lOMoARcPSD|3076807 LLB301 REAL PROPERTY LAW TORRENS SYSTEM AND INDEFEASIBILITY............................................................................3 INDEFEASIBILITY PROBLEM SOLVING...................................................................................................................................3 THE TORRENS SYSTEM – OVERVIEW....................................................................................................................................3 THE ‘OLD SYSTEM’ – CONVEYANCING..................................................................................................................................3 TORRENS SYSTEM................................................................................................................................................................ 4 INDEFEASIBILITY.................................................................................................................................................................. 4 EXCEPTIONS TO INDEFEASIBILITY.......................................................................................9 FRAUD EXCEPTION.............................................................................................................................................................. 9 SECTION 185 EXCEPTIONS SUMMARY...............................................................................................................................12 IN PERSONAM (PERSONAL EQUITY) EXCEPTION................................................................................................................13 SHORT LEASE EXCEPTION..................................................................................................................................................15 EXCEPTION IN FAVOUR OF AN ADVERSE POSSESSOR........................................................................................................16 CARELESS MORTGAGEE EXCEPTION..................................................................................................................................16 EXCEPTIONS IN OVERRIDING STATUTES.............................................................................................................................16 UNREGISTERED INTERESTS................................................................................................................................................18 CAVEATS............................................................................................................................................................................ 18 SETTLEMENT NOTICES....................................................................................................................................................... 23 PRIORITIES INTRO..............................................................................................................................................................25 PRIORITIES BETWEEN MORTGAGEES.................................................................................................................................25 PRIOR REGISTERED INTEREST FOLLOWED BY SUBSEQUENT REGISTERED INTEREST..........................................................25 PRIOR REGISTERED INTEREST FOLLOWED BY SUBSEQUENT EQUITABLE ESTATE................................................................25 PRIOR EQUITABLE ESTATE FOLLOWED BY SUBSEQUENT REGISTERED INTEREST................................................................26 COMPETING EQUITABLE INTERESTS..................................................................................................................................26 PRIORITIES AND CAVEATS..................................................................................................................................................28 VOLUNTEERS..................................................................................................................................................................... 28 ADVERSE POSSESSION......................................................................................................29 OWNERSHIP, POSSESSION AND TITLE................................................................................................................................29 ADVERSE POSSESSOR – GENERAL LAW – MUST APPLY......................................................................................................29 ELEMENTS......................................................................................................................................................................... 29 ESTABLISHING “ADVERSE POSSESSION”.............................................................................................................................29 LIMITATION PERIOD + ACCRUAL PERIOD...........................................................................................................................30 ADVERSE POSSESSION AND TORRENS – text p 375-8........................................................................................................32 CONVEYANCING PROCESS................................................................................................33 SUMMARIES (So far)........................................................................................................36 LEASE COVENANTS SUMMARY..........................................................................................................................................36 LEASE ASSIGNMENT SUMMARY........................................................................................................................................36 TERMINATION SUMMARY.................................................................................................................................................37 NATURE AND CREATION OF LEASES..................................................................................38 LEASES............................................................................................................................................................................... 38 ESSENTIAL REQUIREMENTS FOR A LEASE..........................................................................................................................38 FIXED TERM LEASES........................................................................................................................................................... 40 PERIODIC TENANCY...........................................................................................................................................................41 YEARLY TENANCY...............................................................................................................................................................43 TENANCY AT WILL.............................................................................................................................................................. 44 OTHER FORMS OF TENANCY..............................................................................................................................................45 AGREEMENTS FOR LEASE.................................................................................................46 DUAL CHARACTER OF A LEASE...........................................................................................................................................46 AGREEMENTS FOR LEASE (ALF).........................................................................................................................................46 REGISTRATION OF LEASES.................................................................................................50 PRECONDITIONS TO REGISTER...........................................................................................................................................50 POST REGISTRATION OF LEASE..........................................................................................................................................50 REGISTRATION GENERAL PRINCIPLES................................................................................................................................50 UNREGISTERED LEASES – LONG LEASES.............................................................................................................................51 REGISTRATION – SHORT LEASES........................................................................................................................................52 COVENANTS IN A LEASE...................................................................................................53 COVENANTS.......................................................................................................................................................................53 LESSOR COVENANT – FOR QUIET ENJOYMENT..................................................................................................................54 LESSOR COVENANT – NON-DEROGATION (similar to quiet enjoyment)............................................................................55 LESSEE COVENANT – PAYMENT OF RENT...........................................................................................................................56 2 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 LESSEE COVENANT – REPAIR..............................................................................................................................................57 LESSOR COVENANT – BUSINESS EFFICACY.........................................................................................................................59 COVENANTS IN FAVOUR OF LESSOR..................................................................................................................................60 DEALINGS WITH LEASE.....................................................................................................61 ASSIGNMENT OF THE LEASE..............................................................................................................................................61 REQUIREMENTS FOR A LEGAL ASSIGNMENT OF LEASE.....................................................................................................61 POSITION AFTER LEGAL ASSIGNEMNT...............................................................................................................................61 ENFORCING COVENANTS POST-ASSIGNMENT OF THE LEASE............................................................................................63 LESSOR CONSENT (c).........................................................................................................................................................63 ENFORCING COVENANTS POST-ASSIGNEMNT OF REVERSION...........................................................................................65 TERMINATION OF LEASES.................................................................................................67 HOW A LEASE CAN END.....................................................................................................................................................67 TERMINATING A PERIODIC TENANCY................................................................................................................................69 TERMINATION OF FIXED TERM LEASE................................................................................................................................70 ADDITIONAL REMEDIES FOR BREACH OF LEASE OBLIGATIONS..........................................................................................73 MORTGAGES....................................................................................................................76 NATURE OF MORTGAGES...................................................................................................................................................76 OLD SYSTEM MORTGAGES.................................................................................................................................................76 TORRENS MORTGAGE........................................................................................................................................................ 78 USUAL COVENANTS IN MORTGAGES................................................................................80 GENERALLY........................................................................................................................................................................ 80 CHARIGING CLAUSE – set out in mortgage (clause 12.1)...................................................................................................80 PERSONAL COVENANT TO REPAY PRINCIPAL AND INTEREST – ESSENTIAL.........................................................................80 ACCELLERATION OF REPAYMENT UPON DEFAULT..............................................................................................................80 RIGHTS OF A TORRENS MORTGAGOR...............................................................................82 TO POSSESS LAND..............................................................................................................................................................82 TO POSSESS CERTIFICATE OF TITLE....................................................................................................................................82 TO GRANT SUBSEQUENT MORTGAGES..............................................................................................................................82 TO LEASE THE PROPERTY...................................................................................................................................................82 MORTGAGOR RIGHT TO REDEEM THE MORTGAGE...........................................................................................................82 NO RIGHT TO REPAY BEFORE THE CONTRACTUAL DATE....................................................................................................84 REMEDIES OF A TORRENS MORTGAGEE...........................................................................85 ACTION FOR DEBT ON THE PERSONAL COVENANT TO REPAY............................................................................................85 ENTER INTO POSSESSION..................................................................................................................................................85 APPOINT A RECEIVER......................................................................................................................................................... 85 FORECLOSURE................................................................................................................................................................... 86 EXERCISE POWER OF SALE.................................................................................................................................................86 CAVEATS............................................................................................................................................................................ 91 EASEMENTS.....................................................................................................................93 EASEMENTS....................................................................................................................................................................... 93 CREATION OF EASEMENTS.................................................................................................................................................94 EXTINGUISHING EASEMENTS.............................................................................................................................................95 STATUTORY IMPOSITION OF RIGHT OF USER.....................................................................................................................98 T ORRENSSYSTEMANDI NDEF EASI BI LI TY INDEFEASIBILITY PROBLEM SOLVING Pursuant to s 184, a registered proprietor takes his or her interest subject to other registered interests, unless any of the excepfons apply: fraud excepfon personal equity (or in personam) excepfon careless mortgagee excepfon (links to ss 11A or s 11B) Personal equity examples: 3 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 REAL PROPERTY LAWS NOTES WEEK 1: INTRO TO LAND WHAT IS REAL PROPERTY - - Real Property vs Personal Property Rights in Rem v Rights in Personam o Rights to land = Rights in Rem o Rights to personal property (contractual rights) = Rights in Personam Real property historically Real property in Queensland today REAL PROPERTY: SOURCES OF LAW - Common Law Equity Statute: o Property Law Act 1974 (Qld) o Land Title Act 1994 (Qld) o Land Act 1994 (Qld) INTERESTS IN LAND - - Ownership (Itle) o Individual o Co-ownership Lease Mortgage Easement TITLE SEARCH - Shows the interest in a land – shows 2 registered owners Shows there are other interest: o Easement, Mortgage and Caveat COMMON TERMS AND PHRASES - Mortgage Easement Fee simple Life Estate Freehold Crown Leasehold Licence Lease Sub-lease Assignment Transfer Contract - RegistraIon Torrens Title Lot Survey Plan Co-ownership Community Title NaIve Title Tenure Estate Future interest Equitable interest Indefeasibility Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 WEEK 1: LAND AND INTERFERENC WITH LAND WHAT IS LAND - Land includes messuages, tenements and hereditaments, corporeal or incorporeal, of any tenure or descripIon, and whatever may be the interest in the land o Acts InterpretaIon Act 1954 (Qld) o Acts InterpretaIons Act 1901 (Cth) INTERESTS IN LAND - - Ownership (Itle) o Individual o Co-ownership Lease Mortgage Easement LAND INCLUDES FIXTURES - Depends on the degree and purpose of annexaIon o Holland v Hodgson [1872] lR 7 CP328 o Hobson v Gorringe [1897] 1 Ch 182 o Leigh v Taylor [1902] AC 157 o Palumberi v Palumberi (1986) NSW ConvR 55-287 o Park v Lasrado [2005] QSC 211 HOW FAR DOES LAND EXTEND INTO THE AIRSPACE? - “Whoever’s is the soil, it is theirs all the way to Heaven and all the way to hell” – law in history Cuius est solum, eius est usque ad coelum et ad inferos TREPASS - Lord Camden L.C.J. in EnIck v Carrington (1765) 19 St Tr 1029, at p 1066: “By the laws of England, every invasion of private property, be it ever so minute, is a trespass. No man can set his foot upon my ground without my licence, but he is liable to an acIon, though the damage be nothing … if the admits the fact, he is bound to shew by way of jusIhcaIon, that some posiIve law has empowered or excused him.” BERNSTEIRN OF LEIGH V SKYVIEWS & GENERAL LTD [1978] QB 479 - Person took photos of property from plane. Owner was unhappy and sued that person for trespass Court decided that your right to airspace of an owner of land extends to such height as necessary for the ordinary use and enjoyment of the land. GRAHAM V K D MORRIS AND SONS [1974] QR R 1 - Crane hanging over another property Campbell J: “I am persuaded that the over-hanging crane which, as the plainIi says and I accept, is both an unsightly feature of her land and a cause of nervousness and apprehension to her, interferes with that part of the airspace above her land which is requisite for the proper use and enjoyment of that land.” Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 HOW FAR DO RIGHTS EXTEND BELOW THE SURFACE? - - Generally, only what is necessary for reasonable use and enjoyment o Di Napoli v New Beach Apartments Pty Ltd (2004) ATR 81-728 (NSW case) o Bocardo SA v Star Energy UK Onshore Ltd [2010] UKSC 35 (UK Case) In Queensland, the State is the owner of minerals and Gas Also for most natural resources SECTION 179 PROPERTY LAW ACT 1974 179 Right to support of land and buildings For the beneht of all interests in other land which may be adversely aiected by any breach of this secIon, there shall be alached to any land an obligaIon not to do anything or below it that will withdraw support from any other land or from any building, structure or erecIon that has been placed on or below it. RIGHTS TO MINERALS 6 Meaning of mineral (1) A mineral is a substance – a. Normally occurring naturally as part of the earth’s crust; or b. Dissolved or suspended in water on or within the earth’s crush; or c. That may be extracted from a substance menIoned in paragraph (a) or (b). (2) Subject to subsecIon (3), each of the following is a mineral – SecAon 8 Crown’s property in minerals RIGHTS TO GAS Part 4 Property in Petroleum 28 Petroleum the property of the State (1) This secIon is subject to secIon 28 and chapter 2, part 6, division 3. (2) All petroleum as follows is, and always has been, the property of the State – a. Petroleum on the surface of land, if I was produced in the State; b. Petroleum in a natural underground reservoir in the State, other than petroleum in the reservoir produced outside the State and injected into the reservoir. (3) To remove any doubt, it is declared that – a. A person does not acquire any property in petroleum merely because the person discovers petroleum in a natural underground reservoir; and SEE A TREND HERE? 84 Property in protected plants 61 Property in cultural and natural resources 62 RestricAons on taking etc. of cultural and natural resources of protected areas WEEK 1: TENURE, ESTATES AND LAND CONTROL DOCTRINE OF TENURE - Originated in Feudal England Absolute and Benehcial Ownership resided in the Crown Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 - - Doctrine of Tenure says – land holder does not own the land, the Crown does Describes the relaIonship that subjects have with the Crown in respect of land o Crown could rent the land out, military service in return for the land, or use the land for agriculture Doctrine of Tenure is about the person occupying the land and the ‘ward’ DOCTRINE OF TENURE IN AUSTRALIA - - On assuming sovereignty over Australia, the ‘whole of the lands of Australia became the property of the King of England’. o Williams v AG for NSW (1913) 16 CLR 404, 439. Unallocated land was ‘waste lands of the Crown’. ‘It is far too late in the day to contemplate an allodial, or other system of land ownership. Land in Australis which has been granted by the Crown is held on a tenure of some kind and the Itles acquired under the accepted land law cannot be disturbed.’ o Mabo v Queensland (No 2) 1992 HCA 23 [49] per Brennan J LAND, TENURE AND SOVEREIGNTY - ‘The Crown was treated as having the radical Itle to all the land in the territory over which the Crown acquired sovereignty. The radical Itle is a postulate of the doctrine of tenure and a concomitant of sovereignty. As a sovereignty enjoys supreme legal authority in and over a territory, the sovereign has power to prescribe what parcels of land and what interests in those parcels should be enjoyed by others and what parcels of and should be kept as the sovereign’s benehcial demesne.’ o Mabo v Queensland (No 2) 1002 HCA 23 [50] per Brennan J CROWN MAY ALLOCATE LAND - General provisions o S 30, ConsNtuNon Act 1867 (QLD) Chapter 2 Land AllocaIon – S 14 Governor in Council may grant land o Land Act 1994 (QLD) ESTATES 1) Freehold a. Fee Simple b. Life Estate 2) Leasehold FEE SIMPLE - - ‘to grant a fee simple estate in land is to confer the largest interest in land that is known to the common law, and one which is said to invest in the grantee “the lawful right to exervise over, upon, and in respect to, the land, every act of ownership which can enter into the imaginaIon, including the right to commit unlimited waste’ o Commonwealth v New South Wales (1923) 33 CLR 1, 42 (Isaacs J.) Most urban land in Australia is held as fee simple Fee simple = ownership of property Largest estate own to the common law LAND USE CONTROL THROUGH STATUTE - Brereton J in Spencer v ACT [2007], [at 24]: Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 - - - “the grant of an estate in fee simple, while the largest estate known to law and regarded as pracIcally equivalent to absolute ownership, does not preclude the subsequent exercise of legislaIve power in respect of the land.” See also o Bone v Mothershaw [2002] QCA 120 o Wilson v Raddatz [2006] QCA 392; o Glasgow v Hall [2007] QCA 19 Burns v Queensland [2006] QCA 235, [18] o ‘the sovereign law making power of the Queensland Parliament, [..] included the power to impose upon Mrs Burns the requirement that she have a development permit prior to changing the complexion or presentaIon of her land by clearing it.’ o ‘..if this challenge is correct, then there would seem no limit at all that a State Parliament could impose on the use to which a fee simple land owner put her on his land. Any such Itle holder could build, clear, or grow what they pleased; which acIviIes would include growing cannabis, opium poppy, or noxious weeds, destroying historic buildings, or construcIng buildings of any kind wherever they pleased. SECTION 19: PROPERTY LAW ACT 19 Freehold estates capable of creaAon Aoer the commencement of this Act the following estates of freehold shall be capable of being and, subject to this Act, of subsisIng in land – (a) Estate in fee simple; (b) Estate for life or lives CREATION OF LIFE ESTATE - E.g: o o o My house to Peter for the course of his life, and then to Sarah. = Peter has a life estate. Sarah has a future interest (fee simple) Peter has all the rights of the owner – but can not sell the house Sarah, when she inherits it from Peter, is able to then sell the house if she wishes CROWN LEASEHOLD - A diierent form of tenure 70% of Queensland Unique to Australia: fell outside of the doctrine of tenure (as existed in Britain) Crown leases were granted to develop the colonies Can be 20, 30 or even 99 years in length Special category of leases granted under legislaIon (for example the Land Act 1910, 1962, and now the Land Act 1994). The decision of Wik Peoples v Queensland (1996) 187 CLR 1 discussed the nature of Crown Leases and separated them from common law lease. WEEK 2: NATIVE TITLE TENURE - Originated in Feudal England Absolute and Benehcial Ownership resided in the Crown Describes the relaIonship that subjects have with the Crown in respect of Land Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 - Wastelands = unallocated State land SOVEREIGNTY AND CONSITUTIONAL POWER TO ALLOCE “WASTELANDS OF THE CROWN” - Mabo aqrmed sovereign power resided in Australia Implicit in this power to pass law and power to allocate land ConsItuIon > Land Act Unallocated Land > Allocated Land Mabo v Queensland (No 2) [1992] HCA 23 - Mabo claimed that Australia was not ‘Terra Nullius’ (Land belonging to no one) Basis from Mabo’s argument sowed from the QLD Government to annex the islands Doctrine of tenure should not be applied in full HC agrees with Mabo There was a system of laws and customs relaIng to land that should be recognised NaIve Title rights should be recognised by the common law Altered the doctrine of tenure Aqrmed the sovereign power of the Crown (in pracIce the State Governments) to pass laws to allocated land) But doesn’t overturn common law – NaIve Itle should sit within the doctrine of tenure “In discharging its duty to declare the common law of Australia, this Court is not free to adopt rules that accord with contemporary noNons of jusNce and human rights if their adopNon would fracture the skeleton of principle which gives the body of our law its shape and internal consistency. Australian law is not only the historical successor of, but is an organic development from, the law of England.” … “It is far too late in the day to contemplate an allodial or other system of land ownership. Land in Australia which has been granted by the Crown is held on a tenure of some kind and the Ntles acquired under the accepted land law cannot be disturbed.” - Brennan J RADICAL TITLE - - McHugh J said in Yarmirr v Northern Territory (2001) 208 CLR 1; (at[212]): … Radical Atle was the device that the common law adopted to reconcile the theory of tenure and naAve Atle when the Crown acquired sovereignty of a selled country. It was the invenIon of 19th-century judges confronted with the reality of indigenous persons occupying land over which - according to the orthodox common law view - they had no rights against the Crown. So the judges invented the noIon of a radical Itle burdened with the rights and interests that indigenous people possessed under their tradiIonal laws and customs. Radical Itle in a naIve Itle setng serves the same purpose as the hcIon of the grant of an estate does in the case of the fee simple in England. If the Crown claims Itle to land, that hcIon requires the Crown to prove its Itle. Historically it did so by an inquest of oqce or an informaIon of intrusion. See also Brennan J’s Judgment in Mabo at paragraphs [48]-[51] Crown can’t just go out and discreIonary grant land, tenure etc without considering this other form of land rights which may exist Radical Itle is a lesser form of Itle that the crown has NATIVE TITLE ACT 1993 (CTH) - NaIve Title was then passed Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 - - S 223(1), NaIve Title Act – DehniIon of NaIve Title o Three elements here are important elements to claim NaIve Title S 223(1)(a) Rights and Interest are possessed under the tradiIonal customs observed, by the Aboriginal people or Torres Strait Islanders o ‘Interest’ – whether it be hshing/hunIng or exclusion to land S 223(b) “have a connecIon with the land or waters” o Does not include foreshore – can’t be exclusive to NaIve Title Rights Courts will decide whether it’s exclusive rights or non exclusive rights EXTINGUISHMENT - - ExInguishment is concept whereby NaIve Title Rights will no longer be recognise by the common law ExInguishment is possible by hndings of the HC ExInguishment or parIal exInguishment of naIve Itle (s 237A) Freehold Crown Leasehold – lasts for a very long Ime. There are also restricIons on Crown Leases o Crown grants land by statutes/legislaIons Other acIons o Mining Leases o Passage of LegislaIon restricIng rights (see Akiba) Recognised in the Wik’s decision that the granIng of pastoral leases have the eiect of only parIally exInguishing naIve Itle Wik Peoples v The State of Queensland & Ors; [1996] HCA 40 (‘Wik’) - - - Pastoral Leases granted under the Land Act 1910 (Qld) o Did Pastoral Lease exInguish NaIve Title Rights? From Mabo Freeholder estate would exInguish Court found: Pastoral Leases would not necessarily exInguish NaIve Title Rights because it did not grant exclusive possession like a freehold estate o Nor the same kind of leases that you might come across in a residenIal situaIon (renIng an apartment – given small part of a freehold estate) Did not confer a right of exclusive possession on the landholders Therefore NaIve Title rights could conInue From Mabo: o “clear and unambiguous words be used before there will be imputed to the legislature an intent to expropriate or exInguish valuable rights relaIng to property without fair compensaIon.” Fejo v Northern Territory (1998) 58 – 195 CLR 96 - Held that a grant of land in fee simple exInguished underlying naIve Itle because the two sets of rights were inconsistent with each other = NaIve Title is completely exInguished by the grant of a freehold estate. The rights of a fee simple are enIrely inconsistent with conInued NT rights Wherever you see freehold land granted there is a complete exInguishment of NaIve Title Rights There is compensaIon within the NaIve Title Act – ‘allure’ – but there must be a right to negoIate Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Commonwealth v Yarmirr [2001] HCA 56 - ApplicaIon for determinaIon of naIve Itles to seas Whether public rights to hsh and to navigate and internaIonal right of innocent passage in territorial sea inconsistent with exclusive naIve Itle right. Apply for exclusive control in a sea area o Courts found: not possible as there is public places to hsh and navigate and an internaIonal right of passage o Non-exclusive rights from the foreshore to the sea. o Can claim non-exclusive rights – like to hsh Western Australia v Ward (2002) 213 CLR 1 - The cases ooen refer to the need for those who contend that naIve Itle has been exInguished to demonstrate a “clear and plain intenIon” to do so. That expression, however, must not be misunderstood. The subjecIve thought processes of those whose act is alleged to have exInguished naIve Itle are irrelevant. As Wik and Fejo reveal, where, pursuant to statute, be it Commonwealth, State or Territory, there has been a grant of rights to third parIes, the quesIon is whether the rights are inconsistent with the alleged naIve Itle rights and interest. That is an objecIve inquiry which requires idenIhcaIon of and comparison between the two sets of rights. Reference to acIviIes on land or how land has been used is relevant only to the extent that it focusses alenIon upon the right pursuant to which the land is used. Akiba v Commonwealth (2013) - - - DeterminaIon included naIve Itle right to access and take for any purpose resources in naIve Itle areas o Need a license to hsh Whether legislaIve regimes inconsistent with conInues existence of naIve Itle right Whether right to access and take resources in naIve Itle areas parIally exInguished where resources taken for commercial purposes “Not only does regulaIon of a naIve Itle right to take resources from land or waters not sever the connecIon of the peoples concerned with that land or those waters, regulaIon of the naIve Itle right is not inconsistent with the conInued existence of that right. Indeed, as was pointed out in Yanner, regulaIng the way in which a right may be exercised presupposes that the right exists”. Of course, regulaIon may shade into prohibiIon, and the line between the two may be diqcult to discern. But the central point made in Yanner, and resected in each of Wik, Fejo, Yarmirr and Ward, is that a statutory prohibiIon on taking resources from land or waters without a license does not conclusively establish exInguishment of naIve Itle rights and interests of the kind found to exist in this case…’ (Hayne, Kiefel and Bell JJ at 64) RECAP – NATIVE TITLE = SUI GENERIS RIGHTS - - “Because naIve Itle has its origin in tradiIonal laws and customs, and is neither an insItuIon of the common law nor a form of common law tenure, it is necessary to curb the tendency (perhaps inevitable and natural) to conduct an inquiry about the existence of naIve Itle rights and interests in the language of the common law property lawyer” Gleeson CJ, Gaudron, Gummow and Hayne JJ in Commonwealth v Yarmirr [2001] HCA 56 Only for available to indigenous Australians – must prove connecIon with the Indigenous Land and custom – Must show that rights has not been/has been exInguished Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 - Nowadays, if the rights are exInguished, there is compensaIon RECAP - Mabo established NaIve Title land rights for Indigenous Australians NaIve Title operates as a burden on the Crown’s Itle The Crown did not acquire absolute and benehcial ownership of Australia, but rather, they acquired radical Itle. Certain acIons of the government will exInguish NaIve Title rights. This includes freehold and legislaIon with a clear and plain intenIon. Crown Leasehold will not necessarily exInguish NT Rights. Common law that is recognising NT rights – but not the source of law for those rights o The source of laws for those rights are the tradiIonal law and customs of the indigenous people WEEK 3: CO-OWNERSHIP KEY QUESTIONS 1. What is co-ownership and how is it created? 