they are liable to share profits.
Steps
First look at the joint tenancy problems
Then look at the tenancy in common issues
Apply creation of ownership tests for equity
LEASES
Different Regimes
A lease is an interest in land granted. Confers exclusive possession for a fixed
period of certain duration.
When two parties enter into a lease or agreement for lease, there are two
interests and consequences/remedies created:
1. Contract: Lease or agreement for lease operates as a contract
Types of leases:
1. Fixed term:
- Standard leases, for a specific certain period eg. 6 months, 5 years, 99
years
- Can have an option to renew
2. Periodic Tenancy
- Rolls over from period to period. Determined by reference to the rental
period. If rent is paid every 2 weeks, the periodic tenancy is 2 weeks.
- Is of certain duration as new lease is created from payment for next period.
- The notice period is also equivalent to the period with reference to which
rent is paid
- Can be both express and implied. Express agreement is written and
enforceable. Any situation where money is paid for exclusive possession of
property, is implied period tenancy
s127 of RPA
3. Tenancy at Will
o
o
o
o
o
5. Tenancy at Sufferance
o
o
o
At the end of the duration of the period and lessor is hold over after the
leases had ended, without the consent of the landlord.
Not a trespasser and can be asked to leave at any time
Payment given is occupation fee, not rent. If payment is continued
periodically, an implied periodic tenancy will arise.
The Premises
Not uncommon to lease part of a building eg office block. The premises have to
be identified, by including a plan of the building with identified individual offices.
1. Exclusive Possession:
2. Definite Period
o
o
o
o
o
o
o
o
The parties entered into an agreement to grant a lease for seven years.
The agreement stated an intention to enter into a formal lease, which was to
contain a provision that the landlord could demand a years rent in advance.
The lessee entered into position and started paying rent quarterly in arrears.
No formal lease eventuated.
The lessor sought a years rent in advance. The lessee argued that since
there was no formal lease, the agreement for lease was unenforceable at law.
Held: The lessees contention was rejected. The court held that the parties
had entered into a binding contract to enter into a lease, and that equity
could enforce this agreement.
It will be an equitable unregistered lease if:
Contract is final/enforceable (consideration) AND
Contract is sufficiently certain AND
In writing (s54A) OR part performance (s 23E) AND
Equity would grant specific performance (discretionary)
o
o
o
o
Or
Equitable estoppel can create proprietary interest - Waltons Stores
If you have an equitable lease, equity will:
To
When the lease does not expressly contain either or both of these covenants,
they will be implied into the lease Budd Scott v Daniel (1902)
The Covenant for Quiet Enjoyment
It is a question of fact in each case as to whether or not there has been a
denial of quiet enjoyment (Todburn Pty Ltd v Taormina International Pty Ltd).
from the grant occurs if a lessor interferes substantially with premises that
it leased The test is whether the premises have been rendered unfit or
materially unfit for the purpose for which they were granted (Gordon v Lidcombe
Developments Pty Ltd).
The rationale of this covenant is that the lessor cannot give possession with
the one hand and then take away the benefit of the possession with the other
hand.
Cases where breach of covenant not to derogate from the grant has been
found include:
o
o
The lessor was found to have interfered with the access to a restaurant
business conducted by the lessee on the sixth floor of a building, by
allowing the lift to the restaurant to remain out of operation for several
months (Karaggianis v Malltown Pty Ltd). Removing a lift and obstructing a
corridor needed to bring goods to the lessees business premises is also a
breach of covenant (Edward Kazas & Associates v Multiplex)
A lessor will be in breach if uses premises in a way that blocks the flow of
air to the adjacent tenants premise if the tenant requires ventilation for
ordinary conduct of business (Aldin v Latimer Clark, Muirhead & Co 1894)
The plaintiffs business was adversely affected by sawdust and loud
industrial noise from the neighbouring premises leased from the same
lessor. Both leases contained an undertaking by the lessee not to cause a
nuisance to any other lessee. The lessor could have enforced the
covenant, but did not do so (Aussie Traveller Pty Ltd v Marklea Pty Ltd).
As a result of demolition works close to the leased property, thieves were
able to enter the leased property and steal a large amount of stock
because the work rendered tenants vulnerable to burglary (Len Lease
Development Pty Ltd v Zemlicka).