2. What are the rights and obligaIons between co-owners? 3. How can co-ownership be brought to an end? WHAT IS CO-OWNERSHIP? - Tenants in common Joint tenancy Basic of co-ownership – ownership of real property where there can be alributed ownership to 2 or more people (must be at least 2 – can be corporaIons/held in trust) and have to be in relaIon to the same lot CO-OWNERSHIP OF WHAT? - - Land – Only focus on land for this unit o Communal property o Commercial property Car (personal property) Shares Intellectual property rights TENANTS IN COMMON - Tenants in common is whereby the diierent legal enIIes in the lot own a separate disInct share or fracture in the lot DisInct ownership shares in the property (not physical share) Shares need not be equal (e.g. 1/3 plus 2/3) EnItled to physical possession of whole land Individual share can be leo by will JOINT TENANTS - No separated shares in the property As a group they own the enIre property ‘Right to survivorship’ applies – meaning the surviving JT inherit o If one dies, the other joint tenants automaIcally inherit the ownership Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 TENANTS IN COMMON - In Tenants in Common – the ability to alienate/sell or part with share ‘Right of survivorship’ – does not apply in Tenants in Common o AdministraIon of the estate – the separate share will go in accordance to wishes CREATION OF CO-OWNERSHIP - - Joint Tenants – by express words (e.g. to A and B as ‘joint tenants’) Tenants in common – by express words (e.g. to A and B as ‘tenants in common in equal shares’) o Could be created in a will PresumpIon: o Common law = Joint Tenants If no express words - JT o Equity = Tenants in Common WORDS OF CREATION - - Re Rose [1962]: o “In equal shares as joint tenants” Creates words of confusion as JT cannot have equal shares, they can only own the property jointly as a group Therefore it is a Tenant in Common that is being created Re Barbour [1967]: o “Share and share alike as joint tenants” ProblemaIc because joint tenants are not meant to share and share alike Therefore it is a Tenant in Common SECTION 35 PROPERTY LAW ACT 1974 (QLD) - Default will be tenants in common 35 ConstrucAon of disposiAons of property to 2 or more persons together (1) A disposiIon of the benehcial interest in any property, whether with or without the legal interest, to or for 2 or more persons together benehcially shall be construed as made to or for them as tenants in common, and not as joint tenants. (2) This secIon does not apply— a. to persons who by the terms or by the tenor of the disposiIon are executors, administrators, trustees, or mortgagees, nor in any case where the disposiIon provides that persons are to take as joint tenants or tenants by enIreIes; and b. to a disposiIon for partnership purposes in favour of persons carrying on business in partnership. (3) Subject to the provisions of the Partnership Act 1891 , a disposiIon for partnership purposes of an interest in any property in favour of persons carrying on business in partnership shall, unless a contrary intenIon appears, be construed as— a. a disposiIon (if any) of the legal interest to those persons as joint tenants; and b. a disposiIon (if any) of the benehcial interest to those persons as tenants in common. (4) This secIon applies to any disposiIon made aoer the commencement of this Act. Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 (5) In this secIon— "disposiAon" includes a disposiIon which is wholly or partly oral. LAND TITLE ACT 1994, S 56 56 Registering co-owners (1) In registering an instrument transferring an interest to co-owners, the registrar must also register the co-owners as holding their interests as tenants in common or as joint tenants (2) If the instrument does not show whether co-owners are to hold as tenants in common or as joint tenants, the registrar must register the co-owners as tenants in common RECAP - Co-ownership refers to 2 or more persons who own the same land at the same Ime There are only 2 forms of co-ownership: JT and TIC JT carries the right of survivorship Common law presumpIons have been displaced by statute (the PLA) WEEK 3: CO-OWNERSHIP RIGHTS & OBLIGATIONS KEY QUESTION 1. What is co-ownership and how is it created? 2. What are the rights and obligaAons between co-owners? 3. How can co-ownership be brought to an end? RIGHT AND OBLIGATIONS 1. AlienaIon (e.g. sale/transfer) a. AlienaIon is to sell/gio/transfer a share 2. OccupaIon 3. Outgoings a. Common obligaIon to pay for certain ‘outgoings’ (expenses to keep the property running) 4. Improvements a. Improvements to the property 5. OccupaIon Rent a. Known as OccupaIon fee – which might be able to be claim from one co-owner against another ALIENATION NB see eg right to alienate Hall v Busst (1960) 104 CLR 206 - - One of the rights to property is the right to alienate property If one person decides to alienate the 1/3 share in a Tenant in Common situaIon – then the person will have the 1/3 share in a Tenant in Common o If 2 people – and one gives the ½ share to the other, it ends the co-ownership agreement If co-owners wanted to get rid of enIre property – all needs to sign Hall v Busst Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 o Not appropriate to have a contract that restrains one co-owners ability to alienate their share of the property OCCUPATION - - Each co-owner is enItled to occupy the whole of the premises Co-owners can invite strangers onto the property o Doesn’t need permission from the other co-owner/s o Thrib v Thrib is authority for this If one party ‘ousts’ another then they may be liable for occupa,on rent and/or damages (Case law: Oates v Oates [1949], Thrib v Thrib 1975) OUSTER - - Wrongfully prevenIng another from using the property o E.g. words like “Don’t you dare enter anymore” then changing locks Actual force unnecessary but some express denial needed o One co-owner applying for court order or wriIng to them formally may be enough Changing the locks, making life generally unpleasant etc may not be suqcient OccupaIon rent payable (re Thurgood [1987] OConvR 54-239; Pascoe v Swan) o If denied entry then occupaIon rent – if leo on own accord, not enItled to occupaIon rent See [8.260] OUTGOINGS - - Insurance premiums and pest control o No obligaIon to account to another co-owner absent an agreement SomeImes, however, there is a ‘joint obligaIon’ to insure the property (e.g. under a mortgage) o The bank require insurance – joint obligaIon if required under the mortgage Water and council rates – Joint debts for which co-owners are jointly liable Relevant cases: Muschinski v Dodds (1985); Leight v Dickeson (1884); Forgeard v Shanahan (1994) o Msucihinski v Dodds talks about principle whereby co-owners of property can be required jointly to be obligated to pay debts (based upon principles of equity) – joint obligaIon to pay things like council fees etc If one party pays more than later on, in favour of that party IMPROVEMENTS - - Improvements to the property (e.g. painIng/renovaIng) o If the other person does not help out with improvement, if no agreement there will be no compensaIon o However, equity may come in and say they may be enItled for some compensaIon as one person as exert more energy than the other and it increases the value of the land – only occurs at terminaIon of co-ownership where accounts is taken At common law no right to seek compensaIon for improvements or repairs (absent agreement) In Equity, may be payable at terminaIon of c-ownership See case of Brickwood v Young (1905) and [8.240] Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 OCCUPATION RENT - Also known as occupaIon fee – the amount of money one co-owner is enItled to by virtue of the fact that they are not in the premises Payable where: o One co-owner has been formally ‘ousted’ (Pascoe v Swan) o One party is claiming compensaIon for improvements and has been in sole occupaIon (Brickwood v Young) In Equity and only on terminaIon of arrangement Max equity: ‘must come with clean hands’ – If seek to claim compensaIon then the other party may oiset that with a claim for occupaIon rent o Where relaIonship has broken down (Callow v Rupchev) o See [8.240] CALLOW V RUPCHEV [2009] NSWCA 148 The basic principle that a tenant in common is not liable to pay an occupaIon rent by virtue merely of his being in sole occupaIon of the property does not apply in the case where a matrimonial or similar relaIonship has broken down and one party is, for pracIcal purposes, excluded from the family home. - Callow living with Rupchev in defacto relaIonship RelaIonship broke down – somewhat volaIle Dispute on outgoings QuesIon arose whether occupaIon fee needed to be paid in which one of the parIes was not in possession of the premise A former ouster had a reason in this circumstance? o Not the case, but there may be another category in which OccupaIon Rent may be payable – ‘RelaIonship has broken down’ Callow v Rupchev - “One can describe the breakdown of a domesNc relaNonship as an ouster, but such relaNonships can break down without adributable fault on the part of either party. To describe such a breakdown as an actual ouster involves a ecNon and it is beder to recognise such a breakdown as an independent ground for charging the co-owner who remains with an occupaNon rent.” See [8.260] AMOUNT? - Fair market rent for the premises Must resect the proporIonate interest in the property (e.g. ½) See the case of Kangas v Tsangaras (1990) See [8.260] RECAP - Disputes between co-owners can and do arise Co-owners can invite strangers onto the property Co-owners have ‘joint debts’ such as water and council rates Equity may provide relief for improvements carried out by one co-owner (which may be oiset by an occupaIon fee) Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 - An occupaIon fee may be paid in other circumstances including relaIonship breakdown and ouster WEEK 3: CO-OWNERSHIP TERMINATION KEY QUESTIONS 1. What is co-ownership and how is it created? 2. What are the rights and obligaIons between co-owners? 3. How can co-ownership be brought to an end? TERMINATION AND SEVERANE - - - Severance (of joint tenancy): o AlienaIon - selling o Mutual agreement – to turn into a tenant in common o Course of dealing – if no agreement but parIes have made intenIons clear through incomplete agreement o RegistraIon of transfer (Land Title Act s 59) – for freehold land The eiect of severance will be to turn joint tenancy into a tenant in common so there is sIll a co-ownership arrangement Death of a joint tenant (right of survivorship) TerminaIon – end co-ownership all together ( o Can be done by both co-owners o One can be sole owner of estate and therefore no longer co-ownership o If co-ownership sold to 2 owners – then a new co-ownership will take place Transfer of interest(s) to third party or another co-owner Court Order (Property Law Act 1974, Div 2 Part 5) o Court appoint a trustee to sell property COURSE OF DEALING – CORRIN v PATTON (1990) - Mrs Palon was terminally ill IntenIon to sever joint-tenancy to a tenant in common so survivorship will not automaIcally apply Executed transfer and declaraIon of trust o If the document is registered – able to sever joint tenancy CerIhcate of Itle not obtained (held by Bank) Transfer not registered Issue: upon death, who inherited property? o Course of dealing? Not enough to unilaterally sever a Joint Tenancy Mrs Palon did not do all that was necessary to eiect severance. “The quesIon is then whether Mrs Palon did all that it was necessary for her to do in order to eiect a transfer. Two obstacles are suggested to compleIon of the gio. First, the cerIhcate of Itle remained throughout with the mortgagee and Mrs Palon took no steps to arrange for its producIon for the purposes of registraIon. Secondly, it is not clear whether or not [the solicitor] held the executed transfer on Mrs Palon's instrucIons or those of Mr Corin.” per MASON C.J. AND McHUGH J [at 40] BY REGISTRATION OF TRANSFER (s 59, LAND TITLE ACT 1994) (Qld) 59 Severing Joint Tenancy Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 (1) A registered owner of a lot subject to a joint tenancy may unilaterally sever the joint tenancy by registraIon of a transfer executed by the registered owner. (2) However, the registrar may register the instrument of transfer only if the registrar is saAsYed the registered owner has given, or made a reasonable aZempt to give, each other joint tenant the following— a. if the instrument is an electronic conveyancing document—wrilen noIce of the registered owner’s intenIon to sever the joint tenancy under subsecIon (1) ; b. otherwise—a copy of the instrument. (3) On registraIon of the instrument of transfer, the registered owner becomes enItled as a tenant in common with the other registered owners. (4) If there are more than 2 joint tenants of the lot, the joint tenancy of the other registered owners is not aiected. SALE OR PARTITION UDNER THE PLA - Division 2, s 37 - 43 Allows 1 or either of the co-owners when having a dispute to apply to the courts under Division 2 to appoint a trustee, and the trustee will sell the property and divide the proceeds or parIIon the property o ParIIon is dividing PROPERTY LAW ACT 1974 38 Statutory trusts for sale or parAAon of property held in co-ownership (1) Where any property (other than chalels personal) is held in co-ownership the court may, on the applicaIon of any 1 or more of the co-owners, and despite any other Act, appoint trustees of the property and vest the same in such trustees, subject to encumbrances aiecIng the enIrety, but free from encumbrances aiecIng any undivided shares, to be held by them on the statutory trust for sale or on the statutory trust for parIIon. (2) Where the enIrety of the property is vested in trustees or personal representaIves, those trustees or personal representaIves shall, unless the court otherwise determines, be appointed trustees on either of such statutory trusts, but subject, in the case of personal representaIves, to, their rights and powers for the purposes of administraIon. (3) Where the enIrety of the property is vested at law in co-owners the court may appoint a trustee corporaIon either alone or with 1 or 2 individuals (whether or not being co-owners), or 2 or more individuals, not exceeding 4 (whether or not including 1 or more of the coowners), to be trustees of the property on either of such statutory trusts. (3A) On such appointment under subsecNon (3) , the property shall, subject to the Trusts Act 1973 , secNon 90 , vest in the trustees. (4) If, on an applicaIon for the appointment of trustees on the statutory trust for sale, any of the co-owners saIshes the court that parIIon of the property would be more benehcial for the co-owners interested to the extent of upwards of a moiety in value than sale, the court may, with the consent of the encumbrancee of the enIrety (if any), appoint trustees of the property on the statutory trust for parIIon, or as to part of the property on the statutory trust for sale, and as to part on the statutory trust for parIIon, but a purchaser shall not be concerned to see or inquire whether any such consent has been given. (5) When such trustees for parIIon have prepared a scheme of parIIon they shall serve noIce in wriIng of the scheme on all the co-owners of full age, and any of such co-owners Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 dissaIshed with the scheme may, within 1 month aoer service upon the co-owner of such noIce, apply to the court for a variaIon of the same. (5AA) If any of the co-owners is a person for whom an administrator has been appointed under the Guardianship and AdministraNon Act 2000 for the property, the noIce must be served on the administrator. (5A) If any of the co-owners is an incapacitated person within the meaning of the Public Trustee Act 1978 , the noIce must be served on the person charged by law with the management and care of the incapacitated person’s property, or if there is no person charged, on the public trustee. (5B) Where any of the co-owners is a person not of full age or a person who cannot be found or ascertained, or as to whom it is uncertain whether the person is living or dead, the trustees may act on behalf of the person, and retain land or other property to represent the person’s share. (6) In relaIon to the sale or parIIon of property held in co-ownership, the court may alter such statutory trusts, and the trusts so altered shall be deemed to be the statutory trust in relaIon to that property. (6A) Without limiIng the power of the court so to alter the statutory trusts, the court shall, unless for good reason the court otherwise directs, so alter the statutory trusts as to provide in the case of the statutory trust for parIIon that— a. any encumbrance which, prior to the appointment of the trustees, aiected any undivided share shall conInue to extend and apply to any such share; and b. any mortgage created for raising equality money shall rank in priority aoer any such encumbrance. (7) Where property becomes subject to such statutory trust for sale— a. in the case of joint tenancy—a sale under the trust shall not of itself eiect a severance of that tenancy; and b. in any case—land shall be deemed to be converted upon the appointment of trustees for sale unless the court otherwise directs. (8) This secIon applies to property held in co-ownership at the commencement of this Act and to property which becomes so held aoer such commencement. (9) This secIon does not apply to property in respect of which a subsisIng contract for sale (whether made under an order in a suit for parIIon, or by or on behalf of all the co-owners) is in force at the commencement of this Act, if the contract is completed in due course, nor to land in respect of which a suit for parIIon is pending at such commencement if a decree for a parIIon or sale is subsequently made in such suit. AGREEMENTS BETWEEN CO-OWNERS - ‘Rights of pre-empIon’ or ‘First Rights of Refusal’ E.g. o One co-owner cannot sell the property without the agreement of the other o One co-owner must hrst oier their interest in the property for sale to the other coowner o One co-owner cannot apply to the court for a sale (under s 38 PLA) within a parIcular Ime frame Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 RE PERMANENT TRUSTEE NOMINEES (CANBERRA) LTD [1989] 1 QD R 314 - - Tenants in common land and resort Agreement: o “As a separate and severable covenant, the ParIes hereby agree that neither of them will (except aoer twelve (12) months prior noIce in wriIng to the other of them) make applicaIon to the Court for the appointment of trustees on statutory trusts for sale or parIIon pursuant to the provisions of Division 2 of Part V of the Property Law Act 1974.” QuesIon to the court was: was the clause valid? The agreement was o Not void as ousIng the jurisdicIon of the Court; and o Not Void as amounIng to a restraint on alienaIon Right was sIll there, just required to wait for 12 months KELLY J - - “The eiect of [the agreement] is not to oust the jurisdicIon of the court but only to provide for the giving of twelve months prior noIce in wriIng before seeking to have the jurisdicIon exercised” “there is nothing in the terms of s.38 itself or indeed in any other provision of the Property Law Act from which it could properly be inferred that a covenant whereby the parIes agreed that neither would seek to exercise its statutory right without giving some period of noIce to the other, even a period as long as twelve months, is prohibited and it is diqcult to see any public interest in prohibiIng such a covenant.” CONNOLLY J - ““For my part I cannot see that cl.6 of the management agreement aiects in the slightest degree to abrogate the jurisdicIon of the court. It is no more than a mutual promise by both parIes not to exercise a right of a proprietary character save on twelve months noIce.” o 12 months considered hne. But consider if it was 65 years? Probably not hne in that case HALL V BUSST (1960) 104 CLR 206 “The ground for denying the validity of a contractual restricIon upon alienaIon is that it is a principle of the law that private property should be fully alienable. …a contractual restricIon upon the alienaIon of an absolute estate if unqualihed should be considered void and this seems to accord with modern views of policy” - Per Dixon CJ RECAP - Joint tenancies can be severed in one of several ways including mutual agreement, registraIon of transfer, alienaIon or course of dealing In the event one co-owner doesn’t wish to sell, a co-owner can apply to the Court for an order for parIIon or sale In certain circumstances, agreements between co-owners will be upheld Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 RP who renegs on their obligafon to sell under a contract of sale (who relies on indefeasibility) does not have a good case – in personam can be invoked to defeat RO indefeasible ftle RO grants mortgage in non-registrable form and then denies its existence based on indefeasibility – in this instance the lender can defeat indefeasibility In both cases, RO did something personally to create an interest in the land for someone else. And that someone else can then act on those rights by invoking the in personam excepfon THE TORRENS SYSTEM – OVERVIEW Overview A system of registrafon of ftle to land – ftle is gain by registrafon, not registrafon of ftle Title not dependent on predecessors’ ftles – so no need to prove a chain of ftle Indefeasibility of Rtle – refers to immunity from ajack by adverse claims to the land or interest Frazer v Walker However, indefeasibility of ftle is not absolutely indefeasible as it may be defeated or qualiled Cassegrain v Gerard Cassegrain & Co Pty Ltd Used in all states of Australia, in New Zealand, England and some states of the United States There is no old system land leo in Queensland, ACT and NT See Land Title Act 1994 (Qld) First introduced in South Australia 1858 Introduced in Qld in Real Property Acts (Qld) 1861 and 1877 Superimposed upon ‘old system’ ftle – read in conjuncfon with PLA and common law THE ‘OLD SYSTEM’ – CONVEYANCING Background Private conveyancing – dependent on the nature of the ftle Need to prove a ‘chain of ftle’ Nemo dat quod non habet – you cannot give what you do not have For E to prove they have valid Gtle, must prove valid transfer for all previous individuals. As this has not occurred, cannot prove valid Gtle RegistraHon of Deeds Public register of deeds – registrafon not compulsory Did not cure any defects in a seller's ftle – validity sfll dependent upon the chain of ftle Priority according to date of registrafon, not execufon See PLA ss 241-9 for all above All registered deeds and other instruments made bona lde and for valuable considerafon take priority according to the date of registrafon (not execufon) 4 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 PLA s 246 TORRENS SYSTEM General DeKniHons (LTA s 4, Sch 2) Each parcel of land is called a lot Ea c hl o t e x i s t so nap l a n Ea c hl o t h a sau n i q u et i t l er e f e r e n c en u mb e r The Torrens system protects registered interests Ea c hp e r s o nwh oh a sar e g i s t e r e di n t e r e s t i nal o t i sar e g i s t e r e dp r o p r i e t o ro f t h a t i n t e r e s t ( RP) Th er e g i s t e r e dp r o p r i e t o ro f t h el e g a l f e es i mp l ei sa l s oc a l l e dt h er e g i s t e r e do wn e r( RO) Registrafon of an instrument T or e g i s t e ral o t , i n t e r e s t , i n s t r u me n t o ro t h e rt h i n gme a n sr e c o r dt h ep a r t i c u l a r so f t h et h i n gi nt h e f r e e h o l dl a n dr e g i s t e r Us u a l l yh a p p e n s2 3d a y sa f t e rl o d g me n t o f t h ei n s t r u me n t INDEFEASIBILITY Statutory Provisions – ESect of indefeasibility Upon registrafon, the registered proprietor of an interest in land has good ftle: s u b j e c t t or e g i s t e r e di n t e r e s t sa ff e c t i n gt h el o t b u t f r e ef r o ma l l o t h e r i n t e r e s t s LTA s 184(1) The registered proprietor: a )i sn o t a ff e c t e db yc o n s t r u c t i v en o t i c eo f a nu n r e g i s t e r e di n t e r e s t i nt h el o t b )i sl i a b l et oap r o c e e d i n gf o r p o s s e s s i o no f t h el o t o ra ni n t e r e s t i nt h el o t ONL YI Ft h ep r o c e e d i n gi s b r o u g h t b yt h er e g i s t e r e dp r o p r i e t o r o f a ni n t e r e s t a ff e c t i n gt h el o t LTA s 184(2)x The registered proprietor’s interest can be DEFEATED if the: a )e x c e p t i o n si nL T As1 8 5a p p l y ; o r b )t h ef r a u de x c e p t i o na p p l i e s LTA s 184(3)x CreaHon / RecogniHon of Indefeasibility A Lot means a separate, disfnct parcel of land on: t h er e g i s t r a t i o no f as u b d i v i s i o n ;OR t h er e c o r d i n go f p a r t i c u l a r so f a ni n s t r u me n t LTA Sch 2, s 4 Indefeasibility for a lot is created by recording the parfculars of the lot on the freehold register LTA s 37 Indefeasibility of ftle for a lot is the current parfculars listed in the freehold register – may be evinced by a cerflcate of ftle LTA s 38 5 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 No need for considerafon LTA s 180 Transfer / creafon of an interest in a lot occurs upon registrafon LTA s 181 A legal interest is created or transferred upon registrafon LTA s 182 RegistraHon of Instruments An instrument is registered by recording in the freehold land register the necessary parfculars LTA s 173 An instrument is registered when its parfculars are entered on the freehold land register LTA s 174 Re g i s t e r e di n s t r u me n t f o r msp a r t o f t h ef r e e h o l dl a n df r o mt h et i mei t i sl o d g e d : s1 7 5 Re g i s t e r e di n s t r u me n t o p e r a t e sa sad e e d : s1 7 6 Instruments are registered in the order in which they are lodged LTA s 177 Registered instruments have priority according to when they were lodged – not according to when they were registered or executed LTA s 178 Registrafon is required for: f e es i mp l eg r a n t e db yt h eSt a t ed e e do f g r a n t ( s4 7 ) t r a n s f e r o f al o t o r a ni n t e r e s t i nal o t ( s6 0 ( 1 ) ) l e a s e so f al o t o rp a r t o f al o t ( s6 4 ) mo r t g a g e s( s7 2 ) e a s e me n t s( s8 2 ) c o v e n a n t sl o d g e db ySt a t eo r l o c a l g o v e r n me n t ( s9 7 A) p r o fi t sap r e n d r e( s9 7 E) wr i t so f e x e c u t i o n( s1 1 6 ) p o we r so f a t t o r n e y( s1 3 3 ) b u i l d i n gma n a g e me n t s t a t e me n t ( s5 4 A5 4 L ) t i t l eb ya na d v e r s ep o s s e s s o r ( s1 0 8 ) Interests which may not be registered: Be n e fi c i a l i n t e r e s t su n d e rat r u s t LTA ss 109, 110 h o we v e r ap e r s o n , wh oh o l d st h el e g a l e s t a t ea st r u s t e e , c a nb er e g i s t e r e da sat r u s t e e : s s1 0 91 1 0 Al i f ei n t e r e s t o rr e ma i n d e r LTA s 55, must be read with PLA s 30(2) t h er e g i s t r a r ma y' r e c o r d ' al i f ei n t e r e s t a n dar e ma i n d e r Ar e s t r i c t i v ec o v e n a n t CANNOTb er e g i s t e r e dUNL ESSi s s u e db ySt a t e , l o c a l g o v e r n me n t LTA s 97A Unregistered Interests 6 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Unregistered interests are recognised under Torrens Barry v Heider F ACTS:Br e g i s t e r e dp r o p r i e t o r o f a ni n t e r e s t i nf e es i mp l eo f T o r r e n sl a n d .Bt r i c k e db ySi n t os i g n i n ga t r a n s f e r –Ss a i dh ewo u l dn o t s e l l o r t r a n s f e r p r o p e r t yf o rmu c hl e s st h a ni t swo r t h .St h e nu s e dt r a n s f e r f o r ma n dc e r t i fi c a t eo f t i t l et or a i s el o a n swi t hH, u s i n gt h ep r o p e r t ya ss e c u r i t y .No t h i n gwa sr e g i s t e r e d . T r a n s f e r i nf a v o u r o f Swa sv o i d–t a i n t e db yf r a u d . Br e ma i n e dr e g i s t e r e do wn e r o f l a n di nf e es i mp l e .S h a du n r e g i s t e r e dt r a n s f e r i nh i sn a me .Hu n r e g i s t e r e dmo r t g a g e .Bt r i e dt oa r g u ea l l mo r t g a g e ewa sa n u n r e g i s t e r e dmo r t g a g ei n s t r u me n t wh i c hwa sn o t a ni n t e r e s t i nl a n d .I ne s s e n c e , Ho n l yh a dc o n t r a c t u a l r i g h t sa g a i n s t S, a n dt h a t h eBwa sn o t p r i v yt ot h ec o n t r a c t a n dt h e r e f o r eh i sl a n ds h o u l dn o t b e b u r d e n e db yHmo r t g a g e HELD:Hh a da nu n r e g i s t e r e dmo r t g a g et h a t T o r r e n ss y s t e mwo u l dr e c o g n i s e .Mo r es o , Bh a da r me dS wi t ht h ed o c u me n t st h a t a l l o we dh i mt oc r e a t et h emo r t g a g ei nf a v o u r o f H.No t o n l ywa sHmo r t g a g e r e c o g n i s e d , i t b u r d e n e dt h el a n dt h a t Bwa sr e g i s t e r e do wn e ro f Chan v Cresdon CerHKcate of Title Contains a copy of the parfculars recorded on the Registry Only issued upon request (potenfally increasing opportunity for fraud) LTA s 42(1) Key to dealing with the Registry – must be presented to lodge an instrument Deferred / Immediate Indefeasibility Immediate indefeasibility – a registered proprietor immediately obtains an indefeasible ftle, even if registrafon has been obtained by registrafon of a void or voidable instrument Frazer v Walker F ACTS:Mr a n dMr sFwe r er e g i s t e r e do wn e r s .Mr sFa c q u i r e dal o a nf r o mt h eRsa n df o r g e dMr F' s s i g n a t u r eo nmo r t g a g e .Th eRsr e g i s t e r e damo r t g a g eu n a wa r eo f f r a u db yMr sF .De f a u l t u n d e r t h e mo r t g a g e .Th eRse x e r c i s e dp o we r o f s a l ea n ds o l dl a n dt oWwh ob e c a met h er e g i s t e r e do wn e r .Mr F a r g u e dmo r t g a g ewa sf o r g e da n d , t h e r e f o r e , v o i da n do f n oe ff e c t HELD:i mme d i a t ei n d e f e a s i b i l i t ya p p l i e d–a st h et r a n s f e r t oWh a db e e nr e g i s t e r e d , W’ st i t l ewa s i n d e f e a s i b l e . I t i st h ef a c t t h er e g i s t r a t i o na n dn o t i t sa n t e c e d e n t swh i c hv e s t s/ d i v e s t st i t l e Breskvar v Wall (1971) 126 CLR 376 – strongly recommend reading F ACTS:Bwe r er e g i s t e r e do wn e r so f l a n d–l o a nf r o mP .Bs i g n e da ni n s t r u me n t o f t r a n s f e r a n dg a v ei t t oPa l o n gwi t ht h ec e r t i fi c a t eo f t i t l ea ss e c u r i t yf o r l o a n( l e f t t h en a meo f t h et r a n s f e r e eb l a n k–s ov o i d i n s t r u me n t –c o n t r a v e n t i o no f s t a mpd u t yl e g i s l a t i o n ) .Pr e g i s t e r e dt h et r a n s f e r i nf a v o u r o f W( h i s g r a n d s o n ) .We x e c u t e dat r a n s f e r t oAwh i c ha c t e di ng o o df a i t ha n dwi t h o u t n o t i c eo f t h ee a r l i e r t r a n s a c t i o n( n o t r e g i s t e r e d ) .Pr i o r t ot h er e g i s t r a t i o no f t h et r a n s f e r f r o mWt oA, t h eBd i s c o v e r e dt h e f r a u da n dl o d g e dac a v e a t a g a i n s t f u r t h e rd e a l i n g swi t ht h el a n d . HELD:i mme d i a t ei n d e f e a s i b i l i t ya p p l i e d–r e g i s t r a t i o no f t r a n s f e r t oWc r e a t e da ni n d e f e a s i b l et i t l e d e s p i t et h ei n s t r u me n t o f t r a n s f e r b e i n gv o i d( i mme d i a t ei n d e f e a s i b i l i t y ) .Ah a da ne q u i t a b l ei n t e r e s t a n d ar i g h t t or e g i s t r a t i o n( a n dh a dab e t t e r e q u i t yt h a nB) .Bd e p r i v e do f i n t e r e s t i nt h el o t f r o mt h et i meA s i g n e dt h ec o n t r a c t t op u r c h a s e .Be n t i t l e dt oc o mp e n s a t i o n REASONI NG:Th eT o r r e n ss y s t e m. . . i sn o t as y s t e mo f r e g i s t r a t i o no f t i t l eb u t as y s t e mo f t i t l eb y r e g i s t r a t i o n . . . ar e g i s t r a t i o nwh i c hr e s u l t sf r o mav o i di n s t r u me n t i se ff e c t i v ea c c o r d i n gt ot h et e r mso f t h e r e g i s t r a t i o n . I t ma t t e r sn o t wh a t t h ec a u s eo r r e a s o nf o r wh i c ht h ei n s t r u me n t i sv o i d( a t 3 8 1p e r Ba r wi c k CJ ) 7 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Deferred indefeasibility – occurs unfl a valid transfer is registered – a registered proprietor, who has acquired ftle by registrafon of a void or voidable instrument, would be open to ajack on grounds that the instrument should be set aside even in the absence of fraud Gibbs v Messer – never overruled… F ACTS:Mr sMwa sROo f T o r r e n st i t l el a n d .Sh ee x e c u t e dap o we r o f a t t o r n e yi nf a v o u r o f h e r h u s b a n d wh i c ha u t h o r i s e dh i mt os e l l , mo r t g a g eo r o t h e r wi s ed i s p o s eo f t h el a n d .Mr a n dMr sMs u b s e q u e n t l y mo v e dt oSc o t l a n d .Th ep o we ro f a t t o r n e ya n dt h ed u p l i c a t ec e r t i fi c a t e so f t i t l et ot h el a n dwe r el e f t wi t h Mr Ms o l i c i t o r , C.Cf o r g e dat r a n s f e r o f t h el a n d sMr Mt oafi c t i t i o u sp e r s o nHC.Co nb e h a l f o f HC p r o c u r e dt h er e g i s t r a t i o no f t h et r a n s f e r a n dac e r t i fi c a t eo f t i t l ei s s u e di nt h en a meo f HC.St i l l p r o f e s s i n gt oa c t a sa g e n t f o r HC, Cn e g o t i a t e damo r t g a g ewi t hMc .Up o nt h ef a i t ho f t h emo r t g a g e d o c u me n t p u r p o r t e d l ye x e c u t e db yHC, Mca d v a n c e dt h emo r t g a g et oC.Mo r t g a g es u b s e q u e n t l y r e g i s t e r e d .Wh e nMra n dMr sMr e t u r n e dt oAu s t r a l i aa n dd i s c o v e r e dt h ef r a u d , a no r d e r wa ss o u g h t f o r t h ec a n c e l l a t i o no f HCc e r t i fi c a t eo f t i t l e , a n dt h ei s s u a n c eo f an e wc e r t i fi c a t eo f t i t l ei nt h en a meo f Mr s Mf r e ef r o mMcmo r t g a g e HELD:mo r t g a g ev o i da sp u r p o r t e dt ob eg i v e nb yafi c t i t i o u sp e r s o n .Mr e i n s t a t e da sRO.T h e r e g i s t r a t i o no f a ni n s t r u me n t i nt h en a meo f afi c t i t i o u sp e r s o ne x e c u t e db yaf o r g e r u s i n gafi c t i t i o u s n a med o e sn o t c o n f e r a ni n d e f e a s i b l et i t l eo nab o n afi d ep u r c h a s e r wh ob e c o me sr e g i s t e r e da s p r o p r i e t o r o f a ne s t a t eo r i n t e r e s t . Clements v Ellis F ACTS:Hwa sr e g i s t e r e dp r o p r i e t o r o f t i t l e .L a n de n c u mb e r e db yar e g i s t e r e dmo r t g a g ei nf a v o u r o f t h e t r u s t e e so f t h ewi l l o f E.Hs o l dh e r l a n dt oC.Pu r c h a s emo n e y , me mo r a n d u mo f mo r t g a g e , a n d c e r t i fi c a t eo f t i t l ewe n t t or e a l e s t a t ea g e n t , B.Hd i r e c t e dBt op a yo fft h emo r t g a g e , s e c u r ei t sd i s c h a r g e a n dr e mi t r e ma i n d e r o f p u r c h a s emo n e yt oh e r .Bf o r g e ds i g n a t u r e so f t h emo r t g a g e e st oad i s c h a r g eo f mo r t g a g ea n dl o d g e d–v a l i d l ye x e c u t i n gt r a n s f e r s i mu l t a n e o u s l ya t t h eTi t l e sOffic e .I n s t r u me n t swe r e t h e nr e g i s t e r e di nCn a me .Ba c c o u n t e dt oHf o r t h eb a l a n c eo f t h ep u r c h a s emo n e ya n da b s c o n d e d wi t ht h er e ma i n d e r . HELD:d e f e r r e di n d e f e a s i b i l i t ya p p l i e d–Cwa sn o t e n t i t l e dt or e l yo ni n d e f e a s i b i l i t y , a st h e yd i dn o t d e a l wi t hHo nt h ef a i t ho f t h er e g i s t e r . No t e–mi n o r i t ye n d o r s e di mme d i a t ei n d e f e a s i b i l i t y What is Protected by Indefeasibility Not necessarily all the terms / condifons contained in an instrument – only covenants that touch / concern the land Travinto Nominees v VlaSas PT Limited v Maradona Pty Ltd PRI NCI PLE:Re g i s t r a t i o n… v a l i d a t e st h o s et e r msa n dc o n d i t i o n so f a ni n t e r e s t wh i c hd e l i mi t o r q u a l i f yt h ee s t a t eo r i n t e r e s t o ra r eo t h e r wi s en e c e s s a r yt oa s s u r et h a t e s t a t eo ri n t e r e s t t o t h er e g i s t e r e dp r o p r i e t o r The opRon to purchase contained in a lease is not an incident of the leasehold estate and will not be protected by indefeasibility MercanGle Credits Ltd v Shell Co of Australia; Travinto Nominees v VlaSas Registrafon of a lease protects an opRon to renew the lease as the opfon is part of the lessee's leasehold estate MercanGle Credits Ltd v Shell Co of Australia Ltd Registrafon of a mortgage will protect the mortgagee’s security interest in the land, including a mortgagee’s right to sell the land in the case of default Perpetual Trustees Victoria v English Registrafon of mortgage does not cover personal covenants as they do not delne the estate or interest (eg a guarantee is not protected) 8 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Small v Tomasset However, where fraud occurs by a co-owner of the land and the registered indefeasible mortgage does not secure the debt, the mortgagee may be enftled to an equitable mortgage over the interest – this point is contenfous (text p 320ish) Perpetual Trustees Victoria v English F ACTS:Mr Ef o r g e dh i swi f e ss i g n a t u r eo nl o a nd o c u me n t sa n da ni n s t r u me n t o f mo r t g a g ef o r j o i n t l y o wn e dh o me .Mo r t g a g er e g i s t e r e da n dmo r t g a g e ewa si n n o c e n t o f t h ef r a u da n de n t i t l e dt o i n d e f e a s i b i l i t y HELD:t h er e g i s t e r e dmo r t g a g ea sama t t e r o f c o n s t r u c t i o nd i dn o t s e c u r et h ea d v a n c eo f mo n e yh a d h a db e e nma d eb yt h emo r t g a g e et oMr E.Byi t st e r mst h e“ a l l mo n i e s ” mo r t g a g es e c u r e dmo n e y p a y a b l eu n d e r a“ Se c u r e dAg r e e me n t ” b u t o nt h ef a c t st h e r ewa sn os u c ha g r e e me n t b e c a u s eb o t ht h e mo r t g a g o r swe r er e q u i r e dt os i g nt h ea g r e e me n t , wh i c hd i dn o t o c c u r h e r e( f o r g e d ) .Ho we v e r , t h e mo r t g a g e ewa se n t i t l e dt oa ne q u i t a b l emo r t g a g eo v e r t h ei n t e r e s t o f Mr E RESOL UTI ON:ma yn e e dt os e e kac o u r t o r d e r u n d e r PL As3 8–t oa p p o i n t as t a t u t o r yt r u s t e et os e l l t h ei n t e r e s t Personal covenant to sue is protected and enables the mortgagee to bring proceedings against the innocent landowner personally to recover the sum secured by the registered mortgage Hilton v Gray; MercanGle Credits v Shell Co of Australia Personal covenant not protected where registered under a forged mortgage Grgic v ANZ Torrens Examples Example 1 Ai st h er e g i s t e r e do wn e r o f L o t 1 L o t 1i ss u b j e c t t oar e g i s t e r e dl e a s e( o f 5y e a r s ) Aa g r e e st os e l l L o t 1t oB Ae x e c u t e saF o r m1T r a n s f e rt ot r a n s f e rA' sf e es i mp l ee s t a t ei nL o t 1t oB Byr e g i s t e r i n gt h eF o r m1( a ni n s t r u me n t r e g i s t r a b l eu n d e rt h eL T A)Bn o wh o l d st h ef e es i mp l ee s t a t ei nL o t 1 s u b j e c t o n l yt ot h er e g i s t e r e dl e a s eb u t f r e ef r o mt h ec l a i mo f a n y o n ee l s et ot h el o t Re s u l t :l e a s eb e i n gc r e a t e dfi r s t i nt i meb e f o r ef e es i mp l e .I f n o t r e g i s t e r e d , Bwo u l dt a k ei n d e f e a s i b l et i t l et o l a n ds u b j e c t o n l yt or e g i s t e r e di n t e r e s t sb u t f r e eo f u n r e g i s t e r e di n t e r e s t s Immediate indefeasibility example Ai st h eROo f al o t i nEa s t Br i s b a n e Bf o r g e sA ’ ss i g n a t u r eo naF o r m1i n s t r u me n t o f t r a n s f e ra n dt r a n s f e r st i t l et oC C, wh oi si n n o c e n t o f B’ sf r a u d , b e c o me sRO Ba b s c o n d swi t ht h ep u r c h a s emo n e y Al o d g e sac a v e a t a f t e rCb e c o me st h en e wRO–t h ec a v e a t i sl o d g e dt o ol a t et ob ee ff e c t i v e Cr e ma i n sRO,A’ so n l yr e me d yi sc o mp e n s a t i o nf r o mt h eSt a t eb e c a u s eh eh a sb e e nd e p r i v e do f h i sl o t I mme d i a t ei n d e f e a s i b i l i t y : C' su n i mp e a c h a b l et i t l ea r i s e si mme d i a t e l yo nr e g i s t r a t i o n , e v e nt h o u g hC’ st i t l e wa sa c q u i r e dt h r o u g haf o r g e di n s t r u me n t 9 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 EXCEPTI ONST OI NDEFEASI BI LI TY More than 1 excepHon can apply at any Hme FRAUD EXCEPTION General Principle Fraud by the current registered proprietor prevents the person sheltering behind the benelts of indefeasibility LTA s 184(3)(b) COMMONEXAMPL ES:f o r g e r yo f ar e g i s t e r e do wn e r ’ ss i g n a t u r eo nt r a n s f e r / mo r t g a g e ; wh e r eRO s i g n a t u r eo nt r a n s f e r i sg e n u i n eb u t i n d u c e db yf r a u d u l e n t mi s r e p r e s e n t a t i o n Fraud means actual dishonesty by the person or his / her agent Bahr v Nicolay (No 2) The fraud must have a causal euect upon the registered proprietor obtaining his / her interest which has resulted in loss / deprivafon Bank of South Australia v Ferguson F ACTS:e mp l o y e eo f Bp r e p a r e da“ s t a t e me n t o f p o s i t i o n ” r e l a t i n gt ot h emo r t g a g o r ’ sb u s i n e s sp r o p o s a l , a s s e t sa n dv a l u eo f t h el a n da n dt h e nf o r g e dt h emo r t g a g o r ’ ss i g n a t u r eo nt h es t a t e me n t HELD:wh i l et h i swa sad i s h o n e s t a c t , t h e“ s t a t e me n t o f p o s i t i o n ” wa so n l ya ni n t e r n a l r e c o r do f t h e Ba n ka n di t d i dn o t h a v ea n yo p e r a t i v ee ff e c t u p o nt h ed e c i s i o no f t h emo r t g a g o r t og r a n t t h emo r t g a g e o r t os i g nt h el o a nf a c i l i t ya g r e e me n t .F o r f r a u dt ob eo p e r a t i v e , i t mu s t o p e r a t eo nt h emi n do f t h e p e r s o ns a i dt oh a v eb e e nd e f r a u d e da n dt oh a v ei n d u c e dd e t r i me n t a l a c t i o nb yt h a t p e r s o n Fraud against a registered, or previous registered, owner / proprietor The fraud must be brought home to the registered owner / proprietor of the interest, or to their agents Grgic v ANZ Banking Group F ACTS:Mr G, r e g i s t e r e do wn e r , r e f u s e dt og u a r a n t e el o a nt os o n .So np e r s u a d e daf r i e n dt o i mp e r s o n a t ef a t h e r a t b a n ka n df o r g ef a t h e r ’ ss i g n a t u r eo nmo r t g a g ed o c u me n t s ; s i g n a t u r ewi t n e s s e db y b a n ko ffic e r wh ob e l i e v e dt h ef r i e n dwa sMr G( b u t d i dn o t a s kt os e eI D) .L a t e r s o nf o r g e df a t h e r ’ s s i g n a t u r eo nc o n s e n t t oi n c r e a s et h ea mo u n t b o r r o we d .So nd e f a u l t e d . ANZs o u g h t p o s s e s s i o no f t h e p r o p e r t y HELD:mo r t g a g ei n d e f e a s i b l e–a c t i o n so f b a n k , t h r o u g hi t so ffic e r s , wa sn o t f r a u d .Ac t i o n swe r e c a r e l e s s , b u t n o t t or e c k l e s sa st oa mo u n t t of r a u d( i en od i s h o n e s t y ) .An yf r a u dh e r ewa sb yt h es o n a n dh i sf r i e n d , n o t Go r t h eBa n k .Pe r s o n a l e q u i t ye x c e p t i o nn o t i n v o l v e d .Gl a n dt h e r e f o r eb u r d e n e db y t h emo r t g a g e .Re me d y–c o mp e n s a t i o nf u n d Assets v Mere Roihi Care must be taken not to conclude that mere failure to be prudent is evidence of willful blindness or reckless indiuerence Young v Hoger (agent example) F ACTS:Mr a n dMr sHo wn e dap r o p e r t y .T h e yg a v eamo r t g a g eo v e r t h ep r o p e r t yt os e c u r ea$ 5 0 k l o a nma d et od a u g h t e r t op u r c h a s eab u s i n e s s .Bu s i n e s ss o l d2y e a r sl a t e r .Mr sHf a l s e l yt o l dMr Ht h a t t h ep r o c e e d swe r ea p p l i e dt od i s c h a r g et h emo r t g a g e .Mr sHa n dd a u g h t e r o b t a i n e dal o a nf o r $ 3 5 0 k f r o mPwh i c hwa ss e c u r e do v e r t h ep r o p e r t y .Mo r t g a g eg r a n t e dwi t h o u t Mr Hk n o wl e d g ea n ds i g n a t u r e f o r g e db yMr sHa n dD.L o a np a i do u t fi r s t l o a na n db o u g h t h o mef o rD.De f a u l t o c c u r r e d .Mr sHa n dD r e fi n a n c e dt h el o a nwi t hal o a nf r o mYt h r o u g hb r o k e r .Mr Ha g a i nu n a wa r e .De f a u l t a g a i n–r e g i s t e r e d mo r t g a g e es o u g h t p o s s e s s i o n .Mr Dd e f e n d e db ys e e k i n ga no r d e r t h a t t h er e g i s t e r e dmo r t g a g es h o u l d 1 0 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 b es e t a s i d ef o r f r a u d .So l i c i t o r wa sc a r e l e s si nc a r r y i n go u t t h ed e f e n c e–s h a r e ds e r v i c e dwi t ht h e mo r t g a g eb r o k e r . HELD:n o t h i n gi nt h ec o n d u c t o f t h es o l i c i t o r wh i c ha mo u n t e dt oa c t u a l d i s h o n e s t y ; t h a t h eh a da c t u a l l y h a das u s p i c i o nt h a t Mr Hs i g n a t u r eo nt h emo r t g a g eh a db e e nf o r g e d , a n dt h a t , h a v i n gt h a t s u s p i c i o n , h ea b s t a i n e df r o mf u r t h e r e n q u i r i e s . Fraud against RP will occur where RP lodges an instrument knowing it has not been properly executed or knowledge it is a false document Australian Guarantee CorporaGon v De Jager F ACTS:mo r t g a g e ewa sn o t a wa r et h a t t h ewi f e ’ ss i g n a t u r eo nt h ei n s t r u me n t o f mo r t g a g ewa sa f o r g e r y , b u t e mp l o y e e so f t h emo r t g a g e ewe r ea wa r et h a t h e r s i g n a t u r eh a dn o t b e e nd u l ya t t e s t e d HELD:t h ea c t i o n so f t h ee mp l o y e e so f t h emo r t g a g e ec o n s t i t u t e df r a u d .He n c e , t i t l ed i dn o t p r e v a i l a s a ne n c u mb r a n c eo v e rt h ewi f e ’ si n t e r e s t a sj o i n t p r o p r i e t o r o f t h el a n d Russo v Bendigo Bank F ACTS:Rs o n i n l a wf o r g e dh e r s i g n a t u r eo namo r t g a g ed o c u me n t .T h i swa sf a l s e l ywi t n e s s e db yl a w c l e r k , G, e mp l o y e db yt h es o l i c i t o r f o r t h emo r t g a g e e . HELD:Gs i g n e dn a mea swi t n e s so f Rs i g n a t u r ewi t h o u t Rb e i n gp r e s e n t a n dt h e r e b yma d eaf a l s e s t a t e me n t o nt h ed o c u me n t t h a t s h ewa sp r e s e n t .Ho we v e r , n oe v i d e n c es h ek n e wo f t h es o n i n l a w f r a u d . HELD:e v e nt h o u g hGk n e wwh a t s h es a i dwa sf a l s es h eh a dn o t b e e ns h o wnt ob ed i s h o n e s t a n dt h e c l a i ma n t h a dn o t e s t a b l i s h e dt h er e q u i s i t ec o n s c i o u sd i s h o n e s t yn e c e s s a r yf o r f r a u d . Po s i t i o nwo u l d h a v eb e e nd i ff e r e n t i f i t wa st h es o l i c i t o r a n dn o t l a wc l e r kwh os i g n e dt h ed o c u me n t ( wo u l dh a v e u n d e r s t o o dr a mi fi c a t i o n s ) It is not enough that someone did something to induce RP to become registered MercanGle Mortgagee fails to take adequate steps to idenRfy mortgagor See below “careless mortgagee excepfon” – LTA s 185(1A) Where a mortgage is entered into / transferred post 6 Feb 2006, a mortgagee will lose benelt of indefeasibility he they fail to take reasonable steps to idenffy the mortgagor and the instrument is executed through forgery LTA s 185(1A) Fraud against the holder of an unregistered interest Mere nofce that registrafon will defeat an unregistered interest is not fraud LTA s 184(2)(a) Friedman v BarreS (not fraud) F ACTS:Be n t e r e di n t oawr i t t e nl e a s ewh i c hp r o v i d e df o r a ni n i t i a l 3y e a r t e r ma n da no p t i o nt or e n e w f o r a n o t h e r 3y e a r s .L e a s eu n r e g i s t e r e d .L a n dp u r c h a s e db yF .Fh a dn o t i c eo f Bl e a s ea n dt h eo p t i o n t or e n e w.Wh e nl e a s ee x p i r e d , Bn o t i fi e dFt h a t h ewo u l dr e n e w.Fd i dn o t r e s p o n d .1y e a r l a t e r , F s e r v e dan o t i c et oq u i t o nB.Th r o u g h o u t , Fh a da c c e p t e dr e n t f r o mBi na c c o r d a n c ewi t ht e r mso f t h e l e a s e HELD:wh e nFb e c a meRPh eh e l dt h el a n df r e eo f a n yo p t i o n st or e n e wc o n t a i n e di nt h eu n r e g i s t e r e d l e a s e .T h e r e f o r et h ep u r p o r t e de x e r c i s eo f t h eo p t i o nwa sn o t e ff e c t i v et oc r e a t ea n yn e wl e a s ef o r a t e r ma n dBwa si nap o s i t i o no f at e n a n t h o l d i n go v e rt h ee x p i r a t i o no f afi x e dt e r m. Loke Yew v Port SweSenham Rubber Co Ltd (fraudulent conduct) F ACTS:Ewa st h eRPo f T o r r e n st i t l el a n d .Pu r s u a n t t od o c u me n t si nt h eMa l a yl a n g u a g e , Es u b i n f e u d a t e dap o r t i o no f h i sl a n dt oL , s u b j e c t t ot h ep a y me n t o f a na n n u a l r e n t .Th e s ed o c u me n t swe r e 1 1 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 n o t r e g i s t e r e d .L a t e r , Sa g r e e dt op u r c h a s ea l l o f E’ sl a n d , wi t ht h ee x c e p t i o no f Lh o l d i n g .Ss o l i c i t o r s p r e p a r e dat r a n s f e r o f t h ewh o l ep r o p e r t y , h o we v e r Er e f u s e dt os i g nu n l e s sap r o v i s i o nwa sma d ef o r L p o s s e s s i o no f p a r t o f t h el a n d .T op e r s u a d eE, Sp r e p a r e da n ds i g n e dad o c u me n t wh i c ha c k n o wl e d g e d t h a t t h ec o mp a n yh a dp u r c h a s e dt h ewh o l eo f El a n da n da d d e dLl a n dwh i c hi si n c l u d e da r r a n g e me n t s wo u l db ema d e .Ont h i sa s s u r a n c e , Es i g n e dt h et r a n s f e r .Co mp a n yc o mme n c e da na c t i o nf o r p o s s e s s i o na g a i n s t L HELD:t h ec o mp a n y ’ sa c t i o n sc o n s t i t u t e d“ d e l i b e r a t ef r a u d ” . Th r e er e a s o n s :1 ) wr i t t e na s s u r a n c ewa s f a l s ea n df r a u d u l e n t l yma d ef o r t h ep u r p o s e so f i n d u c i n gE;2 ) f r a u d u l e n t s t a t e me n t i n d u c e dEt o e x e c u t et h ec o n v e y a n c e ;3 ) v a l u eo f Ll a n dwa sn o t i n c l u d e di np u r c h a s ep r i c ep a i db yE Acquiring land with nofce of an unregistered interest such as a lease, and to refuse to acknowledge the existence of the interest is not itself fraud Bahr v Nicolay (No 2) Friedman v BarreS Fraud supervened a\er registraHon Fraud within the meaning of the indefeasibility secfons refers to fraud commijed in the act of acquiring a registered ftle Bahr v Nicolay (No 2) – facts below Courts power to correct register In the case of fraud by the RP or if s 185(1)(c)-(g), (1A) apply (LTA s 187(1)) – the supreme court may by order direct the registrar to: a )c a n c e l / c o r r e c t t h ei n d e f e a s i b l et i t l eo ro t h e rp a r t i c u l a r si nt h ef r e e h o l dl a n dr e g i s t e r b )c a n c e l , c o r r e c t , e x e c u t eo r r e g i s t e ra ni n s t r u me n t c )c r e a t ean e wi n d e f e a s i b l et i t l e d )i s s u ean e wi n s t r u me n t ; o r e )d oa n y t h i n ge l s e LTA s 187(2)x Registrar’s power to correct register Registrar has power to hold and inquiry to determine whether fraud auecfng the land registry has been commijed LTA s 19 The Registrar may correct the Register where: a ni n s t r u me n t h a sb e e ni n c o r r e c t l yr e c o r d e d :s1 5 ( 2 ) ( a ) wh e r eap a r t i c u l a ri si n c o r r e c t l yr e c o r d e d :s1 5 ( 2 ) ( a ) a f t e ra ni n q u i r yh a sb e e nh e l da n dt h eRe g i s t r a rh a sd e c i d e df r a u dh a so c c u r r e d :s1 5 ( 2 ) ( b ) a ne a s e me n t i so mi t t e do r mi s d e s c r i b e dwi t h i nt h ee x c e p t i o nt oi n d e f e a s i b i l i t yi ns1 8 5 ( 1 ) ( c ) :s1 5 ( 3 ) ( a ) t h eSCh a so r d e r e dac o r r e c t i o nu n d e rs2 6 :s1 5 ( 3 ) ( b ) LTA s 15 Remedy for RP who was deprived of a lot Claimant enftled to compensafon from the State for deprivafon of the property LTA s 188(2) Applies because of: 1 2 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 a )f r a u do f a n o t h e r b )i n c o r r e c t c r e a t i o no f i n d e f e a s i b l et i t l e c )i n c o r r e c t r e g i s t r a t i o n d )e r r o ri na ni n d e f e a s i b l et i t l eo ri nt h ef r e e h o l dl a n dr e g i s t e r LTA s 188(1)x Compensafon for loss / damage where damage suuered LTA s 188A Compensafon to careless mortgagee no available LTA s 189 On payment of any compensafon, the State is subrogated to the rights of the claimant against any other person in relafon to the deprivafon, loss or damage – ie state can sue person who commijed the fraud LTA s 190 Common types of fraud Idenfty fraud Perpetrators Re l a t i v e s Ac q u a i n t a n c e s T r u s t e da g e n t s Un k n o wn s Or g a n i s e dc r i me SECTION 185 EXCEPTIONS SUMMARY A registered proprietor of a lot does not obtain the benelt of secfon 184 for the following interests in relafon to the lot … a ) Pe r s o n a l e q u i t y( i np e r s o n a m) b )I n t e r e s t o f al e s s e eu n d e r as h o r t l e a s e( l e s st h a n3y e a r s ) c ) Omi t t e do r mi s d e s c r i b e de a s e me n t d ) Ad v e r s ep o s s e s s o r e ) Ea r l i e re x i s t i n gi n d e f e a s i b l et i t l e f ) F a i l u r eb yr e g i s t r a rt oc a n c e l e a r l i e ri n d e f e a s i b l et i t l e g ) Wr o n gi n c l u s i o no f l a n d h )I n t e r e s t so f t h o s eh o l d i n ga na u t h o r i t yg r a n t e db yc e r t a i nl e g i s l a t i o nt oe x t r a c t n a t u r a l r e s o u r c e sf r o mt h e l a n d LTA s 185(1)x Careless mortgagee excepfon – Invoked where a mortgagee does not take adequate steps to verify the idenfty of a person signing a mortgage instrument LTA s 185(1A) 1 3 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 IN PERSONAM (PERSONAL EQUITY) EXCEPTION General Principles RP does not get benelts of indefeasibility (s 184) as against an equity arising from the act of the RP LTA s 185(1)(a) Elements: a ) at r a n s a c t i o no ra c t t h a t a r i s e sf r o ma na c t o f t h eRP b ) wh i c hg i v e sr i s et oar e c o g n i s e de q u i t a b l e/ l e g a l c a u s eo f a c t i o n( F a r a hCo n s t r u c t i o n s ) c )n o t i n c o n s i s t e n t wi t ht h eL T A The equity may arise before / aoer registrafon Interest may be either an estate in the land or a personal equity enforceable against the RP In personam excepfon commonly occurs where the claim is founded on: c o n t r a c t b e t we e nt h ep a r t i e s( Ba r r yvHe i d e r ) t r u s t / fi d u c i a r yr e l a t i o n s h i p( Ba h rvNi c o l a y( No2 ) ) u n d e r t a k i n gb yRPt ob eb o u n db ya ni n t e r e s t o f t h ec l a i ma n t ( Ba h rvNi c o l a y( No2 ) ) Circumstances of applicaHon A contract amounfng to more than a mere acknowledgement will enliven the personal equity excepfon Bahr v Nicolay (No 2) F ACTS:Bo wnl a n d , wh i c ht h e ys o l dt oNwi t hi n t e n t i o nt h e ywo u l dl e a s et h el a n df r o mN, b u i l da b u s i n e s s , a n du s et h ep r o fi t so f t h eb u s i n e s st ob u yb a c kt h el a n da t t h ee n do f t h el e a s e . T h e r ewa sa c l a u s ei nt h ec o n t r a c t t ot h a t e ff e c t ( wh e nl e a s ee n d e d , Nwo u l ds e l l l a n db a c kt oB) . Nt h e ns o l dt oT d u r i n gt e r mo f t h el e a s e . Co n t r a c t b e t we e nNa n dT , c o n t a i n e dac l a u s ea c k n o wl e d g i n gt h ea g r e e me n t t o s e l l t h el a n dt oB. Twh e na s k e db yBt or e s e l l r e f u s e d , a n dc i t e di n d e f e a s i b l et i t l e HELD:p e r s o n a l e q u i t ye x c e p t i o na p p l i e d .Th ec l a u s ei nt h ea g r e e me n t b e t we e nNa n dTwa smo r e t h a name r ea c k n o wl e d g e me n t o f t h ep r e v i o u sa g r e e me n t , b u t r a t h e r a mo u n t e dt oa na g r e e me n t / u n d e r t a k i n gb yTt ob eb o u n db yt h er i g h t so f t h eBu n d e r t h ep r i o r a g r e e me n t t or e p u r c h a s et h el a n d . Si mi l a r l y , t h eTh a dt a k e nt h et r a n s f e rt h e ywe r eb o u n db yt h ep r i o r p u r c h a s ea n dh e l dt h el a n ds u b j e c t t oac o n s t r u c t i v et r u s t , i n v o k i n gt h ei np e r s o n a me x c e p t i o n REASONI NG:t h ef r a u dwh i c ha t t r a c t st h ei n t e r v e n t i o no f e q u i t yc o n s i s t si nt h eu n c o n s c i o n a b l ea t t e mp t b yt h eRPt od e n yt h eu n r e g i s t e r e di n t e r e s t t owh i c hh eh a su n d e r t a k e nt os u b j e c t h i sr e g i s t e r e dt i t l e The ftle of a purchaser who has nofce of an unregistered interest and purchases on terms indicafng (wrijen / oral) that he will be bound by such unregistered interest is subject to that interest Valbirn v Powprop F ACTS:Pwa st h el e s s e eo f ar e s t a u r a n t i nAi r l i eBe a c h .Th eu n r e g i s t e r e dl e a s ep r o v i d e df o rat e r mo f 3y e a r sa n d a no p t i o nt or e n e wf o r af u r t h e r3y e a r s .Ve n t e r e di n t oac o n t r a c t t op u r c h a s et h el a n d .Th ec o n t r a c t o f s a l e i n c l u d e dt h ef o l l o wi n gc l a u s e s :Cl a u s e3 0–t h ep r o p e r t ywa ss o l ds u b j e c t t oe x i s t i n gt e n a n c i e s , i n c l u d i n gt h eP l e a s e , wh i c hwa sr e f e r r e dt oi nt h ec o n t r a c t a sc o n t a i n i n ga3y e a r o p t i o n ;Cl a u s e3 1–o nt h ed a yo f c o mp l e t i o nt h e s e l l e r wa st od e l i v e rt ot h ep u r c h a s e rc o p i e so f a l l l e a s e s ;Cl a u s e3 8–t h es a l ewa ss u b j e c t t oa n dc o n d i t i o n a l u p o n V’ sp e r u s a l o f t h el e a s e sa n di t swr i t t e na c c e p t a n c eo f t h et e r msa n dc o n d i t i o n sc o n t a i n e di nt h el e a s e s .Pr i o rt o c o mp l e t i o no f t h ec o n t r a c t , V’ ss o l i c i t o r sg a v ewr i t t e nn o t i c eo f V’ sa c c e p t a n c eo f t h el e a s e sp u r s u a n t t oc l a u s e3 8 . F o l l o wi n gc o mp l e t i o n , Vc o n t e n d e dt h a t i t wa se n t i t l e dt or e l yo nt h ei n d e f e a s i b i l i t yo f i t st i t l ea n dwa sn o t b o u n db y P’ so p t i o nt or e n e w HELD:r e j e c t e dVa r g u me n t –n o t wi t h s t a n d i n gi t sr e g i s t r a t i o na n di n d e f e a s i b i l i t yo f i t st i t l e , i t wa sb o u n db yt h e t e r mso f Pr e g i s t e r e dl e a s e . NOTE:i np e r s o n a me x c e p t i o ni sn o t i n v o k e db e c a u s eVh a dn o t i c e , b u t b e c a u s eVa g r e e dt ob eb o u n db yt h a t i n t e r e s t 1 4 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 If an undertaking to honour an unregistered interest is given prior to registrafon, then exhibifng no intenfon to honour at the fme of registrafon will amount to fraud for fraudulent misrepresentafon Loke Yew v Port SweSenham Rubber In personam will not be invoked where there is no equitable / legal cause of acfon Grgic v ANZ Banking Group F r a u de x c e p t i o nd i dn o t a p p l y . I np e r s o n a me x c e p t i o nd i dn o t a p p l ye i t h e r No t eL T As s1 1 A, 1 1 B, 1 8 5 ( 1 A) e ff e c t cf MercanGle Mutual Limited v Gosper F ACTS:Gg a v eMamo r t g a g ei ne x c h a n g ef o r al o a n .Ga l s oa s k e dMt oh o l dd u p l i c a t ec e r t i fi c a t eo f t i t l ef o r s a f e k e e p i n g .I nt h i st r a n s a c t i o n , Mh a do n l ye v e rd e a l t wi t hMr Gwh owa sap r o mi n e n t b a r r i s t e r . Mr Gwa n t e dmo r emo n e y , s oh ef o r g e dwi f e( G) s i g n a t u r eo nav a r i a t i o no f mo r t g a g ea n dp r e s e n t e dt o M.Mi no r d e r t or e g i s t e rv a r i a t i o np r o d u c e dt h ec e r t i fi c a t eo f t i t l ea n dd i ds owi t h o u t Mr sGc o n s e n t . Wh e nMr sGf o u n do u t , s h ewa n t e dt h ev a r i a t i o no f mo r t g a g es e t a s i d ea n dc l a i me ds h eh a d i n d e f e a s i b l et i t l e . HELD:Mr sGwa sn o t b o u n db yt h ev a r i a t i o nt ot h emo r t g a g ea n dt h a t t h emo r t g a g e ed i dn o t h a v ea n i n d e f e a s i b l et i t l e .Mr sGh a dap e r s o n a l e q u i t ya g a i n s t mo r t g a g e ewh i c hi n v o l v e dt h i sp e r s o n a l e q u i t y e x c e p t i o na n de n t i t l e dh e r t oc o mp e l t h emo r t g a g e et od i s c h a r g et h emo r t g a g eo np a y me n t o f a n a mo u n t s e c u r e du n d e r t h emo r t g a g eb e f o r et h ev a r i a t i o n . REASONS: Mr sGp e r s o n a l e q u i t ywa si n v o k e db yt h ef a c t t h eb a n kh a db r e a c h e di t so b l i g a t i o n si t o we d t oh e r t ok e e pt h ec e r t i fi c a t eo f t i t l ei ns a f e k e e p i n ga n dt oo n l yp r o d u c ewi t hh e r c o n s e n t .Asr e g i s t r a t i o n o f v a r i a t i o no f mo r t g a g ewa se ff e c t e db yab r e a c ho f d u t y , i t c r e a t e dap e r s o n a l e q u i t ya g a i n s t t h e mo r t g a g e e c f GRI GC:a d d e da r g u me n t h e r ei st h a t t h eb a n kr e l e a s e dc e r t i fi c a t eo f t i t l ewh e ni t wa sn o t a u t h o r i s e d t od os oi nb r e a c ho f a no b l i g a t i o ni t o we dt ot h eRP–G. Knowing receipt of trust property and accessory liability – inconsistency with LTA To assert in personam excepfon, must not be inconsistent with the LTA – and in parfcular that a RP is not auected by nofce of an unregistered interest LTA s 184(2)(a) As such, where registrafon of an interest consftutes a knowing receipt of trust property, it cannot defeat an indefeasible ftle where there is no dishonesty / fraud by the RP, because to hold otherwise would be inconsistent with the LTA Farah ConstrucGons v Say-Dee That means the lrst limb in Barns v Addy does not give rise to a personal equity Barnes v Addy Kn o wi n gr e c e i p t –wh e r eat h i r dp a r t yr e c e i v e st r u s t p r o p e r t ywi t hk n o wl e d g et h a t i t i st r u s t p r o p e r t ya n d t h a t i t h a sb e e nt r a n s f e r r e dt ot h et h i r dp a r t yi nb r e a c ho f t r u s t –e q u i t ywi l l i mp o s eac o n s t r u c t i v et r u s t However, the second limb in Barns v Addy – party liable if they assist with knowledge in a dishonest and fraudulent design – may not be precluded Farah ConstrucGons v Say-Dee The requisite degree of knowledge to safsfy the second limb in Barns v Addy is: a )a c t u a l k n o wl e d g e b ) wi l l f u l l ys h u t t i n go n e ’ se y e st ot h eo b v i o u s c ) wi l l f u l l ya n dr e c k l e s s l yf a i l i n gt oma k es u c hi n q u i r i e sa sa nh o n e s t a n dr e a s o n a b l ep e r s o nwo u l dma k e d )k n o wl e d g eo f c i r c u ms t a n c e swh i c hwo u l di n d i c a t et h ef a c t st oa nh o n e s t a n dr e a s o n a b l ep e r s o n Baden’s case; Farah ConstrucGons 1 5 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Curial orders / submission to the court’s jurisdicHon Where a RP obtains registrafon under a court order that is subsequently set aside on appeal, the appeal court has the power to order the RP to retransfer the property back to the original owner White v Tomasel F ACTS:To b t a i n e dj u d g me n t a g a i n s t W. Co u r t o r d e r e dWt ot r a n s f e r l a n dt oT , wh od u l yd i ds o . T b e c a mer e g i s t e r e d . Ona p p e a l , Co As e t a s i d eo r i g i n a l j u d g me n t .Do e st h i sme a nl a n ds h o u l db eg i v e n t oW? HELD:Y e s–RPc a n n o t r e l yo np r i n c i p l e so f i n d e f e a s i b i l i t yt or e s i s t a no r d e r t or e t r a n s f e r t h ep r o p e r t y b e c a u s et h e ys u b mi t t e dt ot h ec o u r t ’ sj u r i s d i c t i o ni nt h efi r s t p l a c e SHORT LEASE EXCEPTION General Principles The estate of a RP is subject to the interest of a lessee under a short lease LTA s 185(1)(b) The interest of the lessee under s 185(1)(b) does not include: a ) ar i g h t t oa c q u i r et h ef e es i mp l eo r o t h e rr e v e r s i o n a r yi n t e r e s t a t t h ee n do f t h es h o r t l e a s e ;o r b ) ar i g h t t or e n e w/ e x t e n dt h et e r mo f t h es h o r t l e a s eb e y o n d3y e a r sf r o mt h eb e g i n n i n go f t h eo r i g i n a l t e r m LTA s 185(2)x Opfons to renew which do not extend the term beyond 3 years from the beginning of the original term will be protected LTA s 185(2)(b) DeKniHons Short lease means a term for <= 3 years, or from year to year or a shorter period LTA Sch 2 Term means the period beginning when the lessee is lrst enftled to possession of a lot / part of a lot under the lease and ending when the lessee is last enftled to possession, even if the lease consists of 2 or more disconfnuous periods LTA Sch 2 1 6 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 EXCEPTION IN FAVOUR OF AN ADVERSE POSSESSOR General Principles The interest of a person who, on applicafon, would be enftled to be registered as owner of the lot because the person is an adverse possessor LTA s 185(1)(d) Adverse possessor is delned as a person: a )a g a i n s t wh o mt h et i mef o rb r i n g i n ga na c t i o nt or e c o v e rt h el o t h a se x p i r e du n d e rt h eL i mi t a t i o n so f Ac t i o n sAc t ;a n d b ) wh o , a p a r t f r o mt h eL T A, i se n t i t l e dt or e ma i ni np o s s e s s i o no f t h el o t LTA Sch 2 12 years is the LAA expirafon period – must be in possession of some other person LAA ss 13, 19(1) CARELESS MORTGAGEE EXCEPTION Mortgagee obligafon, prior to lodging a mortgage for registrafon, to take reasonable steps to ensure that the person who executed the mortgage is the RP LTA s 11A Similar obligafon is imposed when transferring a mortgage LTA s 11B If ss 11A, 11B obligafon to take reasonable steps to idenffy mortgagor are not complied with, mortgagee is not enftled to take the benelt of indefeasibility LTA ss 185(1A) CBA v Perrin F ACTS:Pf o r g e dh i swi f e ’ ss i g n a t u r eo nag u a r a n t e ea n dt womo r t g a g e sr e g i s t e r e do v e r t h ef a mi l y h o met h a t wa so wn e ds o l e l yb yMr sPf o r mo r et h a n$ 1 0 M–Mr sPd i dn o t a u t h o r i s e .Ba n kc o n c e d e di t d i dn o t t a k er e a s o n a b l es t e p s HELD:s1 8 5 ( 1 A) i n v o k e d–d e n i e db e n e fi t so f mo r t g a g e s .Ba n kh a dn oi n d e f e a s i b l et i t l ea n dn ot i t l e o t h e r wi s eb e c a u s et h e r ewa sn ot r a n s a c t i o nb e t we e ni t a n dMr sP , t h eRP .I na d d i t i o nt h er i s ko f i d e n t i t y f r a u dh a db e e ns h i f t e db a c kt ot h emo r t g a g e ea n dt op r o t e c t t h ep u b l i cp u r s e , t h eb a n k sf a i l u r et o c o mp l ywi t hi t so b l i g a t i o n sme a n t Mr sPwo u l dh a v er i g h t t oc l a i ma g a i n s t t h es t a t ef o ra n yl o s ss h e s u ff e r e dh o we v e r t h eb a n kwo u l dn o t Where s 185(1A) enlivened, not enftled to claim compensafon for loss either LTA s 189(1)(ab) EXCEPTIONS IN OVERRIDING STATUTES Benelts of indefeasibility may be cut down / overridden by provisions in other statutes – eg: r a t i n ga n dt a x i n gs t a t u t e swh i c hc o n t a i np r o v i s i o n st h a t ma k eu n p a i dt a x e so rr a t e safi r s t c h a r g eo nt h e l a n du p o nwh i c ht h er a xo rr a t ei sl e v i e d Land Tax Act 2010 (Qld) s 60 Ov e r d u er a t e sa r ec h a r g e do nt h el a n d Local Government Act 2009 (Qld) s 96 s t a t u t e sv e s t i n gl a n d/ i n t e r e s t i nCr o wno r a l l o wi n gc o mp u l s o r ya c q u i s i t i o n 1 7 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Transport Planning and CoodinaGon Act 1994 (Qld) s 25 wh e r ec o u r t sh a v et h ep o we rt od e p r i v eap e r s o no f h i s/ h e ri n d e f e a s i b l et i t l e Criminal Proceeds ConascaGon Act 2002 (Qld); see also PLA ss 182 – 194 s t a t u t e sv e s t i n gp r o p e r t yi ns p e c i fi e dc i r c u ms t a n c e s Bankruptcy Act 1966 (Cth) s 58(2) Determinafon of overriding will not be lightly reached – process: a )c o n s i d e r wh e t h e r t h et wos t a t u t e sc a ns t a n dt o g e t h e r–n oc o n fl i c t a st h e yo p e r a t ei nt h e i ro wns p h e r e s , o rs e q u e n t i a l l y , o rt h es t a t u t o r yp r o v i s i o nc r e a t e sr i g h t so ro b l i g a t i o n st h a t a p p l yo n l yt ot h eo r i g i n a l o wn e r b )I f c o n fl i c t –d e t e r mi n ewh i c hp r e v a i l s–r u l e s : a . Sp e c i a l me a s u r ep r e v a i l so v e rag e n e r a l me a s u r e b .L a t e rs t a t u t eo v e r r i d e se a r l i e r c . Pr e c e d e n c ema ya l s ob eg i v e nt op u b l i co v e rp r i v a t er i g h t s Hillpalm v Heaven’s Door Note also inconsistency with Commonwealth statutes Consftufon s 109 1 8 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 CAVEATS AND SETTLEMENT NOTICES UNREGISTERED INTERESTS Unregistered Interests Unregistered interests exist under Torrens – recognised as an equitable interest in the land despite a lack of registrafon Barry v Heider Conlrmed in Chan v Cresdon HCh e l dt h a t L T As1 8 1( p r o v i d e st h a t n oi n s t r u me n t s h a l l b ee ff e c t u a l t op a s sa n ye s t a t eu n t i l r e g i s t e r e d ) h a dt h ee ff e c t t h a t t h eu n r e g i s t e r e di n s t r u me n t i si n e ff e c t i v et oc r e a t eal e g a l o r e q u i t a b l ee s t a t eo r i n t e r e s t i nl a n db e f o r er e g i s t r a t i o n , b u t t h es e c t i o nd o e sn o t v o i dc o n t r a c t so r r e n d e r i n o p e r a t i v e Two types: a )t h o s ec a p a b l eo f b e i n gr e g i s t e r e d , b u t wh i c hh a v en o t b )t h o s en o t c a p a b l eo f b e i n gr e g i s t e r e d Vulnerable – can be exfnguished by: a )r e g i s t r a t i o no f al a t e ri n c o n s i s t e n t r e g i s t e r e di n t e r e s t o r b )c r e a t i o no f al a t e ri n c o n s i s t e n t e q u i t a b l ei n t e r e s t , c r e a t e di ni g n o r a n c eo f t h ee x i s t e n c eo f t h efi r s t Can be protected by lodging a caveat or sejlement nofce CAVEATS Caveator = person who has lodged the caveat or in whose favour the caveat has been lodged LTA Sch 2 Caveatee = person who has an interest in the lot over which the caveat has been lodged, whether that be as registered proprietor or not LTA Sch 2 Primary funcHon A caveat is an instrument that, while it remains in force, prevents the registrafon of an instrument auecfng the lot over which it is lodged from the fme the caveat is lodged, unless s 124(2) applies LTA s 124(1) I n c l u d e s :I n s t r u me n t sl o d g e da f t e r c a v e a t ; I n s t r u me n t sl o d g e db u t n o t r e g i s t e r e dp r i o r t oc a v e a t The prohibifon commenced from the date and fme indorsed by the registrar as the caveat’s date / fme of lodgment and extends unfl the caveats lapse or terminafon LTA s 124(1A) Excepfons to the general rule: a )I n s t r u me n t s p e c i fi e di nt h ec a v e a t b )I n s t r u me n t c o n s e n t e dt ob yc a v e a t o r c )I n s t r u me n t e x e c u t e db yamo r t g a g e ep r i o ri nt i mei f e x e r c i s i n gp o we ro f s a l ea n dc a v e a t c l a i msa n i n t e r e s t i nl o t a ss e c u r i t yf o rp a y me n t Does not apply to a caveat lodged by the registrar (LTA s 124(3)) d )I n s t r u me n t o f t r a n s f e ro f mo r t g a g ewh e r er e g i s t e r e dp r i o rt ol o d g e me n t o f c a v e a t e ) An o t h e ri n t e r e s t t h a t i f r e g i s t e r e dwi l l n o t a ff e c t t h ei n t e r e s t c l a i me db yt h ec a v e a t o r LTA s 124(2)x 1 9 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 The caveator may withdraw the caveat LTA s 125 Secondary FuncHon Gives nofce of the existence of an