In the absence of agreement, landlord has the right to enter premises to inspect
state of repair but is very strictly limited. Can only enter twice a year at a
reasonable time of day upon giving lessee two days notice.
The landlord can also serve notice in writing on tenant requiring any repairs to be
carried out a reasonable time. If the tenant fails to repair, landlord has implied
right to enter and repaid under s85(1)(b). If repairs are structural in nature or
required by statutory authorities. Landlord can enter and carry out repairs at any
time s75(1)(c).
Requires notice to the landlord, if tenants dont give notice there will be no
liability for the landlord. Not a breach until notice received.
Remedies: Preferred remedy is damages for breach of the covenant, but there is
the power to order specific performance, where damage not an adequate
remedy. Where breach right of repair, there exists an implied right to forfeit the
lease, and if serious, terminate the lease for breach. If tenant expends money on
repairs the landlord should have, they may recoup expenditure from future
tenant or another equitable set-off
Sublease
Taking a leasehold estate and carving out lessor estate to third party as
opposed to an assignment which disposes ALL interests.
Period will always be duration or lesser than head lease Example of a
sublease is the lessee transferring the exclusive right to possess all of a
three-storey building for LESS than the remaining four years on the lease.
OR is a sublease if the lessee transfers the exclusive right to possess only
PART of the three-storey building for ALL of the remaining four years on
the lease.
Tenant remains a tenant but has dual roles, tenant also becomes a sublessor ie. sub-landlord and there is now a sub-lessee.
Qualified covenants seek to limit, rather than prohibit the tenants rights
(requires landlord consent to assign)
o
o
o
Privity of Estate
o
o
o
o
o
S117 words include subject matter of the lease. S51 includes all
powers, privileges and rights.
However, s117 and s118 were enacted after s51 RPA so should be
repealed where there are inconsistencies. Do not need touch and concern
for reversion
Gumland Property Holdings suggests that subject-matter of the lease is
required for s 117. Big Country does not seem to suggest this limitation.
But, the reversion was not directly at issue in Big Country. It is an open
interpretation.
BREACHES
Past Breaches
Continuing Breach
The reversioner, NOT the former landlord can sue tenant (Ashmore
Developments; Measures v McFadyen; Big Country)
So if the landlord was entitles to sue for rent arrears and re-enter at time
of assignment, these rights will PASS to assignee.
o
o
The assignment does not affect tenants right to sue for complete
breaches eg. damaged caused by breach of repair covenant (Shevill v
Builders Licensing Board 1989)
The assignee, not the tenant, can sue for continuing breaches such as
when assignee receives premises in a state of disrepair.
EASEMENTS
An easement is a right of definite and limited character annexed to land. The
right is annexed to the enjoyment of the corporeal hereditament (dominant
tenement) where the occupier of another corporeal hereditament (servient
tenement) is bound to:
o
o
In Re Ellenborough Park, held it did not need to be adjoining land but needs to be
close to receive benefit. To show accommodation, it is not sufficient to show that
right increased value of property conveyed unless also shown that is is
connected to the normal enjoyment of that property. In this case, court found the
park was intended to be a garden that enhances and is connected to normal use
and enjoyment of land, therefore formed an easement.
The effect of the easement must be to give some advantage to the DT, which it
otherwise would not have. Bailey v Stephens (1862)
There must be a sufficient connection that accrues a real benefit to the DT. Does
NOT need to physically adjoin. Todrick v Weestern National Omnibus (1934)
A right will not amount to an easement if the DT has exclusive use of the ST land.
A right to store vehicles on the ST was held to not be an easement but akin to
right of possession. Copeland v Greenhalf (1952)
In Bursill Enterprises (1971), the HC held an effect amounting to transfer of
proprietary rights in a column of airspace by giving unrestricted rights did not
create an easement.
It is sufficient for accommodating a DT if the easement benefits the business
conducted on the land. Moody v Steggles (1879)
iii.
iv.
Must be capable of forming the subject matter of a grant. The right must
be within the general nature of rights capable of being created as
easements. The right must be sufficiently definite and not too wide or
vague, must be able to define the right. It is necessary to assess the
degree to which the rights interfere with the ST exclusive possession of
the land.