unregistered interest J & H Just Holdings Pty Ltd v Bank of New South Wales Clarke v Raymor Requirements All caveats must comply with LTA s 121, including: n a meo f c a v e a t o r a d d r e s sf o r s e r v i c eo f d o c u me n t so nc a v e a t o r n a me/ a d d r e s so f ROa n da n y o n ee l s eh a v i n gar i g h t t od e a l wi t ht h el o t t h er e gi s t e r e di nt e r e s t a ff e c t e db yt h ec a v e a t i n t e r e s t c l a i me db yc a v e a t o r g r o u n d so nwh i c ht h ei n t e r e s t i sc l a i me d LTA s 121 There is no requirement to specify in the caveat the quantum of the estate / interest claimed Leros v Terara Once caveat is lodged, registrar will give wrijen nofce to each person whose interest / right to registrafon of an instrument is auected LTA s 123 WRITTEN AGREEMENT If caveat menfoned in wrijen agreement, the agreement must be enforceable PLA ss 11, 59 Who may lodge a caveat The following persons may lodge a caveat: a )“ ap e r s o nc l a i mi n ga ni n t e r e s t i nal o t ” b )t h er e g i s t r a r u n d e r s1 7 c )t h er e g i s t e r e do wn e r o f t h el o t d ) ap e r s o nwi t ht h eb e n e fi t o f ac o u r t o r d e r LTA s 122(1)x An equitable mortgagee can only lodge a caveat to which s 126 (ie non-lapsing caveat) applies LTA s 122(2) Circuit Finance Australia Ltd v Registrar of Titles [2005] QSC 283 A purchaser under an instalment contract for the sale of land may lodge a caveat PLA s 74 A person claiming an interest in a lot the subject of an applicafon for a ftle by adverse possession may lodge a caveat LTA s 104 2 0 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 A person claiming an interest in a lot – LTA s 122(1)(a) “interest in a lot” is delned as: a ) al e g a l o r e q u i t a b l ee s t a t ei nt h el a n do ro t h e rp r o p e r t y ; o r b ) ar i g h t p o we r o rp r i v i l e g eo v e ro r i nr e l a t i o nt ot h el a n do ro t h e rp r o p e r t y AIA s 36 Qld Estates Pty Ltd v Collas L e g a l o r e q u i t a b l ee s t a t ei n t e r e s t i nt h ec h a r a c t e r o f a ne s t a t eo r e q u i t a b l ec l a i m Note: Mijo Developments Pty Ltd v Royal Agnes Water Pty Ltd Ac c e p t e da ne x p a n s i v eme a n i n go f s3 6t oi n c l u d et h er i g h t t oar e c o n v e y a n c ef o l l o wi n gf r a u do f t h e r e g i s t e r e do wn e r –c o n s t r u c t i v et r u s t i mp o s e d The conferring of a right to lodge a caveat will not generally (without more) give a person a caveatable interest Qld Estates v Collas If an interest is capable of being protected by SP, injuncfon or other equitable relief it will generally consftute suzcient interest to support a caveat Re Henderson’s Caveat Examples of interests capable of supporfng a caveat: Ap u r c h a s e r ’ sl i e n : ExPa r t eL o r d Ac h a r g eo v e rl a n d : Cl a r k evRa y mo r e( fi t sd e fi n i t i o no f “ mo r t g a g e ”L T ASc h2 ) Th ei n t e r e s t o f ap u r c h a s e ru n d e ra na g r e e me n t f o rs a l e : ReOi l T o o l Sa l e sPt yL t d Th ei n t e r e s t o f ap u r c h a s e ru n d e ra no p t i o nt op u r c h a s et h el a n d : L a y b u t t vAmo c oAu s t r a l i aPt yL t d Ana g r e e me n t t og r a n t a ne a s e me n t : We l l i n g t o nCi t yCo r p o r a t i o nvPu b l i cT r u s t e e Be n e fi c i a l i n t e r e s t o f ac e s t u i q u et r u s t : RePe y c h e r ' sCa v e a t Th ei n t e r e s t o f au n i t h o l d e ru n d e rau n i t t r u s t : Co s t a&Du p p ePr o p e r t i e sPt yL t dvDu p p e Amo r t g a g e e ' si n t e r e s t : ReDi x o n ' sCa v e a t As e c u r i t yi n t e r e s t o f ac r e d i t o rg i v e nac h a r g eo v e rl a n d : Co mp o s i t eBu y e r svSo o n g Ap r o fi t àp r e n d r e( r i g h t t oc o meo n t ol a n da n dc u t t h i n g sa wa y ) : Co n n o l l yvNo o n e Ab e n e fi c i a l i n t e r e s t u n d e rar e s u l t i n g , c o n s t r u c t i v eo ri mp l i e dt r u s t , wi t h o u t ap r i o rc o u r t o r d e r : Ha r d ma n vHa r d ma n Interests NOT capable of supporfng a caveat: Co n s e n t ( Ql dEs t a t e svCo l l a s ) Ve n d o r ’ sl i e n( a r i s i n gf r o mp u r c h a s e rf a i l u r et op a ya l l / p a r t o f p u r c h a s ep r i c e ) :L T As1 9 1 Ri g h t t op o s s e s s i o no f ab u i l d i n gs i t e :RePTSt e v e n sEa r t h mo v i n gPt yL t d ’ sCa v e a t Sh a r e h o l d e ri nc o mp a n yd o e sn o t h a v eac a v e a t a b l ei n t e r e s t i nc o mp a n yl a n d :Ch a r l e sv Co mmi s s i o n e ro f T a x I n t e r e s t o f ap a r t n e r i np a r t n e r s h i pl a n di sn o t c a v e a t a b l ei n t e r e s t :Ch e t t l evBr o wn Ho l d e ro f ar i g h t o f p r e e mp t i o np r i o r t oe x e r c i s eo f r i g h t Ri g h t t os e t a s i d eac o n t r a c t a n dh a v el a n dr e c o n v e y e d o RePi l e ’ sCa v e a t–n oc a v e a t a b l eh i s t o r i c a l l y o ReMc Ke a n ’ sCa v e a t c a v e a t a b l ei n t e r e s t o Mi j oDe v e l o p me n t sPt yL t dvRo y a l Ag n e sWa t e rPt yL t d–c a v e a t a b l ei n t e r e s t Pr o p o s e da l l o t me n t u n d e rt h eL a n dSa l e sAc t 1 9 8 4 :L T As1 2 2 ( 3 ) Note: this does not prevent a caveat being lodged over the whole of the parcel of the land where the interest claimed is over the whole of the land 2 1 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Nor does this apply to a proposed lot in a community Gtles scheme undr the Body Corporate and Community Management Act 1997 Condifonal Contracts A condifonal contract is a contract of sale which is subject to some condifon or confngency before the obligafon to complete arises – fee simple will disappear if condifon subsequent not safsled EG – subject to anance, subject to local government approval etc Historically – Prior to the fulllment of the condifon by a third party, a vendor would not be ordered to convey the property and consequently it was concluded that the purchaser did not have a caveatable interest in land Re Bosca Land Pty Ltd’s Caveat Re Dimbury’s Caveat Re CM Group Pty Ltd’s Caveat Recently – a purchaser has an equitable interest in the land if he / she is enftled to some form of equitable relief, such as an injuncfon, to protect that interest Re Henderson’s Caveat F ACTS:c a v e a t o rh a dp u r c h a s e d2a c r e so f l a n dwh i c hwa sa nu n d i v i d e dp a r t o f al a r g e r p a r c e l ( c a l l e d P6 9 ) .P6 9wa sl a t e r s o l db yt e n d e r , t h ec o n d i t i o n so f wh i c hi n c l u d e dt h a t t h e2a c r e swe r et ob e s u b d i v i d e df r o mt h ep a r c e l a n dt r a n s f e r r e dt oH.T h ep u r c h a s e r d e n i e dk n o wl e d g eo f t h ec o n d i t i o na n d Hl o d g e dac a v e a t t op r o t e c t h e r i n t e r e s t . HELD:ap u r c h a s e r u n d e r ac o n d i t i o n a l c o n t r a c t h a sa ne q u i t a b l ei n t e r e s t i nt h el a n ds u ffic i e n t t o s u p p o r t ac a v e a t p r o v i d e de q u i t a b l er e l i e f i sa v a i l a b l et op r o t e c t t h a t i n t e r e s t , wh e t h e r b ywa yo f i n j u n c t i o no r s o meo t h e r r e me d y .Co Aa l s or e j e c t e da na r g u me n t t h a t t h ec a v e a t wa st o owi d eb e c a u s e i t c l a i me da ni n t e r e s t o f t h ewh o l eo f P6 9 .Be f o r et h el a n dwa ss u b d i v i d e da n dt h e2a c r e se x c i s e d , t h e c a v e a t o r ’ si n t e r e s t e x t e n d e do v e rt h ewh o l eo f P6 9 Kuper v Keywest ConstrucGons HELD:ap u r c h a s e r o f ap r o p o s e dl o t i nas t r a t ap l a nwh i c hwa sn o t y e t r e g i s t e r e da n dwh e r et h e b u i l d i n gwa ss t i l l u n d e r c o n s t r u c t i o nh a dac a v e a t a b l ei n t e r e s t i nt h ed e v e l o p me n t s i t e .Ac a v e a t a b l e i n t e r e s t c a n n o t b ec l a i me di nap r o p o s e dl o t b e c a u s ei t d o e sn o t e x i s t a t t h er e l e v a n t t i me .Ho we v e r , a n i n t e r e s t ma yb ec l a i me di nt h el o t o v e r wh i c ht h es t r a t ap l a nwi l l b er e g i s t e r e d( t h ed e v e l o p me n t s i t e ) Forder v Cemcorp HELD:ap e r s o nh a v i n gt h eb e n e fi t o f a no p t i o nt op u r c h a s eap r o p o s e dl o t i nas t r a t ap l a nwh e r et h e c o n t r a c t t ob ee n t e r e di n t oo nt h ee x e r c i s eo f t h eo p t i o nwa ss u b j e c t t or e g i s t r a t i o no f t h ep l a n , h a da c a v e a t a b l ei n t e r e s t i nt h ed e v e l o p me n t s i t e .Ca v e a t o r h a dar i g h t t oc a l l o ne q u i t yt or e s t r a i nt h e d e v e l o p e r b yi n j u n c t i o nf r o md e a l i n gwi t ht h es i t ea sawh o l ei n c o n s i s t e n t l ywi t ht h er i g h t so f t h eo p t i o n h o l d e r u n d e r t h ed e e dg r a n t i n gt h eo p t i o n A Mere Equity A mere equity is likely to be a caveatable interest, at least where the facts are such that equity would be prepared to protect the interest by remedies that auect the land in quesfon Re Henderson’s Caveat Lapsing of Caveats Caveat lodged under s 122(1)(a) will lapse either: 3mo n t h sa f t e rl o d g e me n t ; o r 2 2 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 I f t h ec a v e a t e es e r v e san o t i c eu n d e rs1 2 6 ( 2 )o nt h ec a v e a t o r–1 4d a y sf r o ms e r v i c eo f t h en o t i c e : L T A s1 2 6 ( 5 ) Caveat will not lapse if caveator commences acfon in Sup Ct to establish their interest prior to 3 months or 14 days, as applicable Caveats are non-lapsing if lodged: a )b yt h er e g i s t e r e do wn e r b ) wi t ht h ec o n s e n t o f t h er e g i s t e r e do wn e r c ) wi t ht h eb e n e fi t o f ac o u r t o r d e ru n d e rs1 2 2 ( 1 ) ( d ) ( e )p r o v i d e da no ffic ec o p yo f t h eo r d e ri sd e p o s i t e di n t h er e g i s t r a r ’ so ffic ea t t h es a met i met h a t t h ec a v e a t i sl o d g e d d )b yt h eRe g i s t r a ru n d e rs1 7 e )u n d e rPL As7 4–c a v e a t b yp u r c h a s e ru n d e ra ni n s t a l me n t c o n t r a c t f o rt h es a l eo f l a n d LTA s 126(1)x Caveator can withdraw caveat LTA s 125 Removal of caveat by court order A caveatee may apply at any fme for an order for removal from the Supreme Court LTA s 127(1) Removal extends to a caveat lodged by a purchaser under an instalment contract under PLA s 74 PLA s 74(2) Caveatee includes a: Re g i s t e r e dPr o p r i e t o r( o wn e r , mo r t g a g e e( ReWh a l l e y ’ sCa v e a t ) , l e s s e e ) a n yp e r s o nwi t ha ni n t e r e s t i nt h el o t ( u n r e g i s t e r e di n t e r e s t s , e q u i t a b l ei n t e r e s t a sp u r c h a s e ru n d e r c o n t r a c t o f s a l e ) Re Henderson’s Caveat p u r c h a s e r u n d e r c o n t r a c t o f s a l eo f p a r t o f t h el a n d AB v IJ p a r t yt oamu l t i p r o p e r t yc o n t r a c t n oi n t e r e s t i np r o p e r t yn o t p u r c h a s i n g LTA Sch 2 Analogous to an interlocutory injuncfon hearing Re Burman’s Caveat The caveator has onus (Re Jorss’ Caveat) of establishing that: a )t h e r ei sas e r i o u sq u e s t i o nt ob et r i e d ; AND Must show a suicient likelihood of success to jusGfy in the circumstances the preservaGon of the status quo (ABC v O’Niell) and that it is fairly arguable the caveator has a caveatable interest (Tendiris) b )t h eb a l a n c eo f c o n v e n i e n c er e q u i r e st h a t t h es t a t u sq u ob ema i n t a i n e db yt h ec o n t i n u e de x i s t e n c eo f t h e c a v e a t Assessment of whether the caveat should be maintained to protect the caveator – will the claim of the caveator be ajected by the removal Is there hardship to the caveatee? Can condiGons be imposed to protect the caveator’s interest? Just because there is a caveatable interest does not mean it will be maintained 2 3 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Re Burman’s Caveat Undertaking as to damages will ordinarily be required by caveator Re South Brisbane Motors Pty Ltd’s Caveat See also Re Clement’s Caveat A refusal to give an undertaking as to damages will weigh against the party in assessing the balance of convenience Lodgment of a second caveat Generally, a second caveat cannot be lodged on the same or substanfally the same grounds without leave of the court LTA s 129 There are two applicafons: a )I n t e r e s t c l a i me dc a nb et h es a meb u t g r o u n d smu s t b ed i ff e r e n t b )I f i n t e r e s t d i ff e r e n t b u t g r o u n d st h es a met h e ns e c t i o na p p l i e s Re ADC ProperGes (Qld) Pty Ltd’s Caveat F ACTS:c a v e a t o rc l a i me da ni n t e r e s t u n d e r ac o n t r a c t o f s a l e .T h ec a v e a t o r s o u g h t t ol o d g eas e c o n d c a v e a t a f t e r t h ec a v e a t l a p s e da n dt h ed a t ef o r c o mp l e t i o no f t h ec o n t r a c t wa se x t e n d e d HELD:ami n o r v a r i a t i o ni nt h et e r mso f ac o n t r a c t , s u c ha st h ee x t e n s i o no f t i met oc o mp l e t e , d i dn o t g i v er i s et oan e wo r d i ff e r e n t g r o u n d st os u p p o r t t h ec a v e a t In seeking leave of the Supreme Court, the court will consider whether: a ) wh e t h e r t h e r ei sas e r i o u sq u e s t i o nt ob et r i e da n db a l a n c eo f c o n v e n i e n c e ; AND b ) wh e t h e r t h e r ei ss a t i s f a c t o r yr e a s o n sf o rl a p s ea n dd e l a yi na c t i o n Landlush Pty Ltd v Rutherford CompensaHon for improper caveat – make sure to apply the law / facts Lodged with reasonable grounds – A person who lodges or confnues a caveat without reasonable cause must compensate any person who suuers loss / damages as a result LTA s 130(1) Claimant for compensafon must allege and prove: a )L odge dwi t houtr e a s ona bl egr ounds–a b s e n c eo f a nh o n e s t b e l i e f o nt h ep a r t o f t h ec a v e a t o ro n r e a s o n a b l eg r o u n d st h a t ac a v e a t a b l ei n t e r e s t e x i s t e d ; AND Just because no caveatable interest does not mean no reasonable grounds: Kuper v Keywest reasonable cause must be an honest belief based on reasonable grounds that the caveator has such an interest: Bedford ProperGes v Surgo b )I mpr ope rpur pos e–t h ec a v e a t wa sl o d g e da n dma i n t a i n e df o ra ni mp r o p e rp u r p o s e Farvet v Frost u s e dc a v e a t t od e l a yap r o p o s e dc h i l d c a r ec e n t r ewh i l ea n o t h e r wa sb u i l t a d j o i n i n g Young v Rydalmere Credits wh e r ec a v e a t a b l ei n t e r e s t e x i s t sc o u l ds t i l l b el o d g e df o r i mp r o p e r p u r p o s e cf Beca Developments v Idameneo c o u r t sh i s t o r i c a l l yg u a r d e dt h er i g h t o f ap e r s o nt ol o d g eac a v e a t , u n l i k et h a t i nY o u n g Onus – note diuerences: On u st op r o v er e a s o n a b l ec a u s e( p r e s u mp t i o na g a i n s t i t )o nt h ep e r s o nwh ol o d g e d/ c o n t i n u e dt h e c a v e a t :L T As1 3 0 ( 3 ) 2 4 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 I mp r o p e rp u r p o s e–a p p l i c a n t L o s s/ d a ma g e–a p p l i c a n t 2 5 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 SETTLEMENT NOTICES Seclement NoHces Used by purchasers or mortgagees to maintain priority Euect of sejlement nofce: Ha l t sr e g i s t r a t i o no f i n t e r e s t so v e rt h el o t Pr e s e r v e sp l a c ei nt h eq u e u e Gi v e sn o t i c eo f t h ei n t e r e s t L a s t so n l yf o r ama x i mu mo f 2mo n t h s Does not prevent registrafon of: I n s t r u me n t ss p e c i fi e do r c o n s e n t e dt o I n s t r u me n t o f t r a n s f e r o f amo r t g a g e Ani n t e r e s t t h a t d o e sn o t a ff e c t t h ei n t e r e s t c l a i me d I n s t r u me n t l o d g e dp r i o rt or e g i s t r a t i o n Ca v e a t OperaHon of Seclement NoHces Who may deposit Sejlement nofce may be deposited by or for a transferee LTA s 140 Transferee delned as a purchaser for value or a person enftled to an interest in a lot LTA s 138 Holts Registrafon The deposit of a sejlement nofce will prevent registrafon of an instrument auecfng the lot unfl the nofce lapses or is withdrawn, cancelled or removed LTA s 141 However, sejlement nofce does not prevent registrafon of: a )a ni n s t r u me n t s p e c i fi e di nt h es e t t l e me n t n o t i c et owh i c ht h en o t i c ed o e s n ’ t a p p l y b )a ni n s t r u me n t i f t h et r a n s f e r e ec o n s e n t st oi t sr e g i s t r a t i o n c )a ni n s t r u me n t t r a n s f e r r i n gamo r t g a g ewh e r et h emo r t g a g ewa sr e g i s t e r e db e f o r el o d g me n t o f t h en o t i c e d )a n o t h e ri n t e r e s t t h a t , i f r e g i s t e r e d , wi l l n o t a ff e c t t h ei n t e r e s t e )a ni n s t r u me n t l o d g e db e f o r et h en o t i c e LTA s 141(2) Preserves a place in the queue Instruments lodged aoer the sejlement nofce and which are prevented from being registered by the sejlement nofce are deemed to be lodged aoer the instruments speciled in the sejlement nofce LTA s 150 Registrar may withdraw an instrument that has been lodged but prevented from being registered by a sejlement nofce LTA s 149 2 6 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Gives nofce Deposit of a sejlement nofce will give nofce of the interests menfoned in the sejlement nofce to any person carrying out an appropriate search DuraHon of Seclement NoHce May be withdrawn by a transferee LTA s 142 A sejlement nofce lapses: a ) 2mo n t h sa f t e ri t i sd e p o s i t e d ; o r b ) wh e na l l i n s t r u me n t sd i r e c t l yr e l a t e dt ot h et r a n s a c t i o n , a n ds p e c i fi e di nt h es e t t l e me n t n o t i c e , h a v eb e e n l o d g e d ; LTA s 143 Sejlement nofce can be removed by court order LTA s 144 Sejlement nofce can be cancelled by registrar LTA s 145 A further sejlement nofce cannot be lodged without leave LTA s 146 Compensafon for improper sejlement nofce – ie must deposit with reasonable cause (similar to s 130) LTA s 147(1) Requirements of a seclement noHce See text p 437 for extensive list. Seclement NoHces to be Replaced by Priority NoHces Land and Other Legislafon Amendment Bill 2016 Ame n d st h eL a n dTi t l eAc t ( s s 1 3 8 1 4 9 )t or e p l a c eSe t t l e me n t No t i c e swi t hPr i o r i t yNo t i c e s Pr i o r i t yNo t i c e sh a v eamu c hwi d e ra mb i t o f o p e r a t i o nt h a nSe t t l e me n t No t i c e s , wh i c ho n l yc o u l db e l o d g e db yt r a n s f e r e e s Pr i o r i t yNo t i c e sma yb el o d g e db ya n yp e r s o n“ wh oi s , o rwi l l b e , ap a r t yt oa ni n s t r u me n t ” Un l i k eac a v e a t , wh i c hf r e e z e st h eRe g i s t e r , aPr i o r i t yNo t i c ewi l l d e t e r mi n ep r i o r i t ywh e r ea ni n s t r u me n t t owh i c hi t r e f e r si sl o d g e d APr i o r i t yNo t i c ewi l l n o t p r e v e n t t h el o d g e me n t o f ac a v e a t 2 7 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 PRIORITIES PRIORITIES INTRO Unregistered Interests can co-exist alongside registered interests Barry v Heider Conlrmed in Chan v Cresdon See also Butler v Fairclough Two types of unregistered interests: a )t h o s ec a p a b l eo f b e i n gr e g i s t e r e d , wh i c hh a v en o t ( mo r t g a g e , e g ) b )t h o s en o t c a p a b l eo f b e i n gr e g i s t e r e d( e q u i t a b l ef e es i mp l e , e g ) Can be exfnguished by: a )r e g i s t r a t i o no f al a t e ri n c o n s i s t e n t i n t e r e s t o r b )c r e a t i o no f al a t e ri n c o n s i s t e n t ( u n r e g i s t e r e d )l e g a l / e q u i t a b l ei n t e r e s t Can be protected by lodging a caveat PRIORITIES BETWEEN MORTGAGEES Power of sale by mortgagee When a mortgagee exercises a power of sale – Mortgagees are paid out according to priority a ) fi r s t l y , p a y me n t o f c o s t s , c h a r g e sa n de x p e n s e si n c u r r e dp a i dt omo r t g a g e e b ) Th efi r s t mo r t g a g e eg e t sp a i do u t i nf u l l ( i f e n o u g h ) c )I f t h e r ei sa n yr e s i d u e , t h es e c o n dmo r t g a g e eg e t sp a i do u t i nf u l l , t h e nt h et h i r d , e t c PLA s 88 If an instrument of transfer aoer exercising power of sale is executed by mortgagee, mortgagee’s interest is exfnguished aoer the sale – goes to transferee free from liability under the mortgage LTA s 79 PRIOR REGISTERED INTEREST FOLLOWED BY SUBSEQUENT REGISTERED INTEREST General Law Prior legal estate followed by subsequent legal estate nemo dat quod non habet – you cannot give what you do not have – priority is accorded to the interest created lrst in fme Under LTA An interest is created or transferred upon registrafon LTA s 182 Priority based on fme registered instruments lodged LTA s 178 Indefeasibility of registered interests, provided none of the excepfons (fraud / in personam) apply LTA s 184(1) 2 8 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 PRIOR REGISTERED INTEREST FOLLOWED BY SUBSEQUENT EQUITABLE ESTATE General Law The earlier legal interest prevails, unless it should be postponed because of fraud, blameworthy conduct or an estoppel see Northern CounGes v Whipp (fraud) Barry v Heider (estoppel) F ACTS:Bwa sRP .Si g n e dt r a n s f e ro f l a n dt oS.T r a n s f e r a c k n o wl e d g e dt h a t Sh a dp a i df o r t h el a n d . I nf a c t , Sp a i dn o t h i n g .St h e nu s e ds i g n e dt r a n s f e r t omo r t g a g ep r o p e r t yt oH.T r a n s f e r a n dmo r t g a g e n o t r e g i s t e r e d .Bs u c c e e d e di no b t a i n i n ga no r d e rr e s t r a i n i n gr e g i s t r a t i o no f t h et r a n s f e r a n da d e c l a r a t i o nt h a t t h et r a n s f e r wa sv o i da sa g a i n s t S HELD:t h ee x e c u t e dt r a n s f e r o p e r a t e da sar e p r e s e n t a t i o nt h a t Sh a da ni n t e r e s t i nt h ep r o p e r t ywh i c h wa su n e n c u mb e r e db ya n yi n t e r e s t o f Ba n dt h a t a sHh a da c t e dt oh e r d e t r i me n t o nt h er e p r e s e n t a t i o n , Bwa se s t o p p e l f r o md e n y i n gt h er e p r e s e n t a t i o n Under the LTA RP holds indefeasible ftle, subject to indefeasibility excepfons LTA s 184(1) Barry v Heider PRIOR EQUITABLE ESTATE FOLLOWED BY SUBSEQUENT REGISTERED INTEREST General Law A person acquires a legal estate bona lde for value without nofce – take free of prior equitable interest Pilcher v Rawlins If the holder of a later legal estate has actual, construcfve or imputed nofce of a prior equitable estate, he or she takes subject to that prior equitable estate Deventer Pty Ltd v BP Australia RestricRon on construcRve noRce – a purchaser will be deemed to have knowledge of majers that would be ascertained had the purchaser made such searches and inspecfons as ought reasonably to have been made see PLA s 346 Under the LTA An interest is created in law upon registrafon LTA s 182 Legal interest are indefeasible and not auected by nofce of an earlier unregistered interest (unlike above) LTA s 184(2)(a) Friedmann v BarreS me r en o t i c et h a t r e g i s t r a t i o nwo u l dd e f e a t a nu n r e g i s t e r e di n t e r e s t i sn o t f r a u d The above will not apply if the subsequent RP is guilty of fraud, in personam applies or any other excepfon to s 184 2 9 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 LTA ss 184, 185 COMPETING EQUITABLE INTERESTS General Law + LTA Resolve by applying general law principles Breskvar v Wall Where there is noHce Where there is nofce of the earlier interest, the holder of the second interest takes that interest subject to the earlier interest (nofce means actual, construcfve or imputed nofce) Lapin v Abigail Pilcher v Rawlins Rule applies under the general law whether the estate taken by the purchase with nofce is a legal or equitable interest MojeS v Dillon Lodging a caveat and/or sejlement nofce will give construcfve (or actual) nofce of the existence of the interest (second funcfon) Lapin v Abigail JNJ Investments Australia v Sunnyville F ACTS:s e t t l e me n t n o t i c el o d g e db yp u r c h a s e r( S) b e f o r ei t h a de n t e r e di n t ot h ec o n t r a c t t op u r c h a s e l a n df r o mt h ev e n d o r .Ont h ed a ys c h e d u l e df o r s e t t l e me n t , t h ev e n d o r s o l dt h el a n dt oJt h u sp r e v e n t i n g Sf r o mp a y i n gt h eb a l a n c eo f t h ep u r c h a s ep r i c ea n ds e t t l i n gt h ec o n t r a c t .Ja c q u i r e di t si n t e r e s t i nt h e l a n da n dp a i do v et h ep u r c h a s ep r i c ewi t ha c t u a l k n o wl e d g et h a t t h ev e n d o r h a de n t e r e di n t oap r i o r c o n t r a c t wi t hS, a l o n gwi t hn o t i c eo f t h es e t t l e me n t n o t i c ed e p o s i t e db yS. HELD:a sJh a da c q u i r e di t si n t e r e s t wi t ha c t u a l n o t i c eo f Sp r i o re q u i t a b l ei n t e r e s t , Si n t e r e s t p r e v a i l e d o v e r J ’ sa n dt h e r ewa sn ob a s i si ne q u i t yf o r p o s t p o n i n gt h ep r i o r i n t e r e s t .Co u r t r e j e c t e ds u b mi s s i o n t h a t Sb yi t sc o n d u c t h a de n a b l e dJt oc o n d u c t i t s e l f a si f Swo u l dn o t p u r s u ei t sc o n t r a c t t op u r c h a s et h e l a n d .Th ee v i d e n c ee s t a b l i s h e dt h a t Ja i dt h ep u r c h a s ep r i c ewi t ha c t u a l k n o wl e d g eo f t h ep r i o r c o n t r a c t a n da c t e di nr e c k l e s sd i s r e g a r do f t h er i g h t so f t h ee a r l i e r p u r c h a s e r .Pa y me n t o f p u r c h a s ep r i c eb yJ e a r l i e r t h a nSd i dn o t i mp r o v eJp o s i t i o n . Construcfve nofce = knowledge that would have come to a person’s ajenfon had that person made the inquiries that a reasonably prudent person would have made in the circumstances see Hunt v Luck e gk n o wl e d g et h a t at e n a n t o r o t h e r p e r s o ni so c c u p y i n gt h ep r o p e r t yp r o v i d e sc o n s t r u c t i v en o t i c eo f t h e t e n a n t so r o c c u p i e r sp r o p r i e t a r yr i g h t si nt h ep r o p e r t y RestricRon on construcRve noRce – a purchaser will be deemed to have knowledge of majers that would be ascertained had the purchaser made such searches and inspecfons as ought reasonably to have been made see PLA s 346 The knowledge of a solicitor or agent is imputed to the purchaser PLA s 346(1)(b) No NoHce Where there is no nofce of the earlier interest - the rule in Rice v Rice applies: 3 0 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Wh e r et h eh o l d e r o f t h ei n t e r e s t c r e a t e ds e c o n di nt i med o e sn o t h a v en o t i c eo f t h ee a r l i e re q u i t y , p r i o r i t y i sg i v e nt ot h eb e t t e re q u i t y On l yi f t h ee q u i t i e sa r ee q u a l i sp r i o r i t ya wa r d e dt ot h ep e r s o nwh o s ee q u i t ya r o s efi r s t i nt i me( a sa ma t t e ro f l a s t r e s o r t ) Rice v Rice Relevant factors to determine bejer equity include: n a t u r ea n dc o n d i t i o no f t h er e s p e c t i v ee q u i t a b l ei n t e r e s t c i r c u ms t a n c e sa n dma n n e ro f t h ee q u i t a b l ei n t e r e s t sa c q u i s i t i o n wh o l ec o n d u c t o f e a c hp a r t y–i eh a st h e r eb e e na n yp a r t y“ g u i l t y ”o f “ d i s e n t i t l i n gc o n d u c t ” Rice v Rice Breskvar v Wall F ACTS:i n s t r u me n t o f t r a n s f e r wa sv o i d .I d e a–i f Bd e f a u l t e d , Pc o u l ds e l l l a n dt ot h i r dp a r t y .Pb e i n g r o g u e , i n s e r t e dWt ot r a n s f e r , wh i c hwa sr e g i s t e r e d .Pt h e na c t i n go nb e h a l f o f Wc a l l e dA.Awa sb o n a fi d ep u r c h a s e r f o rv a l u ewi t h o u t n o t i c eo f Bc l a i m.Af o u n dWr e g i s t e r e dp r o p r i e t o r .As e t t l e dc o n t r a c t . Be f o r eAc o u l dr e g i s t e r , Bl o d g e dc a v e a t .At h e nl o d g e dt r a n s f e r f o r r e g i s t r a t i o n , wh i c hwa su n s u c c e s s f u l d u et oc a v e a t . o Ah a du n r e g i s t e r e di n t e r e s t –u n r e g i s t e r e de q u i t a b l ef e es i mp l e–h a dn on o t i c eo f Bi n t e r e s t o Bh e l du n r e g i s t e r e di n t e r e s t –e q u i t yo f r e c t i fi c a t i o n–r o s efi r s t i nt i me HELD:Bi n t e r e s t s h o u l db ep o s t p o n e db e c a u s eBi ns i g n i n gt h et r a n s f e r d o c u me n t h a da r me dPwi t h t h eme a n st or e p r e s e n t Wwa st r u eo wn e r o f t h el a n d . I Ns od o i n g , t h e i r e q u i t ywa sn o t b e t t e r t h a nA’ s , wh owa sab o n afi d ep u r c h a s e r . So , Ah a db e t t e r r i g h t t h a nB To determine the bejer equity, regard should be had to all circumstances, including those that arise aoer equitable interests are acquired / created Clark v Raymor (Brisbane) F ACTS:d i s p u t eb e t we e nR( c l a i me du n r e g i s t e r e de q u i t a b l ec h a r g e ) a n dC( h e l du n r e g i s t e r e de q u i t a b l e f e es i mp l e ) .Sp l u mb e r a n dh eh a dg i v e nac h a r g eo v e r a l l r e a l p r o p e r t yt og u a r a n t e ed e b t st oR( wh o s u p p l i e dh i mwi t he q u i p me n t –e q u i t a b l ec h a r g e ) .So me t i mea f t e r t h ec h a r g ec r e a t e d , v e n d o r e n t e r e d i n t oac o n t r a c t t os e l l p r o p e r t yt oC.Af t e r t h i s , Cs e a r c h e dt i t l ea n df o u n di t wa sc l e a re x c e p t f o r a r e g i s t e r e dmo r t g a g ewh i c hwa st ob ed i s c h a r g e da t s e t t l e me n t .SoCp a i dp u r c h a s ep r i c ea n dl o d g e d r e l e a s eo f mo r t g a g e/ t r a n s f e rd o c u me n t s .Be f o r et h e yc o u l do b t a i nr e g i s t r a t i o n , Rl o d g e dc a v e a t wh i c h p r e v e n t e dr e g i s t r a t i o ni nf a v o u r o f C, a n di nd o i n gs or a i s e dt h ep r i o r i t yd i s p u t e .Ri n t e r e s t c r e a t e dfi r s t ( o n l yl o d g e dc a v e a t a f t e r Ci n t e r e s t c r e a t e d ) REASONI NG:c o u r t n o t e dRh a dd o n en o t h i n gt op r o t e c t i n t e r e s t b e f o r eCc r e a t e dt h e i r i n t e r e s t a n d s e a r c h e dt i t l e .Rf a i l e dt og e t d u p l i c a t ec e r t i fi c a t e , a n df a i l e dt ol o d g ec a v e a t i nt i me .Rh a de s s e n t i a l l y l e f t t h eo wn e r o f t h el a n dt oa c t a st h o u g hRmo r t g a g ed i dn o t e x i s t .I nd o i n gs o , Rd i dn o t h i n gt op r o t e c t i n t e r e s t s .Ont h eo t h e r h a n d , Cd i de v e r y t h i n gi nt h e i r c a p a c i t yt op r o t e c t t h e i ri n t e r e s t ( e n t e r e dc o n t r a c t , d i dt i t l es e a r c h , l o d g e dr e g i s t r a t i o nd o c u me n t sp r o mp t l y ) . HELD:Soi nwe i g h i n gwh oh a db e t t e r e q u i t y–c o u r t h e l dCh a db e t t e r e q u i t y .Rt h u sh a di t si n t e r e s t p o s t p o n e di nf a v o u r o f C.Cc o u l dt h e np r o c e e dt or e g i s t r a t i o n .Cb e c a mer e g i s t e r e do wn e r s .R e q u i t a b l emo r t g a g ed i s s o l v e da sCh a di n d e f e a s i b l et i t l e( n o t s1 8 4 ( 2 ) –t a k ei n t e r e s t f r e eo f u n r e g i s t e r e d i n t e r e s t s–k n o wl e d g eo f i n t e r e s t b e f o r er e g i s t r a t i o nd i dn o t d i s e n t i t l eCi na n ywa y ) The fact that an equitable interest is evidenced by an instrument in registrable form does not given the holder bejer equity MojeS v Dillon HELD:n or e a s o nf o r p r e f e r r i n ga ne q u i t a b l ei n t e r e s t c r e a t e db yar e g i s t r a b l ei n s t r u me n t o v e r a n e q u i t a b l ei n t e r e s t c r e a t e dn o t i nr e g i s t r a b l ef o r m Circuit Finance v Wills F ACTS:2e q u i t a b l ec h a r g e swh i c hwe r eg r a n t e do nt h es a med a y 3 1 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 HELD:t h ec h a r g eg r a n t e dt oWp r e v a i l e do v e r t h a t g r a n t e dt oC, t a k i n gi n t oa c c o u n t t h ef a c t t h a t t h e i n t e r e s t r a t ep a y a b l eo nt h eCl o a nwa se x t r a o r d i n a r i l yh i g ha n dwa sc o n s i s t e n t wi t hCb e i n ga wa r et h a t i t wa sl e n d i n gwi t hv e r yl i t t l eo r n os e c u r i t y .Th eo t h e r l o a nwa sc o mme n s u r a t ewi t ha d e q u a t ea n dp r o p e r s e c u r i t y PRIORITIES AND CAVEATS Primary funcfon of a caveat – to freeze the Register – prevents the registrafon of instruments LTA s 124 Secondary funcfon – give nofce of the existence of an unregistered interest J & H Just Holdings Pty Ltd v Bank of New South Wales A failure to caveat will not auect compefng priorifes if: a )t h eh o l d e ro f t h ei n t e r e s t s e c o n di nt i meh a sn o t s e a r c h e dt h er e g i s t e r ;OR b )i si n d i ff e r e n t t ot h ee x i s t e n c eo f t h efi r s t i n t e r e s t Lynch v O’Keefe There is no need for an equitable mortgagee who holds the cerflcate of ftle to lodge a caveat J & H Just v Bank of New South Wales Note LTA s 75 ( 1 ) Ane q u i t a b l emo r t g a g eo f al o t ma yb ec r e a t e db yl e a v i n gac e r t i fi c a t eo f t i t l ewi t ht h emo r t g a g e e Clark v Raymor (Brisbane) – see above VOLUNTEERS Volunteers prior to registraHon Volunteers take subject to all prior equifes – equity will not assist a volunteer Volunteer gio complete in equity if the donor has not everything necessary to be done, although something may remain to be done which can be done by someone else PLA s 200 – the general rule as to whether a gio of property is complete Corin v Pajon F ACTS:Pwa n t e dt os e l l h o u s ea n dg ot oc h i l d r e n , s os i g n e dt r a n s f e r t oCt oh o l da st r u s t e e .Ti t l ed e e d h e l db yb a n k .Pd i dn o t p r o c u r et i t l ed e e df o r r e g i s t r a t i o na n dd i e db e f o r er e g i s t e r e d . HELD:t r a n s f e r n o t c o mp l e t e .Ph a dn o t d o n ea l l t h a t wa sn e c e s s a r yt oe ff e c t t h et r a n s f e r –g i v e nn o a u t h o r i t yt ob a n k , n o t c l e a r wh e t h e r s o l i c i t o rh e l dt r a n s f e r Volunteers a\er registraHon Benelts of indefeasibility apply whether or not considerafon is given LTA s 180 ADVERSEPOSSESSI ON OWNERSHIP, POSSESSION AND TITLE Title – The right to maintain or recover possession of land against all other persons Asher v Whitlock Possession (‘seisen’) is the root of ftle Relafvity of ftle – ftle is a relafve concept – Who has the bejer right to possession? 3 2 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Remedies for interference with rights of possession – Ejectment and recovery of possession Adverse possession – The true owner loses the right to eject a person in possession with the e|uxion of fme ADVERSE POSSESSOR – GENERAL LAW – MUST APPLY General Law A registered proprietor does not obtain the benelt of s 184 indefeasibility against the interest of an adverse possessor LTA s 185(1)(d) Adverse possessor is delned as a person: a )a g a i n s t wh o mt h et i mef o rb r i n g i n ga na c t i o nt or e c o v e rt h el o t h a se x p i r e du n d e rt h eL AA;AND b ) wh o , a p a r t f r o mt h eL T A, i se n t i t l e dt or e ma i ni np o s s e s s i o no f t h el o t LTA Sch 2 ELEMENTS a ) CLe l e me n t so f a d v e r s ep o s s e s s i o nmu s t b ee s t a b l i s h e d b ) Pr o v i s i o n so f t h eL AAmu s t b es a t i s fi e d c ) St a t u t o r yp r o c e d u r et op r o c u r et h er e g i s t r a t i o no f t h ea d v e r s ep o s s e s s o ra sRPmu s t b ef o l l o we d Re Johnson ESTABLISHING “ADVERSE POSSESSION” ADVERSE POSSESSION Two elements: a ) Ad v e r s e–wi t h o u t t h ec o n s e n t o f t h et r u eo wn e r b ) Po s s e s s i o n–wh i c hi s‘ a c t u a l , c o n s t a n t a n dv i s i b l eo c c u p a t i o nb ys o mep e r s o nt oe x c l u s i o no f t h et r u e o wn e r ’ McConaghy v Denmark; Mulcahy v Curramore POSSESSION What is required is possession which is ‘open, not secret; peaceful, not by force; and adverse, not by the consent of the true owner’ Mulcahy v Curramore Two elements: a )F a c t u a l Po s s e s s i o n( s u ffic i e n t p h y s i c a l c o n t r o l ) b )I n t e n t i o nt op o s s e s s Buckinghamshire County Council v Moran Factual Possession Requires that the person in possession exercise a suzcient degree of physical custody and control – amounfng to single and exclusive possession Powell v McFarlane 3 3 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 J A Pye (Oxford) Ltd v Graham Need to show that the possessor has been dealing with the land as the occupying owner might be expected to deal with it, and to the exclusion of all others Powell v McFarlane Acts that give rise to a suzcient degree of physical custody and control depend upon the nature of the land the usual type of use of the land – eg: farm land and residenfal land may require diuerent means of exercising control J A Pye (Oxford) Ltd v Graham IntenHon of possess Requires an intenfon to exclude the world at large, including the true owner – no need to show an intenfon to own the property Powell v McFarlane If the owner has consented to occupafon – no intenfon to possess Intenfon to possess is inferred from the facts – owner intenfon is largely irrelevant Acts of Possession Entry into possession is not suzcient on its own LAA s 21; Mulcahy v Curramore Fencing – good sign of intenfon to possess Buckinghamshire County Council v Moran f e n c i n go f c o u n c i l l a n da n dma i n t a i n i n gg a r d e n=s u ffic i e n t c o n t r o l a n di n t e n t Monash City Council v Melville c o n s t r u c t i o no f f e n c ewi t hi n t e n t i o no f o c c u p y i n gt h el a n dwa ss u ffic i e n t Paying rates – can be strong evidence but not conclusive – and not essenfal (can establish without paying rates) Re Johnson Monash CC v Melville CulRvaRng the land – culfvafng farming land together with fencing has been suzcient JA Pye (Ocford) v Graham Camping – from fme to fme and paying rent was insuzcient Re Johnson LIMITATION PERIOD + ACCRUAL PERIOD An acfon shall not be brought by a person to recover land aoer: a )t h ee x p i r a t i o no f 1 2y e a r s b )f r o mt h ed a t eo nwh i c ht h er i g h t o f a c t i o na c c r u e d LimitaGons of AcGons Act 1974 (Qld) s 13 The ‘true owner’s’ ftle is exfnguished once the limitafon period expires LAA s 24 The adverse possessor can also apply to become the registered owner of the land LTA Commencement of the limitaHon period – Present Interests 3 4 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 The right of acfon to recover possession accrues on the date the person: a ) wa sd i s p o s s e s s e d( b ys o me o n ee l s et a k i n gp o s s e s s i o n )o r b )d i s c o n t i n u e dp o s s e s s i o n( b yv a c a t i n gt h ep r o p e r t y ) LAA s 14(1) The right to recover is deemed not to accrue unless there is someone in possession of the land in whose favour the limitafon period can run – ie there must be a person in adverse possession LAA s 19(1) There is a requirement of conRnuous adverse possession LAA s 19(2) Extension of limitaHon period Disability Where owner has a disability on the date that the right of acfon accrues, the limitafon period may be extended 6 years from the date disability ceased of owner dies (whichever lrst) LAA s 29 A disability means the person is an infant / unsound of mind LAA s 5(2) UNSOUNDMI ND:p e r s o ni s–i n v o l u n t a r yp a t i e n t u n d e r Me n t a l He a l t hAc t , f o r e n s i cd i s a b i l i t yc l i e n t o r i n c u s t o d y In any case, must be brought within 30 years of date the right of acfon accrues LAA s 29(2)(b) Unknown idenRty If the idenfty of the true owner is unknown / not established, the limitafon period if 30 years from the fme that the adverse possessor takes possession LTA s 29(2)(b) Fraud / mistake Where acfon to recover is based on fraud/mistake, fme runs from when owner discovered/could have discovered with reasonable diligence LAA s 38 Gaps in adverse possession Adverse possession must be confnuous LAA s 19(2) If the adverse possessor abandons the land, the limitafon period stops running Trustees, Executors & Agency v Short Adverse possessor cannot rely on previous periods of adverse possession – ie where there a gaps in possession Trustees, Executors & Agency v Short The test is whether the possessor maintained confnuous possession and an intenfon to possess for the whole of the 12 years – short breaks (eg holidays) do not prove abandonment Bligh v MarGn; Nicholas v Andrew Successive adverse possessors 3 5 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 It can be possible to establish the required confnuous possession by a series of occupiers Asher v Whitlock As long as there is no break in possession, the succeeding possessor may add to their fme in possession any periods of possession by preceding occupiers Mulcahy v Curramore AcHon under will or intestacy Where person brings an acfon to recover the land of a deceased person (either under will or intestacy) and the deceased person was in possession of the land at the fme of their death, the acfon will be deemed to accrue on the date of death LAA s 14(2) However, there must be someone in adverse possession before an acfon accrues LAA s 19(1) In the case of fraud – acfon does not commence unfl the plainfu has discovered the fraud or ought with reasonable diligence to have discovered it LAA s 38 Commencement of the limitaHon period – Future Interests (eg remainderman / revesioner) Generally a future interest holder’s right of acfon accrues on the expiry of the previous interest LAA s 15(1) Where the adverse possession began during the previous interest, the limitafon period will expire either: a )1 2y e a r sf r o mt h es t a r t d a t eo f d i s p o s s e s s i o no r b ) 6y e a r sf r o mt h ee x p i r yo f t h ep r e v i o u se s t a t e , wh i c h e v e ri st h el a t e r LAA s 15(2) The creafon of new interests in land by way of assurance (eg transferring life estate) will not auect the limitafon period LAA s 15(3) NOTE – there must be someone in adverse possession before an acfon accrues LAA s 19(1) STOPPING THE CLOCK The limitafon period will stop running when: a )T r u eo wn e rr e t a k e sp o s s e s s i o np e a c e f u l l y b )T r u eo wn e rc o mme n c e sa na c t i o nt or e c l a i mp o s s e s s i o n c ) Oc c u p i e ra c k n o wl e d g e st i t l eo f t r u eo wn e r( s3 5 )–t i mewi l l s t o pr u n n i n ga n da c t i o nd e e me dt oa c c r u eo n a n dn o t b e f o r et h ed a t eo f a c k n o wl e d g e me n t Adverse possession against the Crown is not possible in Queensland LAA s 6(4) ADVERSE POSSESSION AND TORRENS – text p 375-8 Registrafon of ftle of adverse possessor: a ) Ap p l i c a t i o nmu s t b ei nr e s p e c t o f t h ewh o l eo f al o t b ) Ca n n o t r e g i s t e rt i t l eo v e rp a r t o f al o t 3 6 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 c ) Noc l a i ma g a i n s t t h eSt a t eo r l o c a l g o v e r n me n t d ) En c r o a c h me n t sd on o t g i v er i s et oa d v e r s ep o s s e s s i o n : Sh e r r a r dvRe g i s t r a ro f T i t l e s LTA ss 98 - 108 Adverse possession as an excepfon to indefeasibility LTA s 185(1)(d) CONVEY ANCI NGPROCESS Summary Conveyancing Process: 1 ) Ac o n t r a c t o f s a l ei sd r a wnu p 2 )F o r ma t i o no f c o n t r a c t o f s a l e 3 ) Af t e rf o r ma t i o n 4 ) Se t t l e me n t 5 )L o d g e me n t 6 ) Re g i s t r a t i o n Parfes Se l l e r( v e n d o r ) Bu y e r( p u r c h a s e r ) Ou t g o i n g( s e l l e r ’ s )mo r t g a g e e I n c o mi n g( b u y e r ’ s )mo r t g a g e e A contract of sale is drawn up REIQ standard form contracts are commonly used The contract must specify the essenfal terms of the agreement: Pr i c e p a r t i e s i d e n t i f yo f p r o p e r t y i n c l u s i o n s / e x c l u s i o n s c o mp l e t i o nd a t e The contract will usually be condifonal upon the purchaser obtaining lnance and being safsled that there are no exisfng structural defects or defects in ftle the vendor will be unable to remove before sejlement Contract will usually specify that fme is of the essence Contract must be in wrifng and signed to be enforceable PLA s 59 See also PLA ss 10, 11 To transfer an interest at law requires an instrument in wrifng signed by the transferor PLA s 10 Wrt creafng interests in land: a )c r e a t i o n/ d i s p o s a l o f i n t e r e s t mu s t b es i g n e db yt h ep e r s o nc r e a t i n g/ c o n v e y i n gt h es a me 3 7 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 b )d e c l a r a t i o no f t r u s t mu s t b ema n i f e s t e db ys o mewr i t i n gs i g n e db yp e r s o nd e c l a r i n gt h et r u s t ( o rt h e i r wi l l ) c )d i s p o s i n ga ne q u i t a b l ei n t e r e s t mu s t b ep r o v e db ywr i t i n go f t h ep e r s o nd i s p o s i n go f i t ( o r t h e i ra g e n t / wi l l ) PLA s 11 Upon entering into the contract of sale the purchaser takes an equitable interest in the property, namely the equitable fee simple FormaHon of Contract of Sale Deposit paid, usually to a real estate agent to hold on trust Upon entering into the contract of sale the purchaser takes an equitable interest in the property, namely the equitable fee simple, which is a caveatable interest Re Henderson’s Caveat A sejlement nofce can be lodged at this point by buyer or mortgagee – reserves a posifon in registrafon queue see LTA s 141 Vendor holds the property on trust for the purchaser Risk – passes to the purchaser, but note: mo n e yp a y a b l eu n d e ra n yi n s u r a n c ep o l i c ywr t d a ma g e/ d e s t r u c t i o nt ot h ev e n d o ri sp a y a b l eu p o n c o mp l e t i o n , n o t wh e nr i s kp a s s e s( PL As6 3 ) r i g h t t or e s c i n db e f o r ec o mp l e t i o n/ t a k i n gp o s s e s s i o nf o rd e s t r u c t i o n/ d a ma g et od we l l i n gma k i n gi t u n fi t f o rd we l l i n g–u p o nr e s c i s s i o nmo n e yp a i db yp u r c h a s e rwi l l b er e f u n d e d( PL As6 4 ) Insurance Should occur at this stage or before the contract is signed Where a seller has an insurance policy but the buyer does not, the buyer can rely on the seller’s insurance policy despite no privity of contract PLA s 63 Right to rescind the contract for destrucfon of or damage to dwelling, making it unlt for dwelling PLA s 64 A\er FormaHon of the Contract 5-business day cooling ou period aoer contract signed – applies to residenfal property sales (not aucfon sales or commercial property): Property OccupaGons Act 2014 (Qld) [formerly PAMDA] ss 166-168 Penalty of 0.25% of the purchase price Can be waived or shortened 30-60 day period (as set out in the contract) between formafon and sejlement – allows the purchaser to make: s e a r c h e sf o r e n c u mb r a n c e so rd e f e c t sa ff e c t i n gt i t l et h a t a r en o t me n t i o n e di nt h ec o n t r a c t a n d p h y s i c a l i n s p e c t i o n so f t h ep r o p e r t y a p p l i c a t i o n sf o r b a n kl o a n st of u n dt h ep u r c h a s ep r i c e At some point during this fme, the contract becomes uncondifonal 3 8 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Stamp duty (transfer duty) to be paid on the contract and instrument of transfer prior to sejlement and lling The vendor will arrange for the exisfng mortgagee to provide a discharge of mortgage (discharge will occur at sejlement) 3 9 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Seclement Just prior to sejlement the purchaser does a lnal ftle search If unable to conduct ftle search because Titles Ozce is unavailable, fme is no longer of the essence in the contract PLA s 70A At sejlement, the purchase price is paid in exchange for all documents necessary for the purchaser to obtain a transfer eg: release of mortgage; transfer and cerGacate of Gtle (if issued) purchase price might be paid by incoming mortgagee Vendor has an obligafon under the contract to provide good ftle – if vendor cannot do so the purchaser should refuse to sejle There is no vendor’s lien over the property LTA s 191 Aoer sejlement purchaser has a right to possession Lodgment The incoming mortgagee or the transferee will lodge documents a ) Re l e a s eo f mo r t g a g e , t r a n s f e ra n dn e wmo r t g a g e( i nt h a t o r d e r ) b ) Ce r t i fi c a t eo f t i t l e( i f o n eh a db e e ni s s u e d ) Posifons in the queue for registrafon will be secured if a sejlement nofce had been lodged Queensland forms only require Lot and RP informafon for Lot on Plan Descripfon RegistraHon Documents are registered in the order in which they are lodged LTA s 177 The new registered owner obtains an indefeasible ftle upon registrafon see LTA ss 37, 38, 181, 184 above 4 0 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 SUMMARI ES( Sof a r ) LEASE COVENANTS SUMMARY Covenants implied by common law: Qu i e t En j o y me n t ( Au s s i eT r a v e l l e rvMa r k l e a ) No n d e r o g a t i o nf r o mg r a n t ( Ma r t i n sCa me r aCo r n e rvHo t e l Ma y f a i r ) o h a sl a n db e e nma d ema t e r i a l l yl e s sfi t f o rp u r p o s ef o rwh i c hi t wa sl e t ?( Ma r t i n sCa me r a ; Al d i n vL a t i me r ) o i n c r . i ni n s u r a n c ei sn o t an o n d e r o g a t i o nu n l e s ss ob a da st oma k eb u s i n e s si mp o s s i b l e/ p r o h i b i t i v e( O’ Ce d a r ) Do e st h ec o n d u c t a mo u n t t oap r i v a t en u i s a n c ea si nAu s s i eT r a v e l l e rvMa r k l e a ?L e a s ei st r e a t e da sa n o r d i n a r yc o n t r a c t … Covenants implied by PLA – does not apply where expresscovenant… Re p a i r( PL As1 0 5 ( 1 ) ( b ) ) o Mu s t b ek e p t i nas t a t eo f r e p a i rs oc a nb eu s e db yc l a s so f p e r s o n sf o rwh i c ht h ep r e mi s e s we r eo c c u p i e df o r , h a v i n gr e g a r dt oa g e , c h a r a c t e ra n dl o c a l i t y( Pr o u d f o o t vHa r t ) o St a n d a r do f r e p a i rr e q u i r e di su s u a l l yme a s u r e df r o mt h ec o n d i t i o na t c o mme n c e me n t o f l e a s e ( Pr o u d f o o t vHa r t ) o I st h e r eah i g h e r o b l i g a t i o np u r s u a n t t oa ne x p r e s sc o v e n a n t t ok e e p‘ i ng o o da n ds u b s t a n t i a l ’ r e p a i d( L u r c o t t vWa k e l y ? o Re p a i ri sr e n e wa l o rr e p l a c e me n t o f d e f e c t i v ep a r t sn o t s u b s t a n t i a l l yt h ewh o l eo f t h es u b j e c t ma t t e r( L u r c o t t vWa k e l y ) Re n t ( PL As1 0 5 ( 1 ) ( a ) ) Covenants may also be implied by applicafon of contractual principles Se er e l e v a n t c o n t r a c t p r o v i s i o n s–e x p r e s sc o v e n a n t r e a ds u b j e c t t oo v e r r i d i n gi mp l i e do b l i g a t i o n s( q u i e t e n j o y me n t / n o n d e r o g a t i o n ) o No t e–i n s u r a n c et or e i mb u r s ep r e mi u msr e l e v a n t e gb u s i n e s se ffic a c y BP Reanery v Shire of HasGngs LEASE ASSIGNMENT SUMMARY Co n s e n t o b t a i n e d ? T r a n s f e ro f l e a s e Pr i v i t yo f K/ p r i v i t yo f e s t a t e ? o Nod e e do f c o v e n a n t =n op r i v i t yo f K o I f r e g i s t e r e d–L T As6 2 ( 1 )a p p l i e sa n da l l r i g h t s , p o we r sa n dp r i v i l e g e sa n dl i a b i l i t i e sv e s t o L T As6 2 ( 3 )–wi t h o u t l i mi t i n g( 1 ) , t h er e g i s t e r e dt r a n s f e r e eo f ar e g i s t e r e dl e a s ei sb o u n db ya n d l i a b l eu n d e r t h el e a s et ot h es a mee x t e n t a st h eo r i g i n a l l e a s e Ap p l i c a t i o no f L T As6 2 o Un c e r t a i n t yi na p p l i c a t i o n o L T As6 2o n l yo p e r a t e st ot r a n s f e rc o v e n a n t st h a t t o u c h/ c o n c e r nt h el a n d( J o d a wa yvL a n g t o n ) d o e sNOTi n c l u d ep e r s o n a l c o v e n a n t s–e gr e p a y me n t o f s e c u r i t yd e p o s i t o BUTs6 2 ( 3 )p u r p o r t st ob i n dl e s e eu p o nt r a n s f e ro f l e a s e‘ t os a mee x t e n t a so r i g i n a l l e s s e e ’ o t h ee ff e c t o f s6 2i st h a t t h et r a n s f e r o f al e a s ec r e a t e sp r i v i t yo f e s t a t ea n dKb e t we e nl e s s o ra n d t r a n s f e r e e( Ka r a c o mi n a k i svBi gCo u n t r yDe v e l o p me n t s ) 4 1 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 o T h u s , i f a p p r o a c hi nKa r a c o mi n a k i si sf o l l o we dal e s s e ewi l l b el i a b l eo nt h ep e r s o n a l c o v e n a n t s a n dr e q u i r e dt op a y TERMINATION SUMMARY I d e n t i f yt h et y p eo f l e a s e o PL As1 2 9t e n a n c ya t wi l l ?Ca nb ed e t e r mi n e do n3 0d a y sn o t i c e o No t i c emu s t b es e r v e di na c c o r d a n c ewi t hPL As3 4 7 I d e n t i f yb r e a c h/ r e p u d i a t i o n o Re p u d i a t i o n ? o Br e a c ho f e s s e n t i a l / n o n e s s e n t i a l t e r m? NOT E–i f c ont i nui ngbr e a c h–Tf a i l st oo b s e r v eo rp e r f o r ma n yo f t h et e r ms o f t h el e a s ea n dt h ef a i l u r ec o n t i n u e sf o r ap e r i o do f 1 4d a y sa f t e r l a n d l o r d g i v e sn o t i c e … o Wa i v e r ? o Ha sb r e a c hb e e nr e me d i e d ? o Re l i e f Pe r i o d i c/ fi x e d/ a t wi l l ?Cl mi g h t a p p l y Pr o c e d u r a l r e q u i r e me n t s : d o e sPL As1 2 4o rPL As1 2 9t e n a n c ya‘ l e a s e ’ ? I f r e e n t r ya r i s e sa t CL , s1 2 4d o e sn o t a p p l yb u t s1 2 9wi l l I f PL As1 2 4a p p l i e s : Ha sv a l i dn o t i c eb e e ns e r v e d ?F o r m7n o t i c e , s p e c i f y i n gb r e a c he t c … Re l i e f a g a i n s t f o r f e i t u r e–PL As1 2 4 ( 3 ) ?Co u r t h a sd i s c r e t i o nu n d e rs 1 2 4 ( 2 ) . Ma yc o n s i d e re l e me n t si nCe n t r a l Es t a t e s( Be l g r a v i a )v Wo o l g a r o Ap p l i c a t i o n s1 2 9t e n a n c ya r i s e sa f t e rah o l d i n go v e r NOTa sar e s u l t o f i n f o r ma l l e a s e/ a g r e e me n t L e s s e eh o l d i n go v e ra f t e re x p i r yn o t e n t i t l e dt ob e n e fi t o f PL As1 2 4 o Co n c l u s i o n 4 2 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 NATUREANDCREATI ONOFLEASES LEASES A lease is the grant of a right to exclusive possession of land for a lxed or determinate term Radaich v Smith A lease is a contract and grants to the lessee an interest in land – commonly used in commercial se}ngs Terminology Reversion – the lessor’s remaining interest in the premises during the currency of the lease Demise / tenancy / lease – basically a lease, which is either the grant of a right of exclusive possession for a lxed or determinate term or the document that records that grant Holding over – occurs when the lessee remains in possession of the premises and pays rent aoer a lxed term lease has expired ESSENTIAL REQUIREMENTS FOR A LEASE Elements a ) Ag r a n t b yal e s s o rt oal e s s e e b )o f ar i g h t t oe x c l u s i v ep o s s e s s i o no f l a n d c )f o rafi x e do r d e t e r mi n a t ep e r i o do f t i me( t h a t ma yb et e r mi n a t e de a r l i e ru p o nd e f a u l t ) d )t y p i c a l l yi ne x c h a n g ef o rt h ep a y me n t o f r e n t a n d / o ro t h e rc o n s i d e r a t i o n( o ro t h e r wi s ee n t e r e di n t ob y wa yo f d e e d ) . Radiach v Smith; Ashburn Anstalt v Arnold Exclusive possession Lessee must be given the legal right of exclusive possession Radaich v Smith This includes the right to exclude all others, including the lessor; however this is subject to statute PLA s 107 A lessor is reserved the right of entry for: a )t oe n t e r a n dv i e w–mu s t g i v el e s s e e2d a y sn o t i c eo f i n t e n t i o nt ov i e wt h es t a t eo f r e p a i r b )t oe n t e r a n dr e p a i r c )t oe n t e r a n dc a r r yo u t r e q u i r e me n t so f p u b l i ca u t h o r i t y , a n dr e p a i ru n d e rt h el e a s e–t oe n s u r e c o mp l i a n c ewi t hl e g i s l a t i o n d )t or e e n t e ra n dt a k ep o s s e s s i o n–mu s t b ei n1mo n t ha r r e a r s PLA s 107x Lessee has right to remove trespassers and to recover possession Premises must be idenflable Licences A licence is (expressly or impliedly) granted to permit a person to use and/or occupy land without a legal right of exclusive possession Thomas v Sorrell 4 3 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Characterising the arrangement is a majer of substance over form – look for provisions that are indicia of a lease rather than a licence: Gr a t ui t ousl i c e nc e–u s u a l l yl i c e n c eg r a n t e dn o t f o rc o n s i d e r a t i o n( e gu s efi e l df o rs o f t b a l l )–e n t i t l e dt a r e a s o n a b l ep e r i o do f t i mea f t e rr e v o c a t i o nt owi t h d r a w Robson v HalleS Cont r a c t ua l l i c e nc e–l i c e n c eg i v e nf o rc o n s i d e r a t i o n( t i c k e t sf o rf o o t b a l l g a me )–n o t ap r o p r i e t a r y i n t e r e s t , s oi t c a nb er e v o k e de v e ni f i nb r e a c ho f a na g r e e me n t Cowell v Rosehill Racecourse L i c e nc ec oupl e dwi t hi nt e r e s t–p r o p r i e t a r yi n t e r e s t s oi r r e v o c a b l e–e q u i t a b l er e me d i e swi l l b e a v a i l a b l e Cowell v Rosehill Racecourse Lease Licence Lessee has interest in land enforceable through law of contract (subject to privity of contract) and in rem (e.g. trespass, nuisance) Licensee has a personal right only, enforceable through law of contract. (i.e. damages). No interest in land. Governed by PLA and enforceable against third parfes (but consider whether subject to indefeasibility) Not generally governed by PLA and not enforceable against third parfes in the absence of privity of contract with those third parfes Can be registered to obtain benelt of indefeasibility Cannot be registered to obtain benelt of indefeasibility Gives lessee right to exclusive possession Legifmises licensee’s occupafon so that the licensee is not a trespasser and may give licensee fact of exclusive possession but not right of exclusive possession. TEST – Licence or lease? A lease will be granted where the agreement evinces the parfes intended to grant a legal right to exclusive possession for a speciled term – look to substance not form Radaich v Smith F ACTS:Se n t e r e di n t owr i t t e na g r e e me n t wi t hRg i v i n gh e r t h e“ e x c l u s i v er i g h t a n dl i c e n c e ” t oal o c k u p s h o pa n dt oc a r r yo nt h eb u s i n e s so f ami l kb a r f o r 5y e a r s .Th ea g r e e me n t wa sc a l l e dal i c e n c ea n dt h e p a r t i e st h el i c e n s o r a n dl i c e n s e e . HELD:al e a s ewa sc r e a t e d .T h ef a c t t h a t t h ea g r e e me n t wa sl a b e l l e dal i e n c ewa sn o t d e t e r mi n a t i v e . TEST:Al e a s ei sa ni n t e r e s t i nl a n da sd i s t i n c t f r o map e r s o n a l p e r mi s s i o nt oe n t e r t h el a n da n du s ei t f o r s o mes t i p u l a t e dp u r p o s eo r p u r p o s e s . T h i si sd e t e r mi n e db ys e e i n gwh e t h e r t h eg r a n t e ewa sg i v e na l e g a l r i g h t o f e x c l u s i v ep o s s e s s i o no f t h el a n df o r at e r m Street v Mounnord F ACTS:awr i t t e na g r e e me n t t oo c c u p yt wor o o msf o r as t i p u l a t e dwe e k l yp a y me n t wa st e r mi n a b l eo n 1 4d a y sn o t i c e .Th i sa g r e e me n t r e f e r r e dt ot h ea r r a n g e me n t a sal i c e n c ea n di n c l u d e da ne x p r e s s a c k n o wl e d g me n t b yt h eo c c u p i e r t h a t n ol e a s eo r t e n a n c ywa si ne x i s t e n c eo r wa si n t e n d e dt oa r i s e . HELD:i f e x c l u s i v ep o s s e s s i o no f r e s i d e n t i a l a c c o mmo d a t i o nwe r eg r a n t e df o rat e r m, t o g e t h e r wi t ht h e p e r i o d i cp a y me n t o f f u l l e c o n o mi cr e n t , t h e nat e n a n c ywa sc r e a t e d 4 4 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 In determining whether a legal right to exclusive possession has been granted, considerafon should be given to both the nature of the rights granted and the intenfon of the parfes Lewis v Bell F ACTS:Se v e r a l h o r s es t a l l s , h o r s et r a i n i n gf a c i l i t i e sa n da c c o mmo d a t i o ng r a n t e dt ol i c e n s e et r a i n e r . L i c e n s o r “ c o n t r o l st h ep r e mi s e s ” a n dh a sa g r e e dt oa l l o wl i c e n s e e“ t ou s et h ep r e mi s e s ” o namo n t ht o mo n t hb a s i sf o r amo n t h l yf e e .Co n d i t i o n s–“ t or e p a i r d a ma g ea n dk e e pp r e mi s e si ng o o da n ds a n i t a r y o r d e r ” , “ t og i v eu pp r e mi s e si ng o o do r d e r a n dc o n d i t i o no nt e r mi n a t i o n ” , a n dt h el i c e n s o r “ ma ye n t e r a n d i n s p e c t ” HELD:L i c e n c e .Ex c l u s i v ep o s s e s s i o ni st h ec o r n e r s t o n eo f al e a s e .He r et h en a t u r eo f t h ea g r e e me n t d i dn o t e v i n c ea ni n t e n t i o nt oc o n f e ral e g a l r i g h t f o r t h el i c e n c e et oc o n t r o l / e x c l u d eo t h e r sf r o mt h es t a l l –i et h e yc o u l d n ’ t l o c ki t u p . cf KJRR v Commissioner of State Revenue F ACTS:t h e r ewa sa“ l i c e n c ea g r e e me n t ” t h a t p e r mi t t e daf r a n c h i s e et oc a r r yo nb u s i n e s si np r e mi s e s l e a s e db yt h ef r a n c h i s o r .Cl a u s e2 . 2a n d2 . 3s t a t e dt h a t t h el i c e n c ea g r e e me n t wo u l dc o n f e r u p o nt h e l i c e n s e en or i g h t o f e x c l u s i v eo c c u p a t i o na n dd i dn o t c r e a t ea n yp r o p r i e t a r yi n t e r e s t . HELD:i swa sn o t a p p r o p r i a t et oi g n o r ec l a u s e s2 . 2a n d2 . 3a n di t st e r mss h o u l db ea p p l i e dt oc o n fi r m t h ed o c u me n t wa si n d e e dal i c e n c e .Mu s t b ec a u t i o u sn o t t og ot o of a r i nd e t e r mi n i n gt h el e g a l r i g h t s u n d e r t h ec o n t r a c t Licence protecRon / remedies Cannot protect licence by caveat Terminafon may give rise to damages through breach of contract Certainty of term – Fixed or determinate term A lease must be for a delnite period of fme, which requires certainty in relafon to the: a )c o mme n c e me n t d a t e ;a n d b )t h ed u r a t i o no f t h et e r m Say v Smith Commencement date A commencement date may be expressed by reference to an event or the happening of a confngency South Coast Oils v Look Enterprises c o u r t e n f o r c e da na g r e e me n t t og r a n t al e a s ef o r as p e c i fi e dt e r mf r o m“ t h ec o mp l e t i o no f t h es e r v i c e s t a t i o n ” .Byt h et i met h el e s s e es o u g h t t oe n f o r c et h ea g r e e me n t t h es e r v i c es t a t i o nwa sc o mp l e t e da n d t h e r e f o r et h ec o n t i n g e n c yh a do c c u r r e d Commencement may also be implied based on the date of entry into possession and the payment of rent Jopling v Jopling A lease which does not safsfy this requirement is void and unenforceable Caboolture Park Shopping Centre v Edelstein DuraRon The maximum durafon of a lxed-term lease must be ascertainable at the fme that the lease commences (can be a period or specify the date of terminafon) 4 5 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Charles Clay v BriGsh Railway Board It is uncertain if the term of the lease is linked to an external collateral method of measurement Lace v Chantler al e a s ef o r t h e“ d u r a t i o no f t h ewa r ” i si n v a l i da st h et e r mi su n c e r t a i n see also PrudenGal Assurance v London Residuary Body l e a s et oc o n t i n u eu n t i l t h el a n dwa sr e q u i r e db yt h ec o u n c i l f o r r o a d wi d e n i n gwa si n v a l i d Ho we v e r , al e a s ef o r 5y e a r swi t ht h er i g h t t od e t e r mi n et h el e a s ei f t h ewa re n d swo u l db ec e r t a i n The term that a lease commenced “on such terms as customarily apply to leases of this kind” are not uncertain Flexman v BorbeS e x p e r t e v i d e n c ec o u l db eg i v e nt os a t i s f yt h i si nc o u r t NOT E–t h i si sp o o r d r a f t i n gp r a c t i c e Periodic tenancies – weekly / monthly – are certain because the original term is certain and such tenancies can be determined at any fme by either party giving the appropriate nofce PrudenGal Assurance v London Residuary Body Tenancy at will – no set durafon but can be determined on proper nofce FIXED TERM LEASES General A lease granted for a speciled period of fme and which automafcally terminates on the expiry date Lace v Chantler Does not have to be granted for a confnuous period Smallwood v Sheppards Lessee need not enter the premises for the lease to take euect PLA ss 102(1), (2) Requirements Lease must have a certain term a ) Co mme n c e me n t d a t e b ) En dd a t e If a lease for > 3 years will only be a legal lease (ie enforceable at law) if: a ) Co n t a i ne s s e n t i a l t e r msa n dn oCPr e q u i r e dt ob ef u l fi l l e d Masters v Cameron I . I I . I I I . I V . b i n d i n gc o n t r a c t wh e r ep a r t i e sh a v er e a c h e dfi n a l i t yi na r r a n g i n ga l l t e r msa n di n t e n dt ob e i mme d i a t e l yb o u n d , b u t p l a nt op u t i n t omo r ef o r ma l d o c u me n t b i n d i n gc o n t r a c t wh e r ea l l t e r msa g r e e d+n o t i n t e n t i o nt od e p a r t , b u t p e r f o r ma n c ec o n t i n g e n t o ne x e c u t i o no f af o r ma l d o c u me n t NOb i n d i n gc o n t r a c t wh e r eb a r g a i nn o t c o n c l u d e da t a l l , u n l e s so r u n t i l t h e ye x e c u t eaf o r ma l d o c u me n t b i n d i n gc o n t r a c t i f p a r t i e sc o n t e n t t ob ei mme d i a t e l yb o u n db u t h a v ea g r e e du p o ne x p e c t i n gt o ma k ef u r t h e r a me n d me n t s : Ba u l k h a mHi l l sPr i v a t eHo s p i t a l vGRSe c u r i t i e s b ) Co n t r a c t mu s t b ei nwr i t i n ga n ds i g n e dt ob ee n f o r c e a b l e PLA s 11 4 6 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 c ) Re g i s t e r e du n d e r L T A Lease for < 3 years is valid without wrifng or registrafon (see podcast 3 and 4) Lease is only enforceable if all essenfal terms reduced to wrifng and signed by party to be sued. Lease must not be subject to condifon precedent PERIODIC TENANCY General Periodic tenancy is an automafcally renewing tenancy for the periods agreed or implied by law (usually weekly, fortnightly, monthly or yearly) Queens Club v Bignell At the end of each period, a new period will commence unless the tenancy has been terminated by nofce Is a legal interest in land and has the benelt of indefeasibility as a short lease under the Land Title Act 1994 (Qld) Requirements Periodic tenancy need not be in wrifng PLA s 12 Can be created by express agreement between the parfes – eg month to month or year to year Where no express agreement, a periodic tenancy can be implied from the terms agreed an all the surrounding circumstances – payment of rent is one of the most crucial considerafons Turner v York Motors p a y me n t o f $ 8 0 0mo n t h l yr e n t i na d v a n c ei se v i d e n c eo f amo n t h l yt e n a n c ya n dg i v e sr i s et oap r i ma f a c i ec a s ei nf a v o u r o f amo n t h l yt e n u r e Javad v Mohammed Aqil 4 7 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 YEARLY TENANCY General A yearly tenancy confnued from year to year unfl it is determined by either the lessor or lessee by giving appropriate nofce CreaHon Can occur in 5 ways: 1 ) Ex p r e s sg r a n t 2 )I mp l i e db ye n t r yi n t op o s s e s s i o na n dp a y me n t o f r e n t c a l c u l a t e do ny e a r l yb a s i s( J a v a dvMo h a mme d Aq i l ) 3 ) Ho l d i n go v e r–wh e r el e s s e eh o l d so v e ra f t e rt h ee x p i r yo f afi x e d t e r ml e a s eo rt h et e r mi n a t i o no f a t e n a n c ya n dr e n t i sp a i db yr e f e r e n c et oay e a ro r p a r t yo f ay e a r( Mo o r evDi mo n d ) 4 )T e r mst o ov a g u e–( 2 ) a p p l i e s 5 )I n f o r ma l l e a s e–( 3 ) a p p l i e s see Moore v Dimond F ACTS:fi x e d t e r ml e a s ee x p i r e da n dM, t h el e s s o r , a n dD, t h el e s s e e , r e a c h e da na g r e e me n t f o r a f u r t h e r l e a s ef o r 5y e a r sa t ar e n t o f $ 1 6 / wk .T h ea g r e e me n t wa si nwr i t i n gb u t n of o r ma l l e a s ewa s e x e c u t e d .I n i t i a l l y , t h el e s s e er e ma i n e di np o s s e s s i o na n dp a i dt h er e n t a sa g r e e d , b u t h et h e nv a c a t e d t h ep r e mi s e sd u r i n gt h ea d d i t i o n a l 5 y e a r p e r i o d .Th el e s s o rs u e df o r r e n t o nt h eb a s i st h a t t h e r ewa sa y e a r l yt e n a n c yi mp l i e da t l a w, wh i c hh a dn o t b e e nv a l i d l yt e r mi n a t e db yt h el e s s e e .I t wa sa r g u e dt h a t s u c hat e n a n c ywo u l db ei mp l i e db yv i r t u eo f t h el e s s e eb e i n gi np o s s e s s i o na n db yp a y i n gr e n t p u r s u a n t t oa ni n f o r ma l a g r e e me n t f o r 5 y e a r s . HELD:t h ec i r c u ms t a n c e so f t h ep a r t i e sa g r e e me n t , t h a t i st h ei n f o r ma l a g r e e me n t t og r a n t al e a s ef o r a f u r t h e r 5y e a r s , t o g e t h e r wi t ht h ep a y me n t a n da c c e p t a n c eo f r e n t u n d e r t h a t a g r e e me n t , e ff e c t i v e l y d e s t r o y e da n yi mp l i c a t i o nt h a t t h ei n t e n t i o no f t h ep a r t i e swa st oc r e a t eawe e k l yt e n a n c yd e s p i t er e n t b e i n gp a i do nawe e k l yb a s i s . HELD:t h ep a r t i e si n f o r ma l a g r e e me n t f o r al o n g t e r ml e a s ewa sd e c i s i v ea n dt h ewe e k l yr e n t wa sp a r t c o mp e n s a t i o nf o rt h ee n t i r ep e r i o d .I t wa sf u r t h e r n o t e dt h a t t h ei mp l i e dt e n a n c yf r o my e a r t oy e a r d i d n o t r e s t o nt h ea c t u a l i n t e n t i o no f t h ep a r t i e st oc r e a t es u c hat e n a n c y ; i t wa sac o n c l u s i o no f l a w.T h e y e a r l yt e n a n c yt h a t a r i s e si nt h e s ec i r c u ms t a n c e si so n ei mp l i e do r i mp u t e db yl a w Statutory Impact – PLA s 129 Where there is no agreement about the tenancies durafon – a yearly tenancy will no longer be implied by the payment of rent and in its place, a tenancy at will shall be implied which is determinable with 1 month nofce PLA s 129(1) This secfon has no applicafon where a weekly or monthly tenancy is implied Burnham v Carroll Musgrove (weekly) Turner v York Motors Pty Ltd (yearly) This secfon does not apply to yearly tenancies expressly created Brisbane City Council v Council Club F ACTS:t h el e s s e eh a de n t e r e di n t op o s s e s s i o np e n d i n gfi n a l n e g o t i a t i o no f t h el e a s ewh i c hwa sn e v e r c o n c l u d e d .L e s s e ep a i da na n n u a l r e n t o n c eay e a r a n dt h i sc o n t i n u e df o r 9y e a r s . HELD:L e s s e e swe r ei np o s s e s s i o np u r s u a n t t oay e a r l yt e n a n c ya r i s i n gb yi mp l i c a t i o no f l a wa n dwh i c h wa sc o n v e r t e dt oat e n a n c ya t wi l l b yPL As1 2 9 .T h el e s s e ea r g u e dt h a t t h e ywe r ei np o s s e s s i o nu n d e r a ni mp l i e dy e a r l yt e n a n c ywh i c hwa so u t s i d ePL As1 2 9s c o p e .T h i swa sr e j e c t e d–t h ef a c t t h a t i t ma y b ep o s s i b l et oi n f e r f r o mt h ee v i d e n c ea na g r e e me n t b e t we e nt h ep a r t i e st oc r e a t eay e a r l yt e n a n c yd i d 4 8 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 n o t d i s p l a c et h ec o mmo nl a wp r e s u mp t i o na r i s i n gf r o mp a y me n t o f r e n t wh i c ha t t r a c t e dt h eo p e r a t i o no f PL As1 2 9 . NOTE:c o u r t sa r emo r ei n c l i n e