JEA Holdings - Issue of the instrument not being clear as an easement for
parking spaces but rather a covenant. Second issue of omitted/misdescribed
easement. Used the proportionality test to look at whole of servient tenement
not Moncrieff v Jamieson but still pay particular attention where area covered by
easement.
Creation of Easement
Express Grant: Torrens at Law
o
a)
b)
c)
d)
o
o
Torrens in Equity
S23C writing and consideration OR agreement s54A and consideration/part
performance
Express Reservation
o
o
o
Statute
S88K of CA provides power of court to create easement if reasonably necessary
for the effective use or development of other land that will have benefit of
easement. An order may be made only if the court is satisfied that:
a) Use of land having benefit of easement will not be inconsistent with the
public interest
b) The owner of the land to be burdened by easement and those with
registered interests in the burdened land can be adequately compensated.
c) The applicant has made all reasonable attempts to obtain an easement by
negotiation, without success.
Reasonably necessary asks whether the use and development of the putative
dominant tenement that would be possible WITH the easement is substantially
preferable to the use and development of something WITHOUT the easement
(Gittany v McDowell 2009). What is reasonably necessary should be
determined objectively (Re Seaforth Land Sales Pty Ltd (No 2)). It does not
require absolute necessity. Something less will suffice (Durack v De Winton).
The easement must be reasonably necessary for the use of the dominant land,
not merely for the convenience of a particular proprietor of that lands (Hanny v
Lewis). The court has no power to impose an easement unless it is satisfied that
the servient land can be adequately compensated for any loss - s88K(2), OMara
v Gascoigne (1996).
Refer to page 250 of Geoffs textbook.
Examples of use: can be used for access to roads or for construction work where
cranes overlap into airspace of other properties court can create temporary
easement
Changing/Modifying/Extending Easements
The user under a registered easement may change with the nature of the
benefited land, so long as the terms of the grant are sufficiently broad, does not
violence to the principles of the Torrens system.
Need to look at reasonable contemplation of the parties at the time and degree
of interference.
Extinguishment
o
o
Remedies
There are two remedies available to owner of DT for infringement of an
easement.
Abatement: is the remedy of self-help to prevent an infringement of an
easement. The owner of easement has general right to abate the interference
provided that no force is used than reasonably necessary, not likely to be breach
of the peace and no injury to third parties or the public.
Action: Can sue for damages, declaration of injunction. Can bring an action of
nuisance which requires substantial interference of rights by ST.
PROFITS A PENDRE
Right to go onto someone elses land and take the natural products of the
land
Key distinction with easements: always in gross
Can be registered and receive indefeasibility under s 42(1)
Exception to indefeasibility s 42(1)(b)
Basically same law as for easements and same formalities
Can argue extinguishment through the resources being depleted.
However, under Torrens, if registered it needs to be removed off Register.
Very difficult like easements
Is still a property right even though there is no dominant tenement, will be
on the second schedule of the folio of the servient tenement
Clos Farms found not to be profits a prendre
Restrictive Covenants
A covenant is an express or implied promise contained in an instrument.
Freehold Covenant is a covenant entered into respect to freehold land. Do NOT
confuse with leasehold covenant which is an obligation contained in a leasehold
agreement. Contract entered which restricts neighbours use of property. Usually
to achieve the same effect as negative easement
Formalities Creation
Freehold covenants are not registrable
OST s 23B, s 23C, s 23E
Torrens s23B deed, 23C in writing, incorporate in memorandum of
transfer
OST and Torrens: s 88(1), like easements, needs to comply with this
provision or will not be enforceable with subsequent purchasers.
S88(1) Conveyancing Act provides that a covenant will not be enforceable
unless the instrument clearly indicates:
a) There is a benefit of the restriction pertinent to the land
b) There is a burden of the restriction on the land
c) Provides additional persons who has the right to release, vary, modify the
restriction besides the right of law
d) Provides persons who consent is necessary for a release, variation or
modification of restriction
The Law:
The burden cannot run at common law. There is only a contractual interest
This is the rule in Austerberry only enforceable as a matter of contract
where there is privity.
Original covenantor remains liable contractually s 70A Conveyancing Act.