dt ofi n dt h a t t h ey e a r l yt e n a n c ya r i s e sb yi mp l i c a t i o no f l a w.Ass u c h , wh e r et h ep a y me n t o f ay e a r l yr e n t i st h es o l es u b s t a n t i v ef a c t o r r e l i e du p o nt or e a c ht h ec o n c l u s i o nt h a t t h e r ei say e a r l yt e n a n c y , t h e nt h er e l a t i o n s h i pi sl i k e l yt ob ec o n s i d e r e da sa r i s i n gb yi mp l i c a t i o no f l a w r a t h e r t h a ni mp l i e da g r e e me n t a n d , t h e r e f o r e , wi l l f a l l wi t h i ns1 2 9s c o p e The term “there is no agreement as to durafon” has been held to mean that there is no agreement which is euecfve at law Dockrill v Cavanagh As such, if there is a lxed-term lease exceeding 3 years, if parfes entered into an ineuecfve (at law) agreement, and the lessee enters into possession and pays rent pursuant to the informal lease, PLA s 129 may apply TerminaHon Determinable with 6-months’ nofce expiring at the end of a completed year (ie before 30 June if 31 December end of lease) PLA s 135(1) This above nofce will apply unless otherwise agreed PLA s 130 TENANCY AT WILL General Arises where lessee is in possession of the premises with the owner’s consent but without a formal lease CreaHon May be created by agreement but usually implied either: a )a sar e s u l t o f l e s s e eh o l d i n go v e r a f t e rt h ee n do f afi x e dt e r ml e a s e ; o r b ) wh e r eap a r t ye n t e r si n t op o s s e s s i o no f p r e mi s e sp e n d i n gac o n c l u d e da g r e e me n t b e i n gfi n a l i s e d Once rent is paid, then generally at common law a yearly or other periodic tenancy will be implied Turner v York Motors F ACTS:l e s s e ee n t e r e di n t op o s s e s s i o no f t h ep r e mi s e swh i l ed i s c u s s i o n si nr e l a t i o nt ot h et e r mso f a fi x e d t e r ml e a s ec o n t i n u e d .Ne g o t i a t i o n sf a i l e d , s on of o r ma l l e a s es i g n e d .L e s s e ewa si np o s s e s s i o n a n dr e n t p a i dwe e k l y , b u t l a t e r r e n t p a i dmo n t h l y .Ov e r ay e a r l a t e r t h el e s s o r a c c e p t e da ni n c r e a s e d mo n t h l yr e n t a l i nr e t u r nf o r l e s s e eo c c u p y i n gl a r g e r a r e a .Pr o p e r t ys o l dt op l a i n t i ffa n dt h el e s s e e r e ma i n e di np o s s e s s i o n .Pl a i n t i ffc l a i me dl e s s e eo c c u p i e da sal e s s e ea t wi l l a n dg a v eo n emo n t h n o t i c e . HELD:i n i t i a l l yat e n a n c ya t wi l l wa sc r e a t e dwh e nt h el e s s e ewe n t i n t op o s s e s s i o nwh i l ed i s c u s s i o n s we r ec o n t i n u i n g .Ho we v e r , a sr e n t wa sp a i dc o n t i n u o u s l ya n dr e g u l a r l yo namo n t h l yb a s i samo n t h l y p e r i o d i ct e n a n c ya r o s e .Th u s , t h en o t i c ewa si n a d e q u a t e . Note PLA s 129 if yearly… 4 9 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Requirements / TerminaHon No certainty of term is required because this is a personal relafonship, not a right in rem (and therefore also not assignable) Either party may determine this type of tenancy at any fme – however, reasonable nofce must be given PLA s 137 What consftutes reasonable nofce will depend on the circumstances of the individual case PLA s 137(2) r e a s o n a b l ep e r i o do f n o t i c ewi l l i nmo s t c a s e si n v o l v eami n i mu mo f 1mo n t h Bond University Ltd v Limgold Pty Ltd QCAe n d o r s e da3 y e a r n o t i c ep e r i o dt ot e r mi n a t et h et e n a n c ya t wi l l –Bo n du n i v e r s i t yh a dl o n g t e r m c o mmi t me n t st os t u d e n t su n d e r t a k i n gs t u d i e so v e r an u mb e r o f y e a r sa n dt h ed i ffic u l t yi ns o u r c i n g a l t e r n a t i v ef a c i l i t i e sme a n t t h a t 3y e a r swa sr e a s o n a b l ei nt h ec i r c u ms t a n c e s OTHER FORMS OF TENANCY Tenancy at suSerance Where lessee enters into possession of premises lawfully but remains in possession aoer right to occupy ends without the assent/dissent of lessor Cannot be expressly created If the lessor objects, the occupafon will most likely be a trespass – acfon for recovery by lessor can be insftuted without nofce Doe d Bennet v Turner Liable to pay compensafon for use and occupafon (cf rent as lessee does not technically pay rent) which amounts to the equivalent of a fair market value for rent Bayley v Bradley No certainty of term is required – not strictly a lease – can be ejected at any fme without nofce Tenancy by estoppel Not covered in this course 5 0 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 AGREEMENTSF ORLEASE DUAL CHARACTER OF A LEASE Dual Impact A lease is: a ) apr opr i e t a r yi nt e r e s ti nl a n d b )a l s oac ont r a c t Impact Lease must comply with requirements for a valid contract and rules for creafon of an interest in land PLA s 11 The lessee has both contractual and proprietary rights (eg. free enjoyment of interest in land) Terminafon of a lease requires: c o mp l i a n c ewi t hc o n t r a c t l a w–i emu s t i d e n t i f yb r e a c h/ r e p u d i a t i o n PL As1 2 4r e q u i r e me n t s : a )L a n d l o r dmu s t g i v en o t i c es p e c i f y i n gt h ep a r t i c u l a rb r e a c h ; b )I f c a p a b l eo f r e me d y , r q u i r e i n gt h el e s s e et or e me d yt h eb r e a c h c )i nt h ec a s et h el e s s o r c l a i msc o mp e n s a t i o nf o rt h eb r e a c h , r e q u i r i n gt h el e s s e et op a yt h e s a me d )I f l e s s e ef a i l swi t h i nar e a s o n a b l et i met or e me d yt h eb r e a c h/ p a yc o mp e n s a t i o n , l e s s o rma y r e t a k ep o s s e s s i o n AGREEMENTS FOR LEASE (ALF) General AFL allows parfes to agree all essenfal terms and binds parfes to a lease so that lessee can ltout premises or enter possession prior to formal lease documents being executed Contractual requirements: Ag r e e me n t Co n s i d e r a t i o n Ce r t a i n t y–c l e a ra n du n a mb i g u o u s , c o n t i n g e n c i e sa r ef u l fi l l e d PLA requirements: I f g r a n t o f i n t e r e s t –mu s t b es i g n e db yp e r s o nc r e a t i n go r c o n v e y i n gt h ei n t e r e s t : s1 1 I f NOg r a n t –mu s t b es i g n e db yt h ep a r t yt ob ec h a r g e d : s5 9 WriHng requirements – CreaHon of legal interest A lease for more than 3 years must be in wrifng and signed by the lessor to create a legal interest in land PLA ss 10, 11(1)(a) NOT E:I t a l s on e e d st ob er e g i s t e r e d…( d i s c u s s e di np o d c a s t 4 ) Wrifng requirements will include names of parfes, subject majer of the agreement, all essenfal terms, rent, commencement date, use 5 1 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 PLA ss 11 or 59 A lease for a term not exceeding 3 years (including opfon periods) can be created as a legal interest in land by parol if the tenant enters into possession (does not apply if tenant not in exclusive possession) PLA s 12(2) t h i si n c l u d e sp e r i o d i ct e n a n c i e sf o r <3y e a r s . I t d o e sn o t ma t t e r h o wl o n gt h et e n a n c yh a sl a s t e d The above does not apply if the tenant does not have exclusive possession WriHng requirements – Enforcement of a lease An acfon being brought to enforce an agreement for lease is prohibited unless the agreement is evidenced in wrifng signed by the lessor or a lawfully authorised agent PLA s 59 HOWEVER doctrine of part performance is an excepfon to the requirements for wrifng PLA s 6(d) worth incorporafng commercial remedies notes???? To establish part performance – the party seeking performance of the agreement must show: a )t h ea c t swe r ed o n eb yt h ep a r t ys e e k i n gp e r f o r ma n c e ; b )t h ea c t sr e l i e du p o na sp a r t p e r f o r ma n c emu s t b eu n e q u i v o c a l l ya n di nt h e i ro wnn a t u r er e f e r a b l et o s o mes u c ha g r e e me n t a st h a t a l l e g e d( Ma d d i s o nvAl d e r s o n ; Re g e n t vMi l l e t ) c )t h ea g r e e me n t wa sc o n c l u d e d( Go b b l e r svSt e v e n s ) d )t h et e r mso f t h ea g r e e me n t c o u l db ep r o v e nb yo r a l e v i d e n c e ;AND e )t h ec o n t r a c t wa sc a p a b l eo f s p e c i fi cp e r f o r ma n c e Regent v MilleS Entry into possession and payment of rent are classic acts of party performance establishing an equitable lease Cooney v Burns One Stop LighGng (Queensland) v Lifestyle Property Developments F ACTS:l e s s e ea r g u e dc e r t a i na c t sc o n s t i t u t e dp a r t p e r f o r ma n c ei nc r e a t i o no f ac o mme r c i a l l e a s ef o r a l i g h t i n gs h o p .Ac t s : p a y me n t o f ad e p o s i t f o r 1mo n t hr e n t , i n s t r u c t i o n sg i v e nf o r t h ema n u f a c t u r i n go f s h o pfi t t i n g sa n dc o mmu n i c a t i o n st h a t e n s u e db e t we e nl e s s e e ’ sa n dl e s s o r s o l i c i t o r s HELD:n o t p a r t p e r f o r ma n c e .Pa y me n t o f d e p o s i t wa sma d et oPa g e n t a n dn o t t h eDa g e n t a n dwa s s e e na sa ni n t e r n a l a r r a n g e me n t Entry into possession itself may be suzcient Regent v MilleS DiSerences between lease and AFL Lease = the registered instrument (form for registrafon) AFL = the agreement to grant the lease (form of a contract) BUT – unfl a lease is registered, it can operate as an agreement for a lease 1 ) Ana g r e e me n t f o rl e a s ema yb ee n f o r c e a b l ei ne q u i t ya sal e a s eb e t we e nt h ep a r t i e st ot h ea g r e e me n t Walsh v Lonsdale; Chan v Cresdon Pty Ltd 2 )I f s p e c i fi ce n f o r c e me n t i ne q u i t yn o t a v a i l a b l e , l e a s ewi l l b ev o i do r , i f i np o s s e s s i o na n dp a y sr e n t , a l e a s eu n d e rs1 2 9PL A( t e n a n c ya t wi l l ) 5 2 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 3 ) Ana g r e e me n t f o rl e a s ed o e sn o t b i n dt h i r dp a r t i e st or e c o g n i s et h er i g h t so f t h el e s s e e–t h a t i sb e c a u s e t h e r ei sn op r o p e r t yr i g h t c r e a t e da t l a wu n t i l r e g i s t e r e d( f o rmo r ed e t a i l r e f e rt op o d c a s t 4 ) Enforcement of AFL Enforceable if: a ) Co n t r a c t i si nwr i t i n ga n da p p r o p r i a t e l ys i g n e d( PL As s1 1 , 5 9 ) b )L e t t e r o f i n t e n t mu s t e v i d e n c et h ee x i s t e n c eo f a na g r e e me n t ( T i v e r t o nEs t a t e svWe a r we l l ; Du ffv Bl i n c o ) Where the agreement is to grant an interest in land (eg grant of lease) – apply PLA s 11 – grant only needs to be signed by grantor Tiverton Estates Where agreement is AFL and NOT a grant of an interest – apply PLA s 59 – which requires suzcient wrifng and signed by party to be charged Tiverton Estates ESect in equity of a lease void at law In equity a promise or an agreement for a lease is regarded as an equitable lease – considered an “agreement for a lease” Walsh v Lonsdale F ACTS:t h ep a r t i e se n t e r e di n t oa7y e a r wr i t t e na g r e e me n t wi t h o u t f o r ma l i s i n gal e g a l l e a s e( d i dn o t s i g nd e e du n d e r s e a l ) .Wr i t t e na g r e e me n t p r o v i d e df o r r e n t t ob ep a i di na d v a n c e .T h el e s s e ee n t e r e d i n t op o s s e s s i o na n dp a i dr e n t q u a r t e r l y , b u t n o t i na d v a n c e .T h el e s s o r d e ma n d e dp a y me n t o f t h er e n t i n a d v a n c ea n d , wh e nt h i sd i dn o t h a p p e n , l e v i e dd i s t r e s s .L e s s e es o u g h t d a ma g e sf o r u n l a wf u l d i s t r e s s a n da ni n j u n c t i o n .L e s s e ea r g u e dt h a t d i s t r e s swa sal e g a l , n o t a ne q u i t a b l er e me d y , a n da sn of o r ma l l e a s eh a db e e ns i g n e d , t h el e s s e ewa si np o s s e s s i o nu n d e r ay e a r l yt e n a n c y , wh e r e b yr e n t wa sn o t p a y a b l ei na d v a n c e . HELD:l e s s e el i a b l ef o r r e n t f o r wh i c ht h ec o mmo nl a wr e me d yd i s t r e s sc o u l db el e v i e d .Th i sc a me a b o u t t h r o u g ht h ec o u r t d e a l i n gwi t ht h ema t t e r a si f af o r ma l l e a s eh a db e e ng r a n t e db e c a u s eo f t h e a v a i l a b i l i t yo f t h er e me d yo f s p e c i fi cp e r f o r ma n c e . Chan v Cresdon Pty Ltd F ACTS:5y e a r l e a s ei nwh i c hg u a r a n t o r a g r e e dt og u a r a n t e et h ep e r f o r ma n c eo f t h el e s s e e ’ s o b l i g a t i o n s“ u n d e r t h i sl e a s e ” .L e a s ei nr e g i s t r a b l ef o r ma t t a c h e dt oAFLb u t n o t r e g i s t e r e d .L e s s e e e n t e r e di n t op o s s e s s i o na n dp a i dr e n t .L e s s e ewe n t i n t od e f a u l t a n dl e s s o r s u e dt h eg u a r a n t o r HELD:g u a r a n t o r n o t l i a b l e–o n l yg u a r a n t e e do b l i g a t i o n su n d e r al e g a l ( i er e g i s t e r e d ) l e a s e .En t r yi n t o p o s s e s s i o na n dp a y me n t o f r e n t c r e a t e day e a r l yt e n a n c ya t c o mmo nl a w( t h e nPL As1 2 9 ( 1 ) a p p l i e s ) . Th eo b l i g a t i o nt op a yr e n t u n d e r t h ec o mmo nl a wt e n a n c ywa sn o t a no b l i g a t i o n“ u n d e r t h i sl e a s e ” a st h e t e n a n c ya t wi l l n e e d st ob ed i s t i n g u i s h e df r o mt h eu n r e g i s t e r e dl e a s e An unregistered lease is not invalid merely because it is unregistered LTA s 71 Ashton v Hunt F ACTS:wa sa r g u e dt h a t s7 1h a st h ee ff e c t t h a t a nu n r e g i s t e r e dl o n gt e r ml e a s ei sav a l i dl e g a l l e a s e HELD:n o–t h ed o c u me n t i t s e l f i sn o t v o i db u t r a t h e r : 1 ) wi l l b e c o mev a l i df o r a l l p u r p o s e so n c e r e g i s t e r e d ; 2 ) i sas o u r c eo f e q u i t a b l er i g h t s( e gt h er i g h t t os p e c i fi cp e r f o r ma n c eo f t h ee q u i t a b l el e a s e ) ; 3 ) c a nb er e f e r r e dt oi no r d e r t od e t e r mi n et h ec o n d i t i o n so f t h ec o mmo nl a wt e n a n c yc r e a t e db y p o s s e s s i o na n dp a y me n t o f r e n t u n t i l t h el e a s ei sr e g i s t e r e d ; 4 ) i sac o n t r a c t t h a t c a nb es u e do n To be enforceable under Walsh v Lonsdale, the court is obliged to conclude both that: 5 3 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 a )t h ea g r e e me n t i ss p e c i fi c a l l ye n f o r c e a b l ei ne q u i t y ;AND b )t h ep a r t i e sh a v ec o n s t i t u t e dab i n d i n gc o n t r a c t b a s e do nn o r ma l c o n t r a c t u a l p r i n c i p l e s Redder Than Red v AB and SM Rawlings Enforceability in equity will include an injuncfon Stern v McArthur Court may sfll enforce an AFL is the parfes have not yet lnalised all of the terms – ie CP sfll applies see Masters v Cameron I . I I . I I I . I V . b i n d i n gc o n t r a c t wh e r ep a r t i e sh a v er e a c h e dfi n a l i t yi na r r a n g i n ga l l t e r msa n di n t e n dt ob e i mme d i a t e l yb o u n d , b u t p l a nt op u t i n t omo r ef o r ma l d o c u me n t b i n d i n gc o n t r a c t wh e r ea l l t e r msa g r e e d+n o t i n t e n t i o nt od e p a r t , b u t p e r f o r ma n c ec o n t i n g e n t o ne x e c u t i o no f af o r ma l d o c u me n t NOb i n d i n gc o n t r a c t wh e r eb a r g a i nn o t c o n c l u d e da t a l l , u n l e s so r u n t i l t h e ye x e c u t eaf o r ma l d o c u me n t b i n d i n gc o n t r a c t i f p a r t i e sc o n t e n t t ob ei mme d i a t e l yb o u n db u t h a v ea g r e e du p o ne x p e c t i n gt o ma k ef u r t h e r a me n d me n t s : Ba u l k h a mHi l l sPr i v a t eHo s p i t a l vGRSe c u r i t i e s Contractual rights Where a lease (or AFL) is evidenced by some wrifng and fullls PLA s 59 requirements it may be valid as a legal contract or as an AFL – if breached, an acfon may be brought for damages in relafon to the breach Leitz Leeholme Stud v Robinson F ACTS:Al e a s ef o r 6y e a r si nr e g i s t r a b l ef o r mo f l a n du s e dt ob r e e dr a c e h o r s e swa sn o t r e g i s t e r e d . Th et e n a n t e n t e r e di n t op o s s e s s i o na n dp a i dr e n t .L e s s e ei na r r e a r s , t h e nr e p u d i a t e dt h el e a s ea n dl e f t t h ep r e mi s e sa f t e r 3y e a r sa f t e r g i v i n g1mo n t hn o t i c eo f i n t e n t i o nt od os o . ARGUMENTS:L e s s o r s u e df o r b a r g a i nd a ma g e sf o r l o s so f l e a s e .L e s s e ea r g u e dt h a t o n l y( PL As1 2 9 e q u i v a l e n t ) t e n a n c ya t wi l l s on o t a c t i o nc o u l db eb r o u g h t b yt h el e s s o r f o r b a r g a i nd a ma g e sa st h e l e s s o r ’ sc o n t r a c t u a l r i g h t swe r el o s t o nt e r mi n a t i o n HELD:1mo n t hn o t i c et e r mi n a t e dt h et e n a n c ya t wi l l b u t d i dn o t t e r mi n a t et h ewh o l eo f t h el e g a l r e l a t i o n s h i p .I n s o f a r a st h eme mo r a n d u mo f l e a s eo p e r a t e da sa na g r e e me n t , i t r e t a i n e das e p a r a t e i d e n t i t yf r o mt h et e n a n c ya t wi l l i mp l i e db yl a w.Ass u c h , t h ec o n t r a c t u a l p o s i t i o nwa st h a t t h ep a r t i e sh a d c o n c l u d e da na g r e e me n t f o r al e a s ef o r 6y e a r sa n dt h en o t i c ea mo u n t e dt owr o n g f u l r e p u d i a t i o n .Th u s , l e s s ore nt i t l e dt os u ef orda ma ge s In other words, the contractual posifon retains a separate idenfty from the tenancy at will which may be implied by law (under PLA s 129) Leitz Leeholme Stuf v Robinson TerminaRon must be euecfve under both contract law and property law to avoid liability Leitz Leeholme Stuf v Robinson 5 4 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 REGI STRATI ONOFLEASES PRECONDITIONS TO REGISTER The lease must: a )b ev a l i d l ye x e c u t e d ; b )i n c l u d eas u ffic i e n t d e s c r i p t i o no f t h ep r e mi s e st oi d e n t i f yt h el o t o r p a r t o f l o t t h a t i st ob el e a s e d( i f f o r p a r t o f t h e l o t , mu s t i n c l u d es k e t c hp l a n : s6 5 ( 2 ) ) ; a n d c )i n c l u d ed e t a i l so f t h ec o n s i d e r a t i o ng i v e nf o r t h eg r a n t o f t h el e a s e LTA s 65 The lease must also be in the appropriate form LTA s 10 If the premises cannot be suzciently idenfled by descripfon, the lease must include a lease sketch plan that safsles the registrar’s standards or (if required by the Registrar) a plan of survey idenffying that part of the lot LTA s 65(2) If the lease is for a term of more than 10 years (including opfons) and is not a lease of all or part of a building, the lease will require planning approval as a subdivision under the Sustainable Planning Act 2009 Condifons of a lease lodged at the Land Titles Ozce are in an ajached Form 20 Schedule Note applicafon of LTA ss 181, 182… ExisHng mortgage If there is a mortgage over the land – the mortgagee must consent to the lease for it to be valid against the mortgagee (otherwise mortgage will have right to recover possession against lessee) Pigot’s Case LTA s 66 POST REGISTRATION OF LEASE A lease can be amended (Form 13 Amendment) but limits apply – including the amendment must not: a )i n c r e a s e/ d e c r e a s et h ea r e al e a s e d ;o r b )a d do r r e mo v eap a r t yt ot h el e a s e c )b el o d g e da f t e r t h el e a s e st e r mh a se n d e d LTA s 67(1)-(2) If lessor under a registered lease lawfully re-enters and takes possession, the lessor may lodge a request with the registrar LTA s 68(1) Registrar must be nofled where a lease is surrendered LTA s 69 REGISTRATION GENERAL PRINCIPLES A lease for > 3 years must be registered to be euecfve at law A lease for < 3 years is euecfve at law without registrafon LTA s 185(1)(b) Euect of registrafon – registered lease or short lease is binding on owner of the land and any later registered interest LTA ss 184, 185 5 5 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Long-term leases A long term lease is a lease for more than 3 years A lease is subject to same rules as other interests in land – ie unfl registrafon a lease is not euecfve to pass an estate or interest in the land at law LTA ss 181, 182 A general view that by execufng a lease intended to operate as a lease at law, the lessor is under an obligafon to register, or procure the registrafon of, the lease Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd UNREGISTERED LEASES – LONG LEASES DiSerent legal status of unregistered lease > 3 years 1 ) CL–v o i d 2 ) Po s s e s s i o n–t e n a n c ya t wi l l 3 ) Pa yr e n t –PL As1 2 9 4 ) Eq u i t y–I f SPe n f o r c e da sal e a s ev sp a r t i e s 5 ) Co n t r a c t –r e me d i e sa v a i l a b l ef o r b r e a c h( L e i t z ) Common law + Possession – (1)+(2) Unregistered tenancy not void, so lease ? 3 years not registered will not be void LTA s 71 Once tenant enters into possession, a tenancy at will will take euect Once rent paid – yearly / monthly tenancy will be implied Moore v Dimond However, this yearly tenancy will be converted into a tenancy at will, which can be terminated by giving 1 month nofce PLA s 129(1) Any condifons inconsistent with LTA and PLA may sfll be enforceable in equity PLA s 129 – (3) “No agreement as to durafon” no express agreement which is euecfve to create a legal lease for the agreed period Dockrill v Cavanagh Applies where: Wa n t o f f o r ma l i t yi nc r e a t i n gl e g a l t e r m( e . g . l e a s et e r me x c e e d s3y e a r sa n di sn o t i nwr i t i n g ) L e a s ee x c e e d i n g3y e a r si sn o t i np r o p e r f o r mf o r r e g i s t r a t i o no rn o t r e g i s t e r e d Equity – (4) The lease will generally take euect as an equitable lease between the parfes if it is capable of specilc performance (discrefonary remedy): t r e a t e df o ra l l p u r p o s e sb e t we e nt h ep a r t i e sa sal e g a l l e a s ef o ra g r e e dt e r m a no r d e r f o r s p e c i fi cp e r f o r ma n c ec o u l dr e q u i r et h ep a r t i e st oe x e c u t ea n dr e g i s t e rt h el e a s e( t og i v ei t l e g a l e ff e c t ) Defeated by subsequent registered interest in absence of fraud or in personam excepfon 5 6 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 LTA ss 184, 185 Valbirn v Powprop Land Title Act Not invalid merely because it is unregistered LTA s 71 Legal interest only created upon registrafon: LTA ss 181, 182 The lease does not have the benelt of indefeasibility as against subsequent registered interests LTA s 184 Contract The lease is sfll a contract between the lessor and lessee NaGonal Carriers Ltd v Panalpina (Northern) Ltd Capable of specilc performance Regent v Millet Capable of being breached with contractual rights enforceable to obtain contract remedies Capable of part performance in equity to overcome lack of formalifes Regent v MilleS PLA s 6(d) REGISTRATION – SHORT LEASES General Short lease means a term for <= 3 years, or from year to year or a shorter period LTA Sch 2 Term means the period beginning when the lessee is lrst enftled to possession of a lot / part of a lot under the lease and ending when the lessee is last enftled to possession, even if the lease consists of 2 or more disconfnuous periods LTA Sch 2 The estate of a RP is subject to the interest of a lessee under a short lease LTA s 185(1)(b) If lrst lease is registered and includes menfon of an opfon, then the opfon takes the benelt of indefeasibility Re Eastdorp No 2 Wallace McCrimmon Weir However, the interest of the lessee under s 185(1)(b) does not include: c ) ar i g h t t oa c q u i r et h ef e es i mp l eo r o t h e r r e v e r s i o n a r yi n t e r e s t a t t h ee n do f t h es h o r t l e a s e ;o r d ) ar i g h t t or e n e w/ e x t e n dt h et e r mo f t h es h o r t l e a s eb e y o n d3y e a r sf r o mt h eb e g i n n i n go f t h eo r i g i n a l t e r m LTA s 185(2)x ExisHng Mortgage Registered mortgagee not bound by later registered lease unless consent given LTA s 66 Registered mortgagee is bound by earlier registered leases LTA s 66 If no consent to lease, mortgagee can sell the property without regard to the interest of the lessee 5 7 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Pigot’s Case 5 8 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 COVENANTSI NAL EASE COVENANTS DeKniHon A covenant is an agreement or promise made in a deed – used to describe any obligafon in the lease Leahy v Canavan Summary Covenants implied by common law: Qu i e t En j o y me n t ( Au s s i eT r a v e l l e rvMa r k l e a ) No n d e r o g a t i o nf r o mg r a n t ( Ma r t i n sCa me r aCo r n e rvHo t e l Ma y f a i r ) Covenants implied by PLA Re p a i r( PL As1 0 5 ( 1 ) ( b ) ) Re n t ( PL As1 0 5 ( 1 ) ( a ) ) Covenants may also be implied by applicafon of contractual principles – eg business ezcacy BP Reanery v Shire of HasGngs Contract Subject to contract law principles re essenfal terms and repudiafon Usual Covenants Implied at law Imposed on lessor: * Qu i e t e n j o y me n t * No n d e r o g a t i o nf r o mg r a n t Pe r mi t l e s s e et or e mo v ei t sc h a t t e l sa f t e rt e r mi n a t i o n Pe r mi t t h el e s s e et og oo n t ot h ep r e mi s e sa n dt a k ee mb l e me n t sa f t e rt h el e a s ei st e r mi n a t e d Imposed on lessee: * Pa y me n t o f r e n t * T ok e e pi ng o o da n dt e n a n t a b l er e p a i r L e s s o r ’ sr e a s o n a b l er i g h t o f e n t r y Us ep r e mi s e si nat e n a n t l i k ema n n e r These are implied in all leases, subject to express covenants and overriding legislafon: n o t t oc o mmi t v o l u n t a r ywa s t e( l i a b l ei nd a ma g e sf o rd o i n gs o ) : PL As1 0 4 Wh e r et e n a n t f o r y e a r s–p a yd o u b l er e n t f o r h o l d i n go v e ro f t h ep r o p e r t y : PL As1 3 8 Wh e r el e s s e ed o e sn o t y i e l du pp o s s e s s i o na f t e rn o t i c eo f i n t e n t i o nt oq u i t –p a yd o u b l er e n t : PL As1 3 9 5 9 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 LESSOR COVENANT – FOR QUIET ENJOYMENT General Rules Implied where no express term in the lease Budd-ScoS v Daniell Aussie Traveller Pty Ltd v Marklea Subject to any reservafons (eg right to enter and euect repairs), the lessor or those claiming under the lessor (e.g. the lessor’s other tenants in the building) will not substanfally interfere with the lessee or the lessee’s possession of the premises Quiet = peaceful and free from disturbance (cf acousfcally quiet) Hudson v Cripps Conduct may occur on or ou the premises MarGns Camera Corner v Hotel Mayfair Right of tenant is not dependent on payment of rent Contractual terms – this covenant is usually considered an intermediate term Koompahtoo Test Breach will occur where lawful enjoyment of the leased land is substanfally interfered with by the acts of the lessor or those claiming under the lessor – direct physical interference is not essenfal Kenny v Preen HELD:d i r e c t p h y s i c a l i n t e r f e r e n c ewa sp r e s e n t i nt h ef o r mo f t h el e s s o r ’ sk n o c k i n go nt h el e s s e e ’ sd o o r , s h o u t i n gt h r e a t sa t t h el e s s e e , a n dd e l i b e r a t ea n dp e r s i s t e n t a t t e mp t st of o r c et h el e s s e eo u t o f p o s s e s s i o nb yi n t i mi d a t i n gme a n s HELD:l e s s o r i nb r e a c ho f t h ec o v e n a n t f o r q u i e t p o s i t i o n .Wh i l et h ec o u r t f o u n da c t u a l p h y s i c a l i n t e r f e r e n c ewi t ht h ee n j o y me n t o f t h er e p mi s e s , t h e yi n d i c a t e dt h a t ab r e a c ho f t h ec o v e n a n t c o u l do c c u r a l t h o u g ht h e r eh a db e e nn o t d i r e c t p h y s i c a l i n t e r f e r e n c ewi t ht h el e s s e e ’ sp o s s e s s i o na n de n j o y me n t Southwark London Borough Council v Baxter Re g u l a re x c e s s i v en o i s ewi t h o u t d i r e c t p h y s i c a l i n t e r f e r e n c ewa sc a p a b l eo f a mo u n t i n gt oab r e a c h MarGns Camera Corner v Hotel Mayfair F ACTS:f a i l e dt ok e e pd r a i np i p e sc l e a r , wh e r ed a ma g ewa sc a u s e dt ot h el e s s e e ’ sg o o d sb yt h e o v e r fl o wo f wa t e r f r o mb l o c k e dd r a i np i p e s( wh i c hwe r eo np a r t o f t h ep r e mi s e st h a t h a db e e nr e t a i n e d b yt h el e s s o r ) s e e p i n gi n t ot h el e a s e dp r e mi s e s HELD:b r e a c ho f q u i e t e n j o y me n t a swe l l a sb r e a c ho f n o n d e r o g a t i o n Q of fact – does not require the lease be pracfcally frustrated Aussie Traveller v Marklea F ACTS:al e s s e ec a u s e dd i s r u p t i o n( b yn o i s ea n ds a wd u s t )t oan e i g h b o u r i n gl e s s e eo f t h es a me l e s s o r .T h el e a s eo f t h eo ff e n d i n gl e s s e ec o n t a i n e dt h es t a n d a r dc l a u s er e q u i r i n gt h el e s s e en o t t o c a u s ean u i s a n c eo t n e i g h b o u r s .Th el e s s o rh a dn o t s o u g h t t oe n f o r c et h a t c o v e n a n t . HELD:l e s s o r wi l l b el i a b l ef o r a c t so f n u i s a n c ec o mmi t t e db yap e r s o nc l a i mi n gt h r o u g hh e r o r h i m, e v e nt h o u g ht h o s ea c t swe r en o t a u t h o r i s e d/ e n c o u r a g e db yt h el e s s o r , i f t h el e s s o r wa si nap o s i t i o nt o c o r r e c t o r t e r mi n a t et h eu n l a wf u l c o n d u c t b ya c t i v ei n t e r v e n t i o n cf Fanigun v Woolworths F ACTS:L e s s ea l l o we dc u s t o me r st oq u e u eo na ne a s e me n t a r e aa t t a c h e dt ot h el e a s ewh i c hc a u s e da n u i s a n c et oan e i g h b o u r i n go wn e r .Th el e a s ec o n t a i n e dac o v e n a n t n o t t oc a u s ean u i s a n c et o n e i g h b o u r i n go wn e r s 6 0 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 HELD:l e s s o r NOTl i a b l e . c fAUSSI E:h e r et h el e s s o r c o u l dn o t h a v ep u r s u e dt h el e s s e ei nr e l a t i o nt oab r e a c ho f t h a t c o v e n a n t u n t i l t h ei s s u eo f wh e t h e r t h ee a s e me n t wa sb r e a c h e db yt h eq u e u i n gwa sr e s o l v e db yc o u r t a c t i o n . Ab i l i t yt oe n f o r c ea n yn o t i c et or e me d yab r e a c hwo u l dh a v ed e p e n d e do nt h er e s o l u t i o no f t h a t i s s u e ( NOT E: a c t i o nwa sn o t b a s e dh e r eo nb r e a c ho f q u i e t e n j o y me n t o r d e r o g a t i o nf r o mg r a n t …) However, covenant is not a guarantee the lessee will be protected from EVERY temporary disturbance of possession Kenny v Preen May be dizcult to lnd a breach when the majers complained of worsen the situafon of the lessee lijle from that applying at the date of the grant Brynes v Jokona Examples Examples of breach: r e mo v a l o f wi n d o wsb yl e s s o r t of o r c et h el e s s e eo u t :L a v e n d e rvBe t t s c u t t i n gc e n t r a l s e r v i c e si n c l u d i n gc u t t i n go fffi r es p r i n k l e rs y s t e ms( Ko h u avT a i Pi n g )o rs u p p l i e so f g a s a n de l e c t r i c i t y( Pe r e r avVa n d i y a r ) wr o n g f u l l ye v i c t i n gal e s s e eo r t h r o wi n gt h el e s s e e ’ sp r o p e r t yi n t ot h es t r e e t :Mu s u me c i vWi n a d e l l ma k i n ga l t e r a t i o n st oa na d j a c e n t p r o p e r t yt h a t wo u l do b s t r u c t al e s s e e ’ sp o t e n t i a l c u s t o me r s :JC Be r n d t vWa l s h i n t i mi d a t i n g , t h r e a t e n i n go ra b u s i n gt h el e s s e e :Ke n n yvPr e e n f a i l i n gt ok e e pd r a i np i p e sc l e a r , wh e r ed a ma g e swa sc a u s e dt ot h el e s s e e ’ sg o o d sb yt h eo v e r fl o wo f wa t e rf r o mb l o c k e dd r a i np i p e ss e e p i n gi n t ot h el e a s e dp r e mi s e s :Ma r t i n sCa me r aCo r n e rvHo t e l Ma y f a i r Ex c e s s i v en o i s e :By r n e svJ o k o n a Consequence / damages Breach of the covenant for quiet enjoyment enftled the lessee to recover damages from the lessor and/or in an appropriate case, an injuncfon to restrain further breaches Damages being awarded on contract principles Mira v Aylmer Square Investments Punifve / exemplary damages not awarded for breach of contract Kenny v Preen If suzciently serious may enftle terminafon Byrnes v Jokona Covenant non-applicaHon Covenant does not apply where lease is granted for a purpose prohibited under planning laws or if the premises are not suited for the permijed use (T has obligafon to invesfgate whether premises are lt for purpose for which they are to be used) City of Subiaco v Heytesbury ProperGes Covenant does not apply to exisfng interferences Southwark London Borough Council v Baxter HELD:Ho Le x c l u d e dl e s s o r l i a b i l i t yf o r n o i s ef r o mo t h e rl e s s e e si nt h eb u i l d i n gwh i l ei n v o l v e di nt h e o r d i n a r yu s eo f t h e i r p r e mi s e s .T h i se x c l u s i o nwa so nt h eb a s i st h a t t h en o i s ewa sc o n s e q u e n t u p o n 6 1 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 s t r u c t u r a l d e f e c t si n h e r e n t i nt h ed e mi s e dp r e mi s e swh e nl e t a n dr e s u l t e df r o ma c t i v i t i e swi t h i nt h e p a r t i e sc o n t e mp l a t i o n LESSOR COVENANT – NON-DEROGATION (similar to quiet enjoyment) General Rules Subject to any reservafons, the lessor must not act (or permit others to act) so as to make the premises materially less lt for the permijed use Palmer v Fletcher Implied to give business ezcacy to lease – the use of the property by the lessee would be very dizcult or impossible without the implicafon of this term Karaggianis v Malltown Pty Ltd Usually relevant where the lessor retains control of a property that adjoins the premises Test / examples Breach occurs where either the lessor’s acfvifes, or acfvifes on land under the lessor’s control, make the leased premises unlt, inappropriate or signilcantly less suitable for the express purpose for which the premises was leased Aldin v LaGmer Clark F ACTS:L e a s eo f p r e mi s e si n c l u d e da ne x p r e s st e r mt h a t t h el e s s e ewo u l dc a r r yo nt h eb u s i n e s so f a t i mb e r me r c h a n t .L e s s o r ’ ss u c c e s s o r i nt i t l eo r g a n i s e dwo r k so na d j a c e n t l a n dwh i c hs e r i o u s l yd e p l e t e d t h ea i r s u p p l yt ot h ed r y i n gs h e d su s e di nt h et i mb e r b u s i n e s s . HELD:s i g n i fi c a n t i n t e r f e r e n c ewi t ht h ed r y i n gp r o c e s s , wh i c hwa san e c e s s a r yi n c i d e n t o f t h eb u s i n e s s o f at i mb e rme r c h a n t Harmer v Jumbil (Nigeria) Tin Areas F ACTS:L e s s o r wh ol e a s e dp r e mi s e sf o r t h es t o r a g eo f e x p l o s i v e sk n e wt h a t i f b u i l d i n g swe r ee r e c t e d wi t h i nac e r t a i nr a d i u st h el e s s e e ’ sl i c e n c et os t o r ee x p l o s i v e swo u l db er e v o k e d .L e s s o r l a t e r l e a s e d a d j a c e n t p r o p e r t yt oa n o t h e rl e s s e ewh oc o n s t r u c t e db u i l d i n g swi t h i nt h ep r o h i b i t e dr a d i u s HELD:Br e a c ho f c o v e n a n t f o r n o n d e r o g a t i o n Karaggianis v Malltown Pty Ltd F ACTS:L e s s o r s t o p p e dt h eo p e r a t i o no f e s c a l a t o r sa n dr e d u c e dt h el i f t s e r v i c et ou p p e r l e v e l o f a b u i l d i n gwh i c hwa sl e a s e df o r u s ea sar e s t a u r a n t HELD:Br e a c ho f c o v e n a n t f o r n o n d e r o g a t i o n–l a n d l o r dl i a b l et ot e n a n t Insurance – increases unlikely to amount to derogafon from the grant unless the cost would be so high as to make the lease impossible or prohibifve, not merely more expensive O’Cedar v Slough Trading F ACTS:t e n a n t p a i dap o r t i o no f r e n t a sc o n t r i b u t i o nt o wa r d si n s u r a n c ep o l i c y .L a n d l o r dl a t e r l e t a n e i g h b o u r i n gt e n a n c yt oa n o t h e r t e n a n t wh i c hma d ei t i mp o s s i b l et oma i n t a i ni n s u r a n c e . HELD:b e c a u s el a n d l o r du n d e r t a k i n gb u s i n e s si nb u s i n e s s l i k ema n n e r , t h ef a c t t h a t i t i n c r e a s e dt h e i n s u r a n c ep r e mi u mswa s n ’ t ab r e a c ho f t h i sc o v e n a n t The premises must be so auected by the lessor’s acfons that the premises are not reasonably lr for the speciled use Vasile v Perpetual Trustees WA 6 2 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Economic compeffon is not enough to establish derogafon from the grant Port v Griith Possible for one acfon – eg harassment or infmidafon by lessor – to consftute breach of both covenant of quiet enjoyment and covenant of non-derogafon Markham v Paget Overriding QuesRon – is always whether the euect of the acts in quesfon is such as to disturb or interfere with the lessee’s occupafon irrespecfve of the place where those acts originated Aussie Traveller Pty Ltd v Marklea MUST READ pp 10-12 F ACTS:mu l t i t e n a n t e db u i l d i n g .L e s s e e1s o l dc a n v a sg o o d sa n dL e s s e e2d i dwo o d wo r k( t i mb e r s t a i r c a s e s ) .L e s s e e1c o mp l a i n e dt ol e s s o r t h a t c a n v a sg o o d sd a ma g e db ys a wd u s t b l o wni n t o p r e mi s e ss ol e s s e e1u n a b l et oc a r r yo nb u s i n e s sa sc a n v a sp r o d u c t swe r es o i l e da n ds t a i n e d .Al s o n o i s ef r o mwo o d wo r kc o n d u c t e de v e r ys e c o n dd a yma d eo r d i n a r ys p e e c hi n a u d i b l e HELD:l e s s o r l i a b l ef o r a c t so f n u i s a n c ec o mmi t t e db yc o mmo nl e s s e e s .L e s s e e1a wa r d e dd a ma g e s f o r b r e a c ho f c o v e n a n t .L e s s o r l i a b l ef o r a c t so f n u i s a n c ec o mmi t t e db yap e r s o nc l a i mi n gt h r o u g ht h e l e s s o r , e v e ni f t h ea c t swe r en o t a u t h o r i s e do r e n c o u r a g e db yt h el e s s o r , i f t h el e s s o r wa si nap o s i t i o nt o c o r r e c t o r t e r mi n a t et h eu n l a wf u l c o n d u c t b ya c t i v ei n t e r v e n t i o n( e ge n f o r c i n gt h a t l e a s e ) LESSEE COVENANT – PAYMENT OF RENT Express agreement Express clauses normally deal with: a )q u a n t u m b )p a y me n t d a t e s c )p a y me n t me t h o d s ; a n d d )r e v i e ws Where there is no express clause, PLA s 105 applies – ie parfes can contract out Statutory OperaHon Lessee covenanted to pay rent to the lessor for the period agreed to at the beginning of the lease (ie 1 year lease), unless there has been some destrucfon / damage making the premises unlt to live in PLA s 105(1)(a) May not be an essenfal term unless expressed to be so Shevill v Builders Licensing Board F ACTS:T e n a n t f a i l e dt op a yr e n t .L a n d l o r dt e r mi n a t e df o r ab r e a c ho f t h el e a s e–u s e dc o n t r a c t u a l r i g h t t h a t a l l t e r msa r ee s s e n t i a l i nt h ec o n t r a c t HELD:b r e a c ho f c o v e n a n t wa sn o t ab r e a c ho f a ne s s e n t i a l t e r m–t h u s , s u b s t a n t i a l d a ma g e swe r en o t r e c o v e r a b l e cf Gumland Property Holdings v Dujy Bros Fruit Market F ACTS:F a i l u r et op a yr e n t wa saf a i l u r et op e r f o r ma ne s s e n t i a l t e r m.T h i sl e a s ed i dn o t h a v eac l a u s e t h a t s a i da l l t e r mse s s e n t i a l .Ho we v e r , i t d i dh a v ea na n t i s h e v i l l ec l a u s e( wh i c hp r o v i d e df o r c e r t a i n t e r mst ob ee s s e n t i a l wi t h i nt h ec o n t r a c t , i n c l u d i n gp a y me n t o f r e n t ) HELD:d e s p i t et h et e r m, t h ec o v e n a n t t op a yr e n t wa se s s e n t i a l a n dd i d n ’ t h a v et oh a v er e g a r dt ot h e a n t i s h e v i l l t e r mi t s e l f LESSEE COVENANT – REPAIR 6 3 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 GENERAL RULES Usually an express covenant Implied that lessee keep / yield up the premises in good and tenantable repair having regard to the condifon at commencement, unless the parfes agree otherwise (ie contract out) PLA s 105(1)(b) Excepfon to damage caused by: fi r e fl o o d l i g h t n i n g s t o r ma n dt e mp e s t a n dr e a s o n a b l ewe a r a n dt e a r PLA s 105(1)(b) Good and tenantable repair Premises must be kept in a state of repair so that it can be used safely by the class of persons for which the premises were occupied for, having regard to age, character and locality Proudfoot v Hart Obligafon is to maintain, not improve, the premises Proudfoot v Hart If this is not done – and damage is caused – lessee must make good the damage that resulted from the lessee breach Proudfoot v Hart ConRnuing obligaRon – a fresh cause of acfon for breach arises from date to day Granada Theatres Ltd Repair – is the renewal or replacement of defecfve parts that are not substanfally the whole of the subject majer (as opposed to renewal, which is the reconstrucfon of substanfally the whole of the subject majer) – majer of degree LurcoS v Wakely & Wheeler F ACTS:No t i c es e r v i c e db yl o c a l c o u n c i l t or e p l a c ef r o n t e x t e r n a l wa l l t h a t wa si nd a n g e r o u sc o n d i t i o n . Ho u s ewa so l d .Co n d i t i o no f wa l l c a u s e db yo l da g e .Wa l l c o u l dn o t b er e p a i r e de x c e p t b yr e b u i l d i n g HELD:l e s s e el i a b l e , u n d e r ac o v e n a n t t o“ s u b s t a n t i a l l yr e p a i r a n dk e e pi nt h o r o u g hr e p a i r a n dg o o d c o n d i t i o nt h ed e mi s e dp r e mi s e s ” , f o r t h ec o s t so f d e mo l i s h i n ga n dr e b u i l d i n gt h ef r o n t e x t e r n a l wa l l o f t h e l e a s e dh o me CondiHon at commencement Need not improve state of repair beyond that which applied at commencement May even require lessee to remove lxtures at the end of the term Wincant v South Australia Inherent structural / design defects Inherent defect is a defect in the fundamental and original design or construcfon Doctrine of inherent defect unclear as to appropriate conclusions 6 4 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 A building contains an inherent defect if it is of a kind that by its own inherent nature it will in the course of fme fall into a parfcular condifon – no obligafon imposed on lessee to remove inherent defect (only required to maintain state of repair) Graham v The Markets Hotel Pty Ltd HELD:t h e r ei sn od o c t r i n eo f i n h e r e n t d e f e c t b ywh i c hal e s s e e , wh oi ss u b j e c t t oac o v e n a n t t or e p a i r , i su n d e r n oo b l i g a t i o nt or e mo v ea ni n h e r e n t d e f e c t .Ont h i sv i e w, al e s s e ema yb eo b l i g e dt oma i n t a i n t h es t r u c t u r es u b j e c t t ot h ed e f e c t i n s o f a r a st h i sc a nb ea c h i e v e db yr e p a i r cf Ravensep properGes Ltd v Davstone F ACTS:ac o n c r e t eb u i l d i n gwh i c hf e a t u r e da ne x t e r n a l c l a d d i n go f s t o n e , h a db e e nc o n s t r u c t e dwi t h o u t e x p a n s i o nj o i n t s .Ast h es t o n e swe r en o t p r o p e r l yt i e di n t ot h eb u i l d i n gt h e r ewa sad a n g e r t h a t , a st h e b u i l d i n ge x p a n d e d , t h es t o n e sc o u l df a l l .L e s s e e sr e f u s e dt oc a r r yo u t a n yr e p a i r wo r kc l a i mi n gt h a t t h e d a ma g ewa sc a u s e db ya ni n h e r e n t d e f e c t i nt h eb u i l d i n g .L e s s o r c o mp l e t e dt h ewo r ka n ds u c c e s s f u l l y s u e dl e s s e ef o r b r e a c ho f c o v e n a n t . HELD:n od o c t r i n e–o nt h i sv i e wal e s s e ema yb eo b l i g e d , u n d e r ar e p a i r c o v e n a n t , t or e p a i rd a ma g e c a u s e db ya ni n h e r e n t d e f e c t .Us u a l t e s t s h o u l db ea p p l i e d–wh e t h e rwh a t wa sr e q u i r e dt ob ed o n e c o u l dp r o p e r l yb ed e s c r i b e da sr e p a i r Reasonable wear and tear excepHon Reasonable wear and tear means the reasonable use of the house by the tenant and the ordinary operafon of natural forces Haskell v Marlow cf LurcoS v Wakeley r e p a i r c o v e n a n t d i dn o t i n c l u d et h ef a i r we a ra n dt e a r e x c e p t i o n Onus on lessee to prove this excepfon Haskell v Marlow Excepfon does not exclude lessee from liability for repairing all consequenfal deteriorafon Haskell v Marlow EXAMPLE:i f t i l ef e l l o ffar o o f t h el e s s e ei sn o t l i a b l ef o r t h ei mme d i a t ec o n s e q u e n c e s ; b u t i f t h el e s s e e d o e sn o t h i n g , wh i c hr e s u l t si nmo r ewa t e r g e t t i n gi n , wi t ht h er e s u l t t h a t t h er o o f a n dt h ewa l l sd e c a ya n d , u l t i ma t e l y , t h ewh o l eh o u s eb e c o me su n i n h a b i t a b l e , t h el e s s e ec a n n o t s a yt h a t t h i swa sd u et o r e a s o n a b l ewe a r a n dt e a r Eg – excepfon applies to exterior paintwork, but lessee may be required to repaint where consequenfal damage to fmber •ows from the deteriorafon Bunyip Buildings v Gestetner DAMAGES FOR BREACH Common law – diminufon in value or cost of pu}ng into repair Conquest v Ebbets (diminufon in value) Joyner v Weeks (cost of repair) PLA s 112 imposes a limitafon on damages whether repair covenant is express or implied (other than those in residenfal tenancy agreements): a )n o t t oe x c e e dd i mi n u t i o ni nv a l u e b )n od a ma g e sf o r f a i l u r et ol e a v ei nr e p a i ri f p r e mi s e st ob ed e mo l i s h e do rs u b s t a n t i a l l ya l t e r e d( a f t e r t e n a n t l e a v e s ) PLA s 112(1) 6 5 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Provision does not apply when the D breach has created the need for the structural alterafons to be made Graham v The Markets Hotels LESSOR COVENANT – BUSINESS EFFICACY Covenants may be implied under general contractual principles Liverpool City Council v Irwin The court can imply a term as a majer of fact for the purpose of ‘business ezcacy’ – in other words to make the contract workable in business. The Moorcock Implied term that D would take reasonable care to ensure river bed was in a condifon not to damage vessel A term may be implied if: a )i t mu s t b er e a s o n a b l ea n de q u i t a b l e b )i t mu s t b en e c e s s a r yt og i v eb u s i n e s se ffic a c yt ot h ec o n t r a c t s ot h a t n ot e r mwi l l b ei mp l i e di f t h e c o n t r a c t i se ff e c t i v ewi t h o u t i t c )i t mu s t b es oo b v i o u st h a t “ i t g o e swi t h o u t s a y i n g ” d )i t mu s t b ec a p a b l eo f c l e a re x p r e s s i o n e )i t mu s t n o t c o n t r a d i c t a n ye x p r e s st e r mo f t h ec o n t r a c t BP Reanery (Westernport) v Shire of HasGngs Liverpool City Council v Irwin F ACTS:Lwa sl e s s o r o f ah i g h r i s ea p a r t me n t b l o c k HELD:i mp l i e dc o n t r a c t u a l d u t yt ot a k er e a s o n a b l ec a r et ok e e pt h eme a n so f a c c e s st ot h ei n d i v i d u a l fl a t s( t h a t i s , c o mmo na c c e s ss u c ha sl i f t s , s t a i r c a s e s , p a s s a g e wa y sa n dr u b b i s hc h u t e s ) u s a b l ea n di n r e a s o n a b l er e p a i r Covenants have been implied in the following circumstances: t h a t t h el e s s o rk e e pt h ee x t e r i o ro f ab u i l d i n gi nr e p a i r , a swi t h o u t s u c hac o v e n a n t , i t wo u l db e i mp o s s i b l ef o rt h el e s s e et oc o mp l ywi t ha ne x p r e s sc o v e n a n t t ok e e pt h ei n t e r i o ri nr e p a i r BarreS v Lounova t h a t t h el e s s o ro p e r a t ea n dma i n t a i nl i f t sa n de s c a l a t o r st os e r v i c eac o mme r c i a l l e s s e eo nt h efi f t ha n d s i x t hfl o o r so f t h eb u i l d i n g Karaggianis v Malltown t h a t al e s s e ei se n t i t l e dt oas u p p l yo f e l e c t r i c i t y Jenkins v Levinson However, covenant implicafon may not extend to registered leases – HC suggested should avoid use of extrinsic evidence of what was in the minds of the parfes to an easement Wesnield Management v Perpetual Trustee Company COVENANTS IN FAVOUR OF LESSOR Unless otherwise agreed, a lessor is implied to have the following powers: a )T oe n t e r a n dv i e w b )T oe n t e r a n dr e p a i r–p r o v i d e dn o t i c eg i v e nt ot e n a n t a n dt e n a n t h a sf a i l e dt od os o 6 6 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 c )T oe n t e r a n dc a r r yo u t r e q u i r e me n t so f p u b l i ca u t h o r i t y–s h o u l db ed o n ewi t h o u t u n d u ei n t e r f e r e n c e wi t ho c c u p a t i o na n du s e d )T oe n t e ra n dr e t a k ep o s s e s s i o n PLA s 107x DEALI NGSWI THLEASE ASSIGNMENT OF THE LEASE ESecHng an assignment Assignment of lessee’s interest to another person Assignment at law must comply with PLA PLA s 199 Assignment may require the lessor’s consent Assignment without a deed of consent signed by lessor, assignor and assignee only creates privity of estate DisHnguish a sublease A sublease is: a ) al e a s eo f a l l o r p a r t o f t h ep r e mi s e s b )t h a t i sg r a n t e db yt h el e s s e e c )f o rat e r mt h a t e n d sa t l e a s eo n ed a yb e f o r et h ee n do f t h el e a s et e r m Lonsdale Street v Carra If the sublease is granted for a term that equals or exceeds the remainder of the lease term, it will be an assignment of the lessee’s interest Milmo v Carreras If there is a sublease: p r i v i t yo f e s t a t ec o n t i n u e sb e t we e nh e a dl e s s o ra n dh e a rl e s s e e , a n di sc r e a t e db e t we e nl e s s e ea n d s u b l e s s e e n op r i v i t yo f e s t a t eb e t we e nh e a dl e s s o ra n ds u b l e s s e e Pr i v i t yo f c o n t r a c t c o n t i n u e sb e t we e nl e s s o r/ l e s s e e p r i v i t yo f c o n t r a c t c r e a t e db e t we e ns u b l e s s o ra n ds u b l e s s e e n op r i v i t yo f c o n t r a c t b e t we e nl e s s o ra n ds u b l e s s e e Lessor can bring head lease to an end and sublease will fall Pennell v Payne REQUIREMENTS FOR A LEGAL ASSIGNMENT OF LEASE Requirements 1 ) As s i g n o r a n da s s i g n e emu s t a g r e et oa na b s o l u t ea s s i g n me n t i nwr i t i n g PLA ss 11, 199 2 ) No t i c et ot h el e s s o ro f t h ea s s i g n me n t PLA s 199 6 7 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 3 ) Co n s e n t o f t h el e s s o r ma yb er e q u i r e d( ma yb eac o n d i t i o no f t h el e a s e ) 4 )L e g a l e s t a t ed o e sn o t p a s st oa s s i g n e eu n t i l t r a n s f e r o f l e a s er e g i s t e r e d LTA s 62 Licencing Licensing of an area is not an assignment as a license is not a possessory right Lam Kee Ying v Lam Shes Tong POSITION AFTER LEGAL ASSIGNEMNT Privity of contract The terms of the lease are enforceable between the original lessor and the original lessee – liability not auected by assignment Auriol v Mills If an assignee breaches the contract, the original lessee will be in breach even though they were not in occupafon Ahern v L A Wilkinson For assignor to escape liability, there must be express agreement to discharge obligafons – this is not implied merely from the fact of an assignment Baynton v Morgan Privity of estate Privity of estate created between lessor and assignee because the assignor is transferring an estate in the land to assignee – causing lessor-lessee relafonship to cease exisfng (replaced with new lessorassignee relafonship) When privity of estate is created between lessor / assignee, the assignee will be bound by those covenants that touch and concern the land Austerberry v Corp of Oldham Covenants that touch and concern the land Covenants which touch and concern the land will be ones that auect the nature, quality or mode of use of the land and is not merely collateral to that use P&A Swip Investments v Combined English Stores Condifons to be applied: a ) Do e st h ec o v e n a n t b e n e fi t o n l yt h ep e r s o nwi t ht h er e v e r s i o n a r yi n t e r e s t a t a n yt i me , a n di f s e p a r a t e d f r o mt h er e v e r s i o nc e a s et ob eo f b e n e fi t t ot h ep e r s o nwh oh a st h eb e n e fi t o f t h ec o v e n a n t ? b ) Do e st h ec o v e n a n t a ff e c t t h en a t u r e , q u a l i t y , mo d eo f u s eo rv a l u eo f t h el a n d ? c )I st h ec o v e n a n t n o t e x p r e s s e dt ob ep e r s o n a l ? d ) Th ep a y me n t o f mo n e ywi l l n o t p r e v e n t ac o v e n a n t f r o mt o u c h i n ga n dc o n c e r n i n gt h el a n di f t h eo t h e r c o n d i t i o n sa r es a t i s fi e da n dt h ec o v e n a n t i sc o n n e c t e dwi t hs o me t h i n gt ob ed o n eo n , t oo ri nr e l a t i o nt o t h el a n d P&A Swip Investments v Combined English Stores Group Covenants “relafng to the land” can be enforced as deemed to be made by and on behalf of the covenantor / covenantee and their successors in ftle, unless contrary intenfon expressed PLA s 53 6 8 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Examples of covenants which touch / concern the land on the part of the lessee include: t op a yr e n t ( Pa r k e rvWe b b ) t or e p a i r ( Wi l l i a msvEa r l e ) t oi n s u r ea g a i n s t fi r e( Ve r n o nvSmi t h ) t ou s et h ep r e mi s e sa sap r i v a t ed we l l i n go n l y( Wi l k i n s o nvRo g e r s ) n o t t oa s s i g nt h el e a s ewi t h o u t t h el e s s o rc o n s e n t ( Go l d s t e i nvSa u n d e r s ) Covenants on the part of the lessor that touch / concern the land: c o v e n a n t t or e n e wt h el e a s e( Mu l l e rvT r a ff o r d ) n o t t ob u i l do nt h ea d j o i n i n gl a n d( Ri c k e t t svEn fi e l dCh u r c h wa r d e n s ) t os u p p l yt h ep r e mi s e swi t hwa t e r( J o u r d a i nvWi l s o n ) t or e s e r v eac a r p a r k( Hu r l fi t evCo l e sMy e r ) L e s s o r ’ sr i g h t t os u ef o ra r r e a r s , t or e e n t e r a n df o r f e i t t h el e a s ea n dt os u ef o rl o s so f b a r g a i nd a ma g e s ( Gu ml a n d ) o T hi swi l l pa s swi t hl a ndunde rPLAs1 1 7–none e df ora s s i gnme nt( a ut oma t i c ) Personal covenants: F i r s t r i g h t o f r e f u s a l Op t i o nt op u r c h a s ef r e e h o l d , b u t n o t ePL As5 3( a b o v e ) PosiHon a\er assignment See above If lessor consent to assignment, there will be a deed of consent signed by all 3 parfes Aoer assignment – lessee remains liable to lessor for breaches by assignor and assignee unless express release If only privity of estate – lessor can only sue lessee on covenants that touch and concern the land – same for lessee against lessor Lessee 1 enftled to indemnity from lessee 2 for breaches of covenant that touches and concerns the land ENFORCING COVENANTS POST-ASSIGNMENT OF THE LEASE Lessor enforcement against lessee If no deed of consent (only prifvity of estate) – lessor can enforce covenants that touch and concern land – note PLA s 62 If a deed of consent (privity of contract and estate) – all covenants are enforceable aoer a legal assignment occurs. Lessee enforcement against lessor If a deed of consent (privity of estate and contract) – all covenants including personal covenants If no deed of consent (privity of estate) and provided transfer of lease is registered covenants that touch and concern land – note PLA s 62 PLA s 62 – Must apply On registrafon of lease – all rights, powers, privileges and liabilifes transfer to lessee PLA s 62(1) 6 9 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Registered lessee bound to same extent as original lessee PLA s 62(3) BUT PLA s 62 uncertain in applicafon – only operates to transfer the covenants that touch and concern the lessor’s estate in the land and NOT personal covenants Jodaway v Langton (leases) Queensland Premier Freehold Mines v French Euect of PLA s 62 is that the transfer of a lease creates privity of estate and privity of K between lessor and the transferee of the lease Karacominakis v Big Country Developments HELD:c o mb i n a t i o no f ( 1 ) a n d( 3 ) r e s u l t e di nc r e a t i o no f p r i v i t yo f e s t a t ea n dp o s s i b l yc o n t r a c t a s b e t we e nl a n d l o r da n dn e wt e n a n t a f t e r r e g i s t r a t i o no f t h et r a n s f e r The euect of s 62 is not expressly restricted to creafng privity of K for so long as the transferee is RP – transferee will remain liable of CL obligafons Murphy v Harris t r a n s f e r e eo f al e a s ea r g u e dt h ee q u i v a l e n t o f s6 2o f PL Ah a dr e l i e v e dh i mo f h i sCLo b l i g a t i o nt o i n d e mn i f yt h el e s s e ea g a i n s t t h el e s s e e ’ sl i a b i l i t yt ot h el e s s o r f o r t h et r a n s f e r e e ’ sb r e a c ho f c o v e n a n t , o n t h eg r o u n dt h a t t h ep r o v i s i o nf r e e dt h el e s s e ef r o ma l l f u r t h e r l i a b i l i t y . T h ea r g u me n t r e j e c t e d ConRnuing breaches – arguable new assignee may be liable if not recfled LESSOR CONSENT (c) Lease silent as to assignments / other parHng with possession In absence of contractual requirement, tenant interest in lease is assignable because it is regarded as property and not personal rights Lease prohibiHng assignment of the lessee’s interest in all cases Covenant against assignment only will not prohibit an assignment Church v Brown Lessor may waive the benelt of the absolute covenant and permit an assignment PLA s 119 PLA s 121 DOES NOT apply here Bocardo SA v S&M Hotels Lease perminng assignment of lessee interest only if lessor gives its prior consent Lessor’s consent to a proposed assignment or underle}ng is no to be unreasonably refused PLA s 121(1)(a)(i) Unless there is an express provision to the contrary, the lessor cannot demand a lne or premium as the price for giving consent PLA s 121(1)(b) Failure of lessee to seek consent is a breach of covenant for which the lease may be forfeited even where there are no reasonable grounds on which consent could be withheld Barrow v Isaacs PLA s 121 cannot be contracted out of 7 0 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Avoid by se}ng out criteria to be safsled by the assignee, rather than an obligafon to obtain consent What is unreasonable? Q of fact – onus on lessee InternaGonal Drilling Fluids Strict test – consider whether refusal relates to: a )c h a r a c t e ro f p r o p o s e da s s i g n e e–t h e i rfi n a n c i a l s t a n d i n g , a b i l i t yt oc o n d u c t b u s i n e s so np r e mi s e so r p r o p o s e du s e( Ho u l d e rvGi b b s ) ;OR b ) wh e t h e r t h er e f u s a l i sf o r ac o l l a t e r a l p u r p o s e( e gt or a i s er e n t o rf o r c eas u r r e n d e r )( J AMc Be a t h No mi n e e s ) Houlder v Gibbs cf Pimms v Tallow Chandlers LI BERALTEST:al e s s o r ’ sp r o p e r t yi n t e r e s t sc a nb eal e g i t i ma t ec o n s i d e r a t i o nf o r al e s s o r i nd e c i d i n g wh e t h e r o r n o t t oc o n s e n t t oa na s s i g n me n t / s u b l e a s e Second category is unreasonable Houlder v Gibbs JA McBeath Nominees v Jenkins Development (alterior moGve) F ACTS:l e s s e es o u g h t c o n s e n t b ul e s s o r r e f u s e do nb a s i sa s s i g n e ec o u l dn o t o p e r a t eb u s i n e s s s u c c e s s f u l l y .L e s s o rs u b s e q u e n t l yo ff e r e dn e wl e a s et op r o p o s e da s s i g n e eo nt e r msmo r ef a v o u r a b l et o l e s s e e . HELD:u n r e a s o n a b l e–l e s s o r r e f u s a l t oc o n s e n t t oa na s s i g n me n t o f al e a s eu n r e a s o n a b l ea st h el e s s o r h a da t t e mp t e dt oo b t a i nap e r s o n a l p e c u n i a r yg a i nb yo ff e r i n gt h ep r o p o s e da s s i g n e ean e wl e a s ea t a mu c hh i g h e r r e n t wh i c hwa sv i e we da sac o l l a t e r a l p u r p o s e Boss v Hamilton Island Enterprises F ACTS:At t e mp t b yl e s s o r t or e f u s et oc o n s e n t t oa na s s i g n me n t o f al e a s eo nHa mi l t o nI s l a n du n l e s s t h el e s s e eu n d e r t o o kt ob eb o u n db ys p e c i fi e da d d i t i o n a l e n v i r o n me n t a l r e g u l a t i o n si n c l u d i n gc o n t r o l so n t r e ec l e a r i n g , b u i l d i n gg u i d e l i n e sa n dr e g u l a t i o n sg i v i n gl e s s o r a na b i l i t yt od i r e c t ap e r s o nt ol e a v et h e i s l a n d HELD:u n r e a s o n a b l eu n d e r PL As1 2 1–t h e s er e q u i r e me n t swo u l dh a v eh a dap o t e n t i a l l ys i g n i fi c a n t i mp a c t u p o nwh a t c o u l db ed o n ewi t ht h el a n da n do nt h el e s s e e ’ se n t i t l e me n t t oq u i e t p o s s e s s i o na n d d i dn o t r e fl e c t i nt h el e a s ec o v e n a n t swh e ni t wa sc r e a t e d Lessor enftled to a reasonable fme to make a decision and to seek appropriate informafon regarding proposed assignee so as to ground a reasonable decision Daventry Holdings v Bacalakis Hotels A clause sfpulafng the circumstances in which the lessor’s refusal should not be deemed unreasonable will not be euecfve Daventry Holdings v Bacalakis Hotels Pty Ltd If unreasonable refusal – lessee can assign lease validly (lessee must establish unreasonable refusal) Daventry Holdings v Baralakis Hotels Unreasonable refusal will not sound in damages against lessor Skiwing v Trust Company If reasonable refusal – and lessee assigns – breach of covenant – but assignment will sfll vest in assignee Ladies Sanctuary v ParamaSa Property 7 1 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Lessor will be enftled to forfeit the lease with the consequence that the assignee estate / interest would be lost Mussart v Blight Nofce of breach required to be served on a lessee prior to forfeiture should be served on the assignee, not the original lessee, as the assignee now holds the leasehold interest PLA s 124 If lessor accepts rent from assignee, may be deemed to have waived the breach and loses the right to forfeit Property & Bloodstock v Emerton Lease permits the assignment of the lessee’s interest on certain condiHons If lessee fulllls condifons, then lessee will be able to assign without consent… REASONS If applicafon refused without reasons – not necessary to give reasons Secured Income Real Estate v St MarGns Investments ENFORCING COVENANTS POST-ASSIGNEMNT OF REVERSION General Assignment of the reversion occurs when the freehold is purchased or transferred subject to the lease Common law Covenants not enforceable by new owner unless a deed of covenant CHANGED – under statute Upon transfer of land the assignee gets the beneKt (not burden under s 118) of ‘rent and all covenants that touch and concern the land’ PLA s 117 Ass uc h, c a ns uef ort her e nt a st hebe ne fitof t hec o v e na ntt opa yr e ntt ouc he sa ndc onc e r nst hel a nd The following go with the reversionary estate in the land: r e n t r e s e r v e db yal e a s e t h eb e n e fi t o f e v e r yl e s s e e ’ sc o v e n a n t t o u c h i n ga n dc o n c e r n i n gt h el a n d e v e r yc o n d i t i o no f r e e n t r y ; AND o t h e r c o n d i t i o nc o n t a i n e di nt h el e a s e PLA s 117(1) The right to enforce the lessee’s covenants which touch and concern the land pass with the reversion to the assignee, so the assignee can sue in respect of a breach of such obligafon whether it occurred before / aoer assignment PLA s 117(2) Under s 117 PLA can sue lessee for arrears of rent An assignee of the reversion is bound to perform those lessor’s covenants which touch and concern the land PLA s 118 NOTE – personal covenants not ajected, incl. liability to return security deposits / bonds or insurance premiums Lessor not liable for prior breaches of assignor Does not allow lessor to sue on personal covenants – “in relafon to the lot” limits it to covenants that touch and concern land Jodaway Pty Ltd v Langton A guarantee can be treated as a covenant that touches and concerns the land if it guarantees the performance of covenants that do touch and concern the land under PLA s 117 7 2 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Simmons v Lee Gumland NB: So may be able to sue guarantor for breaches of a lease, rather than the lessee May be able to sue on a novated covenant to repay Hua Chiao Commercial Bank v Chiuapue Industries Post registraRon Post registrafon – new lessor has all rights, powers, privileges and liabilifes in relafon to the lot LTA s 62 TERMI NATI ONOFLEASES HOW A LEASE CAN END ExpiraHon of Hme A lxed term lease automafcally ends on the last day of the term Where lease has expired, lessor may recover possession in a summary way through magistrates Court PLA ss 140-152 NoHce to quit (periodic tenancy only) See below Note applicafon of s 129 Surrender Lessee gives up interest in land and lessor accepts that interest, so merger occurs (immediately under common law, but now only by registrafon of relevant form) By agreement – requires Form 8 Surrender and consent of each registered mortgagee and registered sublessee – interest vests in lessor upon registrafon LTA s 69 Must also be in wrifng and signed by the person making the surrender PLA ss 10(1)(a), 11(1)(a) By operaRon of law – occurs when the parfes demonstrate an intenfon to treat the lease as terminated and it would be inequitable to treat the lease as confnuing on food – based on estoppel – eg: a )l e s s o r/ l e s s e ea g r e et h el e a s ei st oe x t e n dt oal a r g e ra r e a–o r i g i n a l l e a s es u r r e n d e r e da n da g r e e me n t wi l l g i v er i s et oan e wl e a s e b )a g r e e me n t t oe x t e n dt h et e r m c )g r a n t o f n e wl e a s et ot h i r dp a r t yd u r i n gt h et e r mo f t h eo l dl e a s ea n dl e s s e ea g r e e st og i v eu p p o s s e s s i o n d )l e s s e ea b a n d o n st h ep r e mi s e sa n dt h ec o n d u c t i sa c c e p t e db yt h el e s s o r–me r ea b a n d o n me n t wi t h o u t r e t a k i n gp o s s e s s i o ni sn o t s u ffic i e n t ( An d r e wsvHo g a n ) Euect – discharge parfes of all future obligafons, including obligafon to pay rent Buchanan v Byrnes 7 3 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Surrender of head lease – head lessor becomes enftled to the reversion expectant on the sublease and the sublessee is able to enforce the sublease and have the terms of the sublease enforced against it PLA s 115 Merger Where one party becomes both lessor and lessee (in the same capacity) the lease covenants are exfnguished Requires registrafon of a Form 14 General Request before takes euect Cooper v FCT FrustraHon Relevant where premises are fully destroyed, not where the premises or part of the premises are merely unusable GP – Doctrine of frustrafon in principle will apply to leases, however, the circumstances must be highly unusual – eg must completely destroy the property NaGonal Carriers v Panalpina (Northern) Ltd F ACTS:Wa r e h o u s el e t f o r 1 0y e a r swi t hv e h i c l ea c c e s sf r o ms t r e e t .Af t e r 5y e a r s , l o c a l c o u n c i l c l o s e d r o a db e c a u s eo f d a n g e r o u sc o n d i t i o n so f d e r e l i c t wa r e h o u s eo p p o s i t e .Ac c e s sd e n i e df o r 2 0mo n t h s– l e s s e ec l a i me dl e a s ewa sf r u s t r a t e d HELD:n o t f r u s t r a t e d–i n t e r r u p t i o nt oa c c e s swa so n l yt e mp o r a r y .Al e a s ei sag r a n t o f a ni n t e r e s t i n l a n dwh i c hr e ma i n sd e s p i t et h ef r u s t r a t i n ge v e n t Lessee is sfll liable to pay rent but check for terminafon and abatement clause in relafon to damage and destrucfon (eg •ood / lre) see PLA s 105 Forfeiture a\er terminaHon for breach At common law, breach of essenfal term gives rise to right to terminate, while breach of nonessenfal term gives rise to acfon in damages (not terminafon), unless: a )l e a s ee x p r e s s l yp r o v i d e sf o rar i g h t o f r e e n t r ya n df o r f e i t u r ei nt h ee v e n t o f ab r e a c ho f c o v e n a n t ;OR b )r i g h t t or e e n t e r a n dt a k ep o s s e s s i o ni sp r o v d e df o rb ys t a t u t e Progressive Mailing House v Tabali Under statute (in absence of express clause / agreement), forfeiture allowed where: r e n t i si na r r e a r sf o r t h es p a c eo f o n emo n t h , e v e nt h o u g hn of o r ma l d e ma n df o rr e n t h a sb e e nma d e ; OR d e f a u l t i sma de i nt h ef u l fi l me n t o f a n yc o v e n a n t , o b l i g a t i o n , c o n d i t i o no rs t i p u l a t i o n PLA s 107(d) RepudiaHon Repudiatory conduct is required and the other party must communicate that they accept the repudiafon of the lease 7 4 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 TERMINATING A PERIODIC TENANCY Requirements Unless the parfes otherwise agree a nofce terminafng a weekly, monthly, yearly or other periodic tenancy must: a )s a t i s f yPL As1 3 1r e q u i r e me n t so f f o r m–n o t i c es i g n e db yl e s s o r , i d e n t i f y i n gp r e mi s e sa n ds t a t i n gt h e d a t eo f t e r mi n a t i o na n dd a t eo f e x p i r yo f p e r i o do f t e n a n c y Form 8 – noGce to tenancy Form 9 – noGce to landlord b )b eg i v e ni nt h ema n n e rp r e s c r i b e db yPL As1 3 2 ;a n d c )b eg i v e nf o rt h ep e r i o do f t i mes p e c i fi e di nPL Aa st h ec a s ema yb e–s e eb e l o w: PLA s 130 If no rent has been accepted, then terminafon can take place immediately upon registrafon LTA s 184 NoHce Nofce must be served Time Limits GP – terminate on the last day of the period of the tenancy next following the giving of the nofce PLA s 136 Weekly – 1 week nofce to the euecfve last day PLA s 133 Monthly – A nofce to terminate a monthly tenancy shall be given on or before the last day of 1 month of the tenancy to be euecfve on the last day of the following month of the tenancy PLA s 134 Yearly – on or before last day of 6 months nofce to last day PLA s 135 Tenancy at will – PLA s 129 – terminate at any fme on 30 days nofce PLA s 129 Tenancy at will – terminate on reasonable nofce – depends on circumstances including: t h en a t u r eo f t h et e n a n c y t h ec i r c u ms t a n c e ss u r r o u n d i n gt h ec r e a t i o no f t h et e n a n c y t h et e r ms( i f a n y )o f t h et e n a n c y , a n d a n yp r o p e r i mp l i c a t i o n sf r o mt h ea g r e e me n t ( i f a n y ) o f t h ep a r t i e swi t hr e s p e c t t ot h et e n a n c y PLA s 137 DefecHve noHce If a nofce is defecfve (e.g. it requires the lessee to vacate before a date set out above), the nofce is invalid and a new nofce needs to be served Any ajempt to terminate the tenancy where nofce invalid will be a repudiafon Relief against forfeiture is not available 7 5 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 TERMINATION OF FIXED TERM LEASE LESSOR STEPS TO FORFEIT AND RE-ENTER FOR BREACH Breach by lessee At common law, and usually found as an express term in the contract, lessor may terminate and retake possession: a )b r e a c ho f a ne s s e n t i a l t e r m( Pr o g r e s s i v eMa i l i n gHo u s evT a b a l i ) b )b r e a c ho f a ni n e s s e n t i a l t e r mwh e r et h el e a s ee x p r e s s l yp r o v i d e sf o rar i g h t o f r e e n t r y( Wh a l l v Bu l ma n ) c )r e p u d i a t i o n–l e s s e ea b a n d o n sp r o p e r t y( a l t h o u g hd i ffic u l t t op r o v e–s e ePL As1 2 4n o t i c e ) Breach may not occur unfl expiry of a parfcular fme – eg rent must be paid 14 days aoer due date… Under statute, lessor may terminate and re-take possession whenever: a )r e n t i si na r r e a r s>1mo n t h , e v e nt h o u g hn of o r ma l d e ma n dh a sb e e nma d e ;o r b )d e f a u l t i sma d ei nf u l fi l me n t o f a n yc o v e n a n t , o b l i g a t i o n , c o n d i t i o no rs t i p u l a t i o n , wh e t h e re x p r e s s e do r i mp l i e di nt h el e a s e PLA s 107(d) Lessor elecHon / waiver Lessor must elect to either waive