This section (despite wording) does not annex at common law. The
covenant cannot bind successors in title even if expresses to do so. It only
affirms that the original covenantee and covenantor remain contractually
liable, even after disposing of the interest in land.
In Equity:
1. The covenant must be negative(restrictive) the burden of a positive
covenant cannot run with the land. (Tulk v Moxhay). Question: On the
facts, is the covenant negative and why? This is a question of
substance, not form Apply the facts.
2. The purchaser (successor in title to the covenantor) must take with
notice. Question: Has the covenant been noted on the register? S 88(3)
CA, S 47(1) RPA, S 42 RPA
Is there actual, constructive or imputive notice? Look at the new party.
Where a purchaser buys the burdened land without notice of a restrictive
covenant but sells land on to purchaser who does have notice, the second
purchaser will take free of the covenant (prevents revival of covenant to
preserve first purchasers interest)
3. The covenant must be intended to run with the land of the
covenantor - look at the original party for intention and new party for
notice (step 2). Under s70A(1) Conveyancing Act assumes A covenant
relating to any land of a covenantor ... shall, unless a contrary
intention is expressed, be deemed to be made by the covenantor on
behalf of himself or herself and the covenantors successors in
title ... and ... shall have effect as if such successors ... were
expressed shows intention to run with land through heirs and
successors.
4. The covenant must BENEFIT the land of the covenantee at the date of
creation. This has these subparts:
i) The covenant must touch and concern the land: Rogers v Hosegood
- Does the covenant affect the mode of use or occupation of the land or
must of itself affect the value
iii) A covenant CANNOT touch and concern the land if the land to be
benefitted is SO LARGE that it cannot be benefitted as a matter of fact
Re Ballards Conveyance
UNLESS
The covenant expresses an intention to annex the covenant to each and every
part of the covenantees land (or some equivalent words) Marquess of Zetland
The covenant must benefit the land of the covenantee at the date of creation.
The covenantee must own the land to be benefited at the time the covenant is
created. This is known in NSW as the rule in Kerridge v Foley. Rationale: the
covenant must have been made for the protection of the land of the covenantee
So did the original covenantee (Dennis) own the land to be benefitted (lot 1) at
the date of entering into the covenant with the covenantor (Harold - lot 2).
NO, as Dennis is no longer the own at the time since it was sold in the order of 1,
2 and 3.
5. If the land of the covenantee is not benefitted ie for example because there
is no compliance with the rule in Kerridge v Foley, then the covenant may still be
enforceable if there is a building scheme / scheme of development.
respecting land or other property, although the person may not be named as a
party to the assurance or other instrument.
(2) Such person may sue, and shall be entitled to all rights and remedies in
respect thereof as if he or she had been named as a party to the assurance or
other instrument.
REVISION LECTURE
For determining priorities:
1. Registered interest
2. Unregistered interests
3. Unregistered tenants last
Question 1.
Vance (registered proprietor)
Too late to caveat to block transfer to Sean as it has been LODGED. Seek an
injunction from court at an ex parte basis to stop the forged transfer to be
registered shortly.
Vance, Ian and Sean has not had any disentitling conduct
Vance is registered but will be subjected to Bob through Barry v Heider (personal
equities exception) as Vance armed Bob. Bob > Vance in priorities.
Sean and Ian will have no interest in the property if Vance wins.
Question 2.
Question 3.
Dealing NOT registered but lodged COULD be dealing registrable.
Jim has not signed any mortgage but has an equitable mortgage by the deposit
of title deeds.
Advise Brian:
Need three elements in caveat: s74F
1. Needs the date
2. Needs the price
3. Needs to be an equitable mortgage
Jim conduct to steal the CT was dishonest but has signed and transferred to
Cynthia, she does NOT have a void dealing with the transfer.
Cynthia will be next to have dealing registrable, assuming no notice. No facts
provided
Despite the bank holding the CT, they are the agent of Cynthia and between
them and the successive effect doctrine, she will satisfy s43A dealing registrable.
As Brian has an equitable interest and Cynthia has a legal interest, she will have
priority.
UNREGISTERED LEGAL INTEREST
S43A dealing registrable for first mortgagee/purchaser
S23D compliance for lease