the breach or to forfeit the lease MaShews v Smallwood Waiver will occur if the lessor does “some unequivocal act recognising the confnued existence of the lease” – only applies to the parfcular breach in Q (not confnuing breaches) PLA s 119 MaShews v Smallwood L e s s o r k n e wo f l e s s e eb r e a c hb u t a c c e p t e dr e n t f a l l i n gd u ea f t e r t h eb r e a c ho c c u r r e d Examples of waiver: a c c e p t a n c eo f r e n t o na“ wi t h o u t p r e j u d i c e ”b a s i swh e r er e n t wa sa c c e p t e dwi t hf u l l k n o wl e d g eo f a b r e a c h( Se g a l Se c u r i t i e s ) l e s s o re q u i v o c a l d e ma n df o rp o s s e s s i o ns u b s e q u e n t t ob r e a c h( Mo o r evUl l c o a t s ) i n s t i t u t i n ga na c t i o nn t or e c o v e rr e n t wh i c hh a sa c c r u e ds u b s e q u e n t t ob r e a c h g r a n t i n gan e wl e a s et ol e s s e e( Wa r dvDa y ) NoHce – under PLA s 124 SP – Right of re-entry or forfeiture is not enforceable by acfon or otherwise unless nofce of breach is served on lessee: a )s p e c i f y i n gp a r t i c u l a r b r e a c hc o mp l a i n e do f b )r e q u i r i n gl e s s e et or e me d yt h eb r e a c h( p r o v i d e di t i sc a p a b l eo f b e i n gr e me d i e d ) c )r e q u i r i n gl e s s e et op a yt h el e s s o r mo n e t a r yc o mp e n s a t i o nf o rt h eb r e a c h( p r o v i d e dl e s s o ri ss e e k i n g c o mp e n s a t i o n ) PLA s 124(1)x see, eg, Gerraty v McGavin s t a t i n gt h a t t h el e s s e eh a s“ n o t k e p t t h ep r e mi s e si nag o o ds t a t eo f r e p a i r ” i sn o t s p e c i fi ce n o u g h Unless you are holding over aoer expiry of lxed term, not enftled to the benelt of PLA s 124 Grepo v Jam-Cal Bundaberg Ltd 7 6 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 F ACTS:t e n a n t i nh o l d i n go v e r , o n ei s s u ewa st h a t t e n a n t a r g u e dg i v i n gan o t i c eo f i n t e n t i o nt oe x e r c i s e o p t i o nc r e a t e da na g r e e me n t f o r l e a s e , a n da sar e s u l t t h e ywe r ee n t i t l e dt os e e kr e l i e f f r o mf o r f e i t u r e HELD:u n l e s sy o ua r eh o l d i n go v e r a f t e r e x p i r yo f afi x e dt e r m, n o t e n t i t l e dt ob e n e fi t o f s1 2 4 Parfes cannot contract out of these provisions PLA s 124(9) Nofce must be in approved form – Form 7 – cannot delete the lrst note in any circumstances PLA s 124(8) Ex parte Taylor fi r s t n o t ei st h a t “ T h el e s s o r wi l l b ee n t i t l e dt or e e n t e r o r f o r f e i t t h el e a s ei nt h ee v e n t o f t h el e s s e ef a i l i n g t oc o mp l ywi t ht h i sn o t i c ewi t h i nar e a s o n a b l et i me–s e es e c t i o n1 2 4o f t h ePL A” cf Suga v Trust Co of Australia f a i l u r et oi n c l u d et h e“ Ad d i t i o n a l n o t e ” wa sn o t f a t a l Breach for CONSENT – courts view remedying the breach as making good the breach as to the future, and not necessarily making the breach as though it never happened Giacomi v Nashving Pty Ltd NB: breach for consent can be remedied by now obtaining it CoA – If lessee fails to remedy within a reasonable fme aoer service of the nofce (usually 14 days), lessor can forfeit the lease PLA s 124(1) Service of noRce – unless contrary intenfon in lease, service of a nofce under s 124 will be euecfve if it is served in a manner provided for in PLA s 347 PLA s 347 Applies where lessor exercises a CONTRACTUAL right in lease to re-enter for breach (will apply in the case of repudiafon where a breach of a term of the lease amounts to the repudiafon) Wood Factory v Kiritos F ACTS:t e n a n t mo v e da l l f e a t u r e sf r o mp r e mi s e s .Al l o we dp r o p e r t yt of a l l i n t od i s r e p a i r . HELD:c o n s t i t u t e dr e p u d i a t i o n .Al s oo t h e r b r e a c h e si n c l u d e dr e p a i rc o v e n a n t .T e r mi n a t i o nv a l i d– n o t i c et ob eg i v e n . Apriaden v Seacrest F ACTS:d e l i b e r a t e l ywi t h h e l dr e n t u n t i l l a n d l o r dd e a l t wi t hc o n c e r n sr e l a t i n gt op r e mi s e s . HELD:r e p u d i a t i o na t c o mmo nl a w.Al s oa mo u n t st of a i l u r et op a yr e n t .T h u s , mu s t s e r v ePL As1 2 4 n o t i c et ot e r mi n a t e ExcepRons: a )a n yl e a s e/ t e n a n c yf o r < =1y e a r b )a n yt e n a n c yo f ah o u s el e t a sad we l l i n gh o u s e PLA s 124(6)(a) Demand for possession If breaches in nofce (Form 7) not remedied – lessor can unequivocally demand possession Physical re-entry not necessary – can be a demand for possession Ex parte Whelan There must be no waiver for the demand to be euecfve Acceptance of rent aoer service of PLA s 124 nofce is not a waiver of breaches in nofce: b r e a c h e so f o t h e r c o v e n a n t s–e gr e p a i r–n o t a c c e p t e d 7 7 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 p a r t p a y me n t o f r e n t u n d e rn o t i c eo r r e n t f o ro t h e rp e r i o d si sn o t awa i v e r , p r o v i d e dl a n d l o r dh a sma d ei t c l e a rt h a t a c c e p t a n c eo f r e n t i sn o t awa i v e ro f t h e i rr i g h t s Steps Re e n t e r L e s s o rt h e nh a st h er i g h t t or e e n t e rt h ep r e mi s e sa n dc h a n g el o c k se t c .Us es e l f h e l p( mu s t n o t u s e mo r ef o r c et h a ni sr e a s o n a b l yn e c e s s a r y : Cr i mi n a l Co d es7 0 )o rr e e n t e rb ywa yo f wr i t ( UCPRr9 ) L e s s e eb e c o me sat r e s p a s s e r L o d g eF o r m1 4Ge n e r a l Re q u e s t t or e c o r dd e t e r mi n a t i o no f l e a s ea n df o r f e i t l e a s ea tl a w RegistraHon of determinaHon of the lease Aoer lawfully re-entering and taking possession under the lease, the lessor may lodge a Form 14 General Request to register that re-entry. The Form 7 Nofce to Remedy Breach will be ajached to the Form 14 General Request The lessee’s legal interest will end on the registrafon of the Form 14 General Request RELIEF AGAINST FORFEITURE Leases SP – May apply for a court to grant relief PLA s 124(3) The lessee may apply to the court (in its inherent jurisdicfon) to be relieved of the consequences of forfeiture of their interest as lessee: a ) Ap p l i e swh e r el e s s o r i ss e e k i n gt oe n f o r c er i g h t o f r e e n t r yo rf o r f e i t u r eo rh a sr e e n t e r e d b ) Th el e s s e ema ya p p l yt ot h ec o u r t f o rr e l i e f ( s e p a r a t ea p p l i c a t i o nORi nr e s p o n s et ol e s s o ra c t i o nf o r e j e c t me n t ) c ) Th ec o u r t wi l l h a v er e g a r dt ot h ep r o c e e d i n g s , c i r c u ms t a n c e sa n dt h ep a r t i e s ’ c o n d u c t u n d e rs 1 2 4 ( 1 ) [ e . g . F o r m7No t i c e ] d ) Th ec o u r t ma yg r a n t o rr e f u s er e l i e f i ni t sd i s c r e t i o n e ) Th ec o u r t ma yg r a n t r e l i e f o na n yt e r msi t t h i n k sfi t i nt h ec i r c u ms t a n c e sa st o : a .c o s t s b .e x p e n s e s c .d a ma g e s d .c o mp e n s a t i o n e .p e n a l t yo r f . o t h e r wi s e , i n c l u d i n gg r a n t i n ga ni n j u n c t i o nt or e s t r a i na n yl i k eb r e a c hi nt h ef u t u r e PLA s 124(2) NOTE – does not apply where valid terminafon for repudiafon Court considerafons: l e s s e e ’ sc o n d u c t a n dwh e t h e ri t wa swi l f u l n a t u r ea n dg r a v i t yo f b r e a c h r e l a t i o nb e t we e nb r e a c ha n dv a l u eo f p r o p e r t y( d o e st h ed i s p r o p o r t i o nb e t we e nt h ee x p e n d i t u r er e q u i r e d t or e me d yt h eb r e a c ha n dt h ev a l u eo f t h ei n t e r e s t i nl a n df o r f e i t e da mo u n t t oac a s eo f h a r d s h i p ? ) s p e e da n de a s et or e c t i f yb r e a c h e s l i k e l i h o o do f b r e a c h e si nt h ef u t u r e CONSI DER–u n c o n s c i o n a b i l i t y … 7 8 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Central Estates(Belgravia) v Woolgar Shiloh Spinners Ltd v Harding; Pioneer Gravels World By Nite v Michael F ACTS:d e f a u l t i np a y me n t o f r e n t f o r 6t o8mo n t h so f l e a s e .F o r m7n o t i c es e r v e d .Ev i d e n c et h a t l e s s e es t i l l s o l v e n t wo u l dme e t r e n t a l o b l i g a t i o n sa n di nf u t u r e , a n df o r f e i t u r eo f l e a s ewo u l dme a nl o s so f b u s i n e s sp r e mi s e s HELD:r e l i e f a g a i n s t f o r f e i t u r eg r a n t e d .T e s t i so n eo f u n c o n s c i o n a b i l i t y .I st h e r ear e a s o n a b l e l i k e l i h o o dt h a t t h er e n t wi l l n o t b ep a i di nt h ef u t u r e ?Ha v ei n t e r e s t so f t h i r dp a r t i e si n t e r v e n e d ?Re s o r t t os t r i c t l e g a l r i g h t o f r e e n t r ywo u l db eu n c o n s c i o n a b l eh e r e Court can grant relief in equity even aoer lessor has obtained judgment and has re-entered by taking physical possession not pursuant to a court order PLA s 124(7) Can apply for relief even aoer Form 14 General Request to record determinafon has been registered Secfon 124 does not apply to certain leases or tenancies see PLA s 124(6)(a) excepfons above Applying for relief will not be construed as an admission by the lessee that a Form 7 has been served by the lessor or that any breach has occurred, or that any right of or cause for re-entry or forfeiture has accrued or arisen and the court is not required to make any lndings in relafon to these issues when granfng relief PLA s 124(3) Non-payment of rent Lessor’s right to re-enter and forfeit is security for payment of rent Shiloh Spinners Ltd v Harding If arrears of rent and costs are paid, court will generally grant relief where just an equitable to do so, unless an excepfon applies Kyriacou v Manakis Excepfons: L e s s e ei si nr e c e i v e r s h i p/ b a n k r u p t ( Di r e c t F o o dSu p p l i e s ) Pa t t e r n/ h i s t o r yo f n o n p a y me n t o f r e n t o rc o n s i s t e n t d e l a y s( J a mF a c t o r svSu n n yPa r a d i s e ) Pr e mi s e sa r eb e i n gu s e df o ri l l e g a l o ri mmo r a l p u r p o s e( Ho s s ma nvF i n e b e r g ) Th i r dp a r t i e sh a v eb e e ng i v e np o s s e s s i o no f t h ep r e mi s e sa n dr e l i e f wi l l i n j u r et h e m( St a n h o p ev Ha wo r t h ) L e s s e ec a n n o t p a yf u t u r er e n t ( Wi l k i n s o n ) Court may impose condifons on any relief such as payment of the lessor’s costs and methods for future rent payment Suga v Trust Co Other Covenants Relief generally granted if: L e s s e er e me d i e sb r e a c h( i f p o s s i b l e ) a n dp a y sl e s s o r ’ sc o s t s( Ea r l o f Ba t h u r s t ) L e s s e ei swi l l i n ga n da b l et of u l fi l f u t u r eo b l i g a t i o n s( Ea r l o f Ba t h u r s t ) L e s s o rh a sn o t s u ff e r e dl o s s( Pi o n e e rGr a v e l s ) Br e a c hi smi n o ra n de a s i l yr e c t i fi e d( Pl a t t vOn g ) see Central Estates v Woolgar (No 2) 7 9 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 F ACTS:L e s s e ec o n v i c t e do f ‘ k e e p i n gab r o t h e l ’ i nt h ep r e mi s e s .T h el e s s o r wa se n t i t l e dt of o r f e i t t h e l e a s ea st h i sa c t i v i t yc o n s t i t u t e dab r e a c ho f c o v e n a n t ( r e q u i r e dl e s s e et oc o mp l ywi t ht h el a w, wh i c hi t h a dn o t ) HELD:b r e a c hwh i c hwa sn o t c a p a b l eo f r e me d ya g a i n s t f o r f e i t u r e–o u t s i d es1 2 4 .T h e‘ s t i g ma ’ a n d t a i n t c a s t o nt h ep r e mi s e sb ys u c ha c t i v i t i e sc a no n l yb er e mo v e db ye n s u r i n gt h a t t h ep e r s o n s r e s p o n s i b l ea r en ol o n g e r a s s o c i a t e dwi t ht h ep r e mi s e s–i t ma yb es o met i meb e f o r et h ep r o p e r t ys t o p s b e i n gv i e we da sa‘ h o u s eo f i l l f a me ’ Clean hands are necessary Rose v Spicer Statutory enftlement to relief from forfeiture does not extend to the loss of an opfon to purchase land even when the person granted that opfon is the lessee Melacare InternaGonal v Daley Investments ADDITIONAL REMEDIES FOR BREACH OF LEASE OBLIGATIONS TerminaHon Upon terminafon, the lessor can: a )r e t a k ep o s s e s s i o n ;a n d b )s u ef o r d a ma g e sf o rb r e a c ho f e s s e n t i a l t e r mo rr e p u d i a t i o n Damages Subject to same contract principles – obligafon on lessor to mifgate loss by re-le}ng Wood Factory If bargain damages lessor is enftled to arrears of rent and rent to end of term – less rent received from a new tenant Gumland Property Holdings Pty Ltd v Dujy Fruit Market (Campbelltown) Pty Ltd Bargain damages – only available if breach of essenfal term or repudiafon Shevill v The Builder’s Licensing Board F ACTS:l e s s e ewa si na r r e a r so f r e n t a n dwa sr e p e a t e d l yl a t ei nma k i n gr e n t a l p a y me n t s .L e s s o r r e e n t e r e da n de x e r c i s e di t sr i g h t t of o r f e i t t h el e a s e .L e s s o r a l s oc l a i me dp r o s p e c t i v ed a ma g e sf o r t h en e t l o s so f r e n t f o r t h eu n e x p i r e dt e r mo f t h el e a s e . HELD:c o v e n a n t t op a yr e n t , wh e nr e a dwi t ht h ef o r f e i t u r ec l a u s e , wa sn o t a ne s s e n t i a l t e r m.No e x p r e s s e dr i g h t t ol o s so f b a r g a i nd a ma g e si f f o r f e i t e dl e a s eu n d e r t e r mi n a t i o nc l a u s ef o r f a i l u r et op a y r e n t .Nor e p u d i a t i o na sl e s s e eh a dn o t a b a n d o n e dt h ep r e mi s e sa n di t se ff o r t st op a yr e n t e v i n c e da n i n t e n t i o nt of u l fi l t h ec o n t r a c t cf Progressive Mailing House v Tabali (below) Contractual remedies – conduct in refusing to pay rent (without basis), together with other breaches (damaging premieses, suble}ng part of premises without consent and breaching a planning scheme), was either repudiafon or fundamental breach and lessor enftled to terminate and sue for damages Progressive Mailing House v Tabali F ACTS:l e s s e e4mo n t h si na r r e a r a n db r e a c h e dn o n mo n e t a r yc o v e n a n t s .Cl a i me dn or e n t p a y a b l e u n t i l l e s s o r c a r r i e do u t wo r k s . HELD:e i t h e r ar e p u d i a t i o no f t h el e a s e , o r af u n d a me n t a l b r e a c ho f t h el e a s e .Wh i l ev i e we di ni s o l a t i o n t h eb r e a c h e swe r en e i t h e r r e p u d i a t i o n/ f u n d a me n t a l b r e a c h , v i e we dt o g e t h e r t h e yd i d .T h u s , d a ma g e s a v a i l a b l e . Wood Factory v Kiritos 8 0 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 F ACTS:l e s s e eb r e a c h e si n c l u d ev a c a t i n gp r e mi s e sp r i o r t oe x p i r yo f t h el e a s et e r ma n dr e l o c a t i n gt o a d j o i n i n gp r e mi s e , f a i l i n gt ok e e pl e a s e dp r e mi s e so p e nf o r b u s i n e s sd u r i n gn o r ma l b u s i n e s sh o u r s , a l l o wi n ga ne mp l o y e et ol i v ei nt h ep r e e mi e s , f a i l i n gt op a yr e n t HELD:l e s s e eb r e a c ho f c o v e n a n t sc o n s t i t u t e daf u n d a me n t a l b r e a c ho r ar e p u d i a t i o no f t h el e a s e .Th e r e l e t t i n go f t h ep r e mi s e sc o n s t i t u t e dt h el e s s o r ’ sa c c e p t a n c eo f t h er e p u d i a t i o n AlternaRve – don’t terminate but claim damages for breach – place party in same posifon as if contract performed Robinson v Harman Failure to repair / deliver up – no damages for breach of covenant exceed the amount by which the value of the reversion in the premises is diminished owing to the breach PLA s 112(1) And no damages can be awarded for breach of covenant to leave premises in repair at the terminafon of a lease if repairs would be made valueless because the premises are to be demolished / structurally altered shortly aoer terminafon PLA s 112(1) Lessor right to set-oS Self help by lessee for lessor’s breach – set ou rent or expense against damages payable by lessor (e.g. for failure to repair) Knockholt Pty Ltd v Graj F ACTS:L e s s e ei na r r e a r so f r e n t .L e s s o ri nb r e a c ho f r e p a i r c o v e n a n t .Re p a i r wa se s s e n t i a l .L e s s e e u n d e r t o o kr e p a i r sa t l e s s e ee x p e n s ea n ds e t o ffc o s t a g a i n s t a r r e a r s HELD:l e s s e ea c t e dc o r r e c t l y But beware of covenants that state that the lessee does not have a right of set ou! Clear words are required Re Partnership Paciac SecuriGes Lessee must noffy lessor of the need for repair before a common law right of set-ou for such a breach will arise BriGsh Anzani v InternaGonal Marine HEL D:t h el e s s o ’ so b l i g a t i o n sc o n s i d e r e dh a v eu s u a l l yb u t n o t i n v a r i a b l yb e e no b l i g a t i o n st o r e p a i r .Th e r ei sn or e a s o ni np r i n c i p l ewh yt h es a mer u l e ss h o u l dn o t b ea p p l i e dt or e c o u p l e s s e ee x p e n d i t u r ea g a i n s t o t h e rmo n e y sp a y a b l et ot h el e s s o r s , s u c ha so b l i g a t i o n st or e p a y o u t g o i n g s 8 1 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 MORT GAGES NATURE OF MORTGAGES Nature A mortgage is a type of security – it is given by the landowner to the security holder to secure: t h er e p a y me n t o f mo n e yo r t h ep e r f o r ma n c eo f a no b l i g a t i o n It is also a contract of loan containing various covenants The Rights of the Mortgagee ( 1 )Th ep e r s o n a l c o v e n a n t –ap r o mi s eb yt h emo r t g a g o rt or e p a yt h emo n e yl e n t b yt h e ( 2 )Th es e c u r e dp r o p e r t y–t h ep e r s o n a l c o v e n a n t d o e sn o t g i v et h emo r t g a g e er i g h t so v e rt h ed e b t o r ’ s p r o p e r t y . T oo b t a i nr i g h t sa g a i n s t t h ep r o p e r t y , as e c u r i t ymu s t b eg i v e n Terminology Mor t ga ge : amo r t g a g ei saf o r mo f s e c u r i t yf o rt h ep a y me n t o f ad e b t o rt h ep e r f o r ma n c eo f s o meo t h e r o b l i g a t i o n . Mor t ga gor : Th emo r t g a g o r i st h ep a r t ywh og r a n t st h es e c u r i t y . Wh e r emo n e yi sl e n t , t h ep e r s o nwh oi s t h eb o r r o we rg r a n t st h emo r t g a g ea n di sk n o wna st h emo r t g a g o r( t h ed e b t o r ) Mor t ga ge e : Th emo r t g a g e ei st h ep a r t ywh oa c c e p t st h es e c u r i t y . Wh e r emo n e yi sl e n t , t h ep e r s o nwh o i st h el e n d e ra c c e p t st h emo r t g a g ea n di sk n o wna st h emo r t g a g e e ( t h ec r e d i t o r ) T o r r e nsl a nd: L a n ds u b j e c t t ot h eT o r r e n ss y s t e mo f r e g i s t e r e dl a n d Ol dSy s t e ml a nd: L a n ds u b j e c t t og e n e r a l l a wo ro l ds y s t e mt e n u r ep r i o rt oT o r r e n s ’ s y s t e m PLA sch 6; see also LTA sch 2 Secured vs Unsecured debts Benelts to creditor – secured creditors get priority in payment over unsecured creditors upon the sale of any secured asset (or in the bankruptcy or liquidafon of the debtor) Mortgage v Sale A court will look to the substance of the agreement to determine whether it is a mortgage or sale Gurankel v Bentley F ACTS:wh e t h e rat r a n s a c t i o ni nwh i c hDb e c a mep r o p r i e t o r o f l a n d , p r e v i o u s l yo wn e db yt h eP , wa s e n t e r e di n t of o r t h ep u r p o s eo f s e c u r i n gad e b t –mo n e y sl e n t b yD.Th a t i s , wh e t h e r t h el a n dwa s s e c u r i t ywi t hPh a v i n ge q u i t yo f r e d e mp t i o n . Al t e r n a t i v e , Ps o l dt oDu p o nt e r mst h a t h ewo u l dh a v ea n o p t i o nt or e p u r c h a s eu p o nc e r t a i nc o n d i t i o n s HELD:t r a n s a c t i o nwa st h eb a r g a i na se x p r e s s e d Re George Ingleaeld i f v e n d o r n o t e n t i t l e dt og e t b a c kt h es u b j e c t ma t t e r o f t h et r a n s a c t i o nb yr e t u r n i n gt h emo n e y , t h e ni t i sa s a l e . I nt h ec a s eo f amo r t g a g e/ c h a r g e , t h emo r t g a g ei se n t i t l e du n t i l f o r e c l o s u r et og e t b a c kt h es u b j e c t ma t t e r b yr e t u r n i n gt h emo n e y 8 2 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 OLD SYSTEM MORTGAGES General Land law – A mortgage of general land law takes euect by way of a conveyance / transfer to the mortgagee of the mortgagor’s legal ftle in the land and a promise to reconvey to the mortgagor on repayment Torrens – charge over land, so no re-conveyance LTA s 74 A charge over land may be transferred Abigail v Lapin How do they work? Steps: a ) Th emo r t g a g o rc o n v e y si t sl e g a l t i t l ei nt h el a n dt ot h emo r t g a g e eb ywa yo f s e c u r i t yu p o nl o a nb e i n g ma d et omo r t g a g o r . b ) Th emo r t g a g e eb e c o me st h el e g a l o wn e ro f t h el a n d , s u b j e c t t ot h er i g h t o f t h emo r t g a g o rt or e c e i v ea r e c o n v e y a n c eo f t h el a n du p o nr e p a y me n t o f t h ewh o l eo f t h el o a n . c ) Mo r t g a g o r r e t a i n sa ne q u i t a b l er i g h t t or e c o n v e y a n c ec a l l e dt h emo r t g a g o r ’ se qui t yofr e de mpt i on d )I f t h eb o r r o we r / mo r t g a g o rr e p a y st h emo n e y sa sr e q u i r e db yt h el o a na g r e e me n t ( o nt i me )t h e b o r r o we r / mo r t g a g o r i se n t i t l e dt oh a v et h el e g a l t i t l er e c o n v e y e dt ot h e mb yt h emo r t g a g e e u n c o n d i t i o n a l l y . Th i si st h ec a l l e dl e g a l r i ghtt or e de e m Equitable right to redeem May be available where the mortgagor has lost its legal right to redeem because the ouer to repay has been late: At l a w–mo r t g a g e ec o u l dr e f u s et or e c o n v e ya n d“ f o r e c l o s e ”t h ei n t e r e s t o f t h emo r t g a g o r( r e t a i nl e g a l t i t l e ) I ne q ui t y–t i met or e p a ywa sn o t s e e na se s s e n c eo f a g r e e me n t –e q u i t yg a v emo r t g a g o r“ a r e a s o n a b l et i me ” b e y o n dt h er e p a y me n t d a t et or e p a y( o f t e na n o t h e r 6mo n t h s ) Euects: At r u emo r t g a g ei sn e v e ra c t u a l l yi n t e n d e dt ob eat r a n s f e ro f t h emo r t g a g o r ' si n t e r e s t i nt h ep r o p e r t yt o t h emo r t g a g e ea b s o l u t e l y( l i k eas a l e ) F a i l u r et or e p a ya f t e rt h e“ r e a s o n a b l et i me“ h a de l a p s e dwo u l da l l o wt h emo r t g a g e et o“ f o r e c l o s e ”t h e i n t e r e s t o f t h emo r t g a g o ra n db e c o met h ea b s o l u t eo wn e ro f t h el a n d Terms: L e g a l Ri ghtt or e de e m–t h ec o n t r a c t u a l r i g h t o f t h emo r t g a g o rt or e p a yt h ed e b t o nt h ed a t efi x e db y t h ec o n t r a c t o f mo r t g a g ea n dt or e q u i r et h emo r t g a g e et or e c o n v e yt h el a n d Equi t a bl er i ghtt or e de e m–t h er i g h t o f t h emo r t g a g o rt or e p a yt h ed e b t e v e na f t e rt h ec o n t r a c t u a l d a t e h a sp a s s e da n dt oo b t a i nar e c o n v e y a n c eo f t h el a n d Equi t yofr e de mpt i on–a r i s e so n c emo r t g a g ei sg i v e n–t h i si sa ne q u i t a b l ei n t e r e s t i nt h el a n d , c o n s i s t i n go f a l l t h emo r t g a g o r ’ sr i g h t si nt h ep r o p e r t y , i n c l u d i n gt h ee q u i t a b l er i g h t t or e d e e m 8 3 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Foreclosure (example lease clause 8.1(c)) Remedy of foreclosure enables the mortgagee to take benelcial ftle to the mortgaged property in full safsfacfon of the mortgaged debt Heath v Pugh Mortgagee applies to the Court for an order that the mortgagor could no longer exercise its equitable right to redeem: u t i l i s e dwh e r emo r t g a g ed e b t e x c e e d sv a l u eo f s e c u r i t y t r a n s f e r i n t omo r t g a g e e ’ sn a mea b s o l u t e l y f r e ea n dc l e a r o f t h emo r t g a g o r ’ si n t e r e s t a n yo u t s t a n d i n ga r r e a r so f t h emo r t g a g ed e b t n o t r e c o v e r a b l e–p e r s o n a l c o v e n a n t si nt h emo r t g a g e e x t i n g u i s h e d( Cf e x e r c i s eo f p o we r o f s a l e ) LTA s 78(2)(c) (applicafon to the court) Fink v Robertson (exfnguishment of personal covenant) TORRENS MORTGAGE Nature – a CHARGE Mortgage includes a charge on a lot … for securing money or money’s worth LTA s 4, sch 2 A registered mortgage operates as a charge on the land for the debt / liability secured LTA s 74 Mortgagor’s obligafons and mortgagee rights contained in the instrument of mortgage see LTA ss 181, 182, 184 etc Mortgagee has the right to sell the mortgaged property and to apply the proceeds to the payment of the debt RegistraHon Registrafon requires: a )p r e s c r i b e df o r m( F o r m2 ) : s7 3 b )v a l i de x e c u t i o n( wi t n e s s e ds i g n a t u r eo rmo r t g a g o r( a n dmo r t g a g e eo rs o l i c i t o r ) : s7 3 c )r e g i s t e r e db yt h er e g i s t r a r r e c o r d i n gt h ep a r t i c u l a r s : s s1 7 3 , 1 7 4 d )r e g i s t r a t i o nc r e a t e sal e g a l mo r t g a g e : s s1 8 1 , 1 8 2 LTA ss above Priority of mortgage takes euect from date of lodgement of the instrument LTA s 178 NOTE – for an instrument to be registered it must be in the appropriate form and comply with complefng the form, including valid execufon LTA s 10(1) A charge over land may be transferred Abigail v Lapin Indefeasibility Mortgagee has benelts of indefeasibility LTA s 184, 185 8 4 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 CONSIDER – fraud / in personam… If indefeasibility can be set aside for fraud / in personam, an exercise of power of sale may be vifated LTA ss 184, 185 Fraud – court must be safsled that cogent evidence existed of the fraud allegafon before it will grant an injuncfon Inglis v Cth Trading Clarke v Japan Machines (Astralia) However, careless mortgagee excepfon – no indefeasibility if it does not take “reasonable steps” to verify the idenfty of the mortgagor: a )L T As 1 8 5 ( 1 A)+s 1 1 A( o r1 1 Bi f t r a n s f e ro f mo r t g a g e ) b )L T As 1 1 A( 3 ) ‘ r e a s o n a b l es t e p s ’ –1 0 0p o i n t s c ) No t eL T As1 8 8–c o mp e n s a t i o np r o v i s i o nf o rp a r t i e sd e p r i v e do f t h eb e n e fi t so f i n d e f e a s i b i l i t yi nc e r t a i n c i r c u ms t a n c e s d ) No t e : L T As 1 8 9 ( 1 ) ( a b) –c a r e l e s smo r t g a g e ei sn o t e n t i t l e dt oc o mp e n s a t i o n Equitable mortgage of a legal interest in land Created in a range of situafons: a ) Ani n f o r ma l c h a r g eo v e r l a n d–e gal e t t e rwi t hs u ffic i e n t i n f o r ma t i o nt os a t i s f yt h eSt a t u t eo f F r a u d s p r o v i s i o n sa n ds i g n e db yt h emo r t g a g o ro rt h e i rl a wf u l l ya u t h o r i s e da g e n t PLA s 10 b ) Me mo r a n d u mi nwr i t i n ge v i d e n c i n ga na g r e e me n t PLA ss 11, 59 c ) Mo r t g a g ei nr e g i s t r a b l ef o r m( F o r m2 )b e f o r er e g i s t r a t i o n d ) De p o s i t o f t i t l ed e e d( p a r t p e r f o r ma n c e )–r e q u i r e s : 1 )d e p o s i t o f c e r t i fi c a t eo f t i t l ewi t hc r e d i t o r ; AND2 ) wi t hi n t e n t i o nt oc r e a t eac h a r g e : Ru s s e l l vRu s s e l l Trust of land A trust of land need only be proven in wrifng – considerafon not required see PLA s 11(1) Bahr v Nicolay 8 5 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 USUALCOVENANTSI NMORT GAGES GENERALLY Covenants may be express or implied and can be: ( 1 )Ex p r e s s l ys e t o u t i nt h emo r t g a g e( s e ee x a mp l eo nBBs i t e ) ( 2 )I mp l i e db yt h ePL A( s u b j e c t t ot h ee x p r e s st e r msi namo r t g a g ei n s t r u me n t ) see PLA s 78 covenants to: r e p a yp r i n c i p a l a n di n t e r e s t a sa g r e e d( s7 8 ( 1 ) ( a ) ) ma i n t a i nt h eb u i l d i n g se t c . o nt h emo r t g a g e dl a n d( s7 8 ( 1 ) ( b ) ) a l l o wmo r t g a g e et oe n t e r a n di n s p e c t s e ea l s op o we r o f s a l e : PL As s8 3 , 8 4 ( 3 )I mp l i e db yL T As7 8( s u b j e c t t omo r t g a g e )–u p o nd e f a u l to f t h emo r t g a g o r t a k ep o s s e s s i o no f t h emo r t g a g e dl o t e n t e ri n t op o s s e s s i o no f t h emo r t g a g e dl o t b yr e c e i v i n gr e n t sa n dp r o fi t s t a k ep r o c e e d i n g st od os oo r f o r e c l o s et h emo r t g a g o r ’ sr i g h t t or e d e e m ( 4 )I n c o r p o r a t e db yt h er e g i s t r a t i o no f as t a n d a r dt e r msd o c u me n t : L T As s1 6 8 , 1 6 9 ( 5 )Se t o u t i nas e p a r a t ei n s t r u me n t a n di n c o r p o r a t e di n t ot h emo r t g a g eb ye x p r e s sp r o v i s i o n : L T As1 7 1 ( 1 ) CHARIGING CLAUSE – set out in mortgage (clause 12.1) A covenant charging the land with repayment “the mortgagor charges the estate or interest in the land with repayment or payment to the mortgagee of $...” It is: ac o v e n a n t b yt h emo r t g a g o r c h a r g i n gt h emo r t g a g o r ' si n t e r e s t i nt h el a n d i na c c o r d a n c ewi t hs p e c i fi ct e r ms i no r d e rt os u p p o r t ap r o mi s eb yt h emo r t g a g o rt or e p a yc e r t a i nmo n e y o rp e r f o r mc e r t a i nn o mi n a t e do b l i g a t i o n s PLA s 78 PERSONAL COVENANT TO REPAY PRINCIPAL AND INTEREST – ESSENTIAL Usually express in the mortgage or implied by the PLA PLA s 78(1)(a) Does not apply if the contrary intenfon expressed in the mortgage PLA s 78(3) Mortgage once registered takes euect as deed LTA s 176 Deed creates speciality obligafon – release of charge from land does not destroy personal covenants to repay – any outstanding amount may be claimed for 12 years from “date upon which right to receive money accrued” LAA s 26(1) 8 6 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 ACCELLERATION OF REPAYMENT UPON DEFAULT Upon default, many mortgages states that whole of money owing becomes immediately repayable Mortgagor may be enftled to relief against payment of the accelerated sum upon making good the default (ie tendering payment of the overdue instalment before mortgagee sells property) PLA s 95 Court may make order upon such condifons as it thinks lt in making order for relief PLA s 95(2) Mortgagor has a right to tender the amount of instalment owing to the mortgagee (and any reasonable expense) to relieve the consequence of the default PLA s 95(2)(a) If mortgagee does not accept payment or has commenced proceedings to enforce mortgage – mortgagor may apply for relief PLA s 95(3) If successful: Pr o c e e d i n g sa g a i n s t t h ea p p l i c a n t s t a y e d De f a u l t e x p u n g e d Defaults OTHER THAN payment of instalments Where there has been a default other than or in addifon to the default to pay instalment, then a court may be more inclined to NOT grant relief 8 7 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 RI GHTSOFAT ORRENSMORT GAGOR TO POSSESS LAND Mortgagor is legal owner and enftled to possession of it, except in the case of default Subject to terms of mortgage, mortgagee under a registered mortgage may take possession of the mortgaged lot – either by actual physical possession or by receiving rent / prolts (construcfve possession) LTA s 78 TO POSSESS CERTIFICATE OF TITLE If lot subject lot a registered mortgage, the consent of the mortgagee is required before the owner of land can apply for a cerflcate of ftle LTA s 42(2) TO GRANT SUBSEQUENT MORTGAGES Mortgagor has statutory right to create a subsequent mortgage – subsequent mortgage cannot: a )b eab r e a c ho f t h emo r t g a g e b )b eg r o u n d sf o r ap e n a l t yo r f o r f e i t u r e ; OR c )t r i g g e r a na c c e l e r a t i o nc l a u s e PLA s 80(4)x Mortgagor can request lrst mortgagee in wrifng to produce cerflcate of ftle, paying costs PLA s 80(2) If mortgagee refuses to produce cerflcate of ftle, applicafon can be made to Supreme Court requiring the lrst mortgagee to show cause PLA s 80(2A) TO LEASE THE PROPERTY A lease (short or long term) executed aoer registrafon of a mortgage is valid against the mortgagee only if the mortgagee consents to it before its registrafon: I n c l u d e sr e g i s t e r e da n du n r e g i s t e r e dl e a s e s Us u a l f o rl e a s ee x e c u t e ds u b s e q u e n t t or e g i s t e r e dmo r t g a g et os e e kc o n s e n t o f mo r t g a g e e LTA s 66 Note applicafon of s 184 for unregistered interests PRIOR TO REGISTRATION MORTGAGOR RIGHT TO REDEEM THE MORTGAGE Clogging the equity of redempHon Equity will not permit a clog on the equity of redempfon: Onf u l fi l l i n gi t so b l i g a t i o n st or e p a yi nf u l l u n d e rt h emo r t g a g e , t h emo r t g a g o rh a st h er i g h t t oar e l e a s eo f t h emo r t g a g e Ap r o v i s i o nwh i c h , i na n ywa y , p r e v e n t st h emo r t g a g o rf r o mr e d e e mi n gt h ep r o p e r t ya f t e ri t h a s d i s c h a r g e di t so b l i g a t i o n ss e c u r e db yt h emo r t g a g ei sVOI Da n da c c o r d i n g l yu n e n f o r c e a b l e Once a mortgage, always a mortgage: 8 8 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Amo r t g a g ei same c h a n i s mt oe n a b l el e n d e r st ol e n dmo n e ywi t ht h ek n o wl e d g et h a t r e p a y me n t i s a s s u r e db yt h es e c u r i t yo ff e r e db yt h emo r t g a g o r I t i sNOTame c h a n i s mt oe n a b l eal e n d e rt og e t t i t l et ot h es e c u r e dp r o p e r t yo rs o meo t h e rs o r t o f c o l l a t e r a l b e n e fi t Default A failure to pay by the speciled date will result in default The rule of equity is that the mortgagor cannot redeem without nofce – which is 6 months Smith v Smith RATI ONALE:t og i v emo r t g a g e ea no p p o r t u n i t yt ofi n da n o t h e r i n v e s t me n t This rule is in•exible and is the law of Queensland Hyde Management Services v FAI Insurances General Principle Step 1 – look at construcfon of mortgage – see Hyde Below Any provision or sfpulafon in a mortgage which has the euect of logging or fejering the equity of redempfon is void in equity and unenforceable Noakes & Co Ltd v Rice 3 devices used to fejer equity of redempfon: a ) Th eo p t i o nt op u r c h a s e b ) Po s t p o n i n gt h er i g h t t or e d e e m c ) Co l l a t e r a l a d v a n t a g e OpHon to purchase An opfon granted to the mortgagee to purchase the mortgaged property is void Look to substance – is it a true mortgage (or one transacfon)? Sun North Developments v Dale F ACTS:L e n d e r h a dfi x e dc h a r g eo v e r s h a r e s&o p t i o nt ob u ya t $ 2 Mt os e c u r el o a no f $ 5 0 0 k .Va l u eo f t h es h a r e swa sa p p r o x i ma t e l y$ 5 M.Bo r r o we r d e f a u l t e d .L e n d e r p u r p o r t e dt oe x e r c i s eo p t i o n HELD:o p t i o nv o i da sf e t t e ro ne q u i t yo f r e d e mp t i o n .Op t i o nt op u r c h a s ei n t e g r a l t omo r t g a g e–i n s u b s t a n c ei t wa so n et r a n s a c t i o n .T h eo p t i o nf o r me dp a r t o f a n dwa si ns u b s t a n c es e c u r i t yf o r a mo r t g a g et r a n s a c t i o n . Samuel v Jarrah Timber and Wood Pavind Corp r e g r e t wa se x p r e s s e dt h a t t h er u l eo p e r a t e dt op r e v e n t t h ee n f o r c e me n t o f ab a r g a i nt h a t h a db e e n e n t e r e di n t ob e t we e nt wop a r t i e so f e q u a l s t a n d i n ga n dd e a l i n ga t a r m’ sl e n g t h If it is not a sale – it there is no mortgage – then no principles relafng to a clog on equity will be relevant Wesnield Holdings v ACT TV Postponing the right to redeem A provision which merely postpones the right to redeem is not void unless it renders the right to redeem illusory, not able to be exercised in a meaningful way or is oppressive or unconscionable Knightsbridge Estates Trust v Byrne 8 9 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 F ACTS:mo r t g a g ep r o v i d e dt h a t p r i n c i p a l a n di n t e r e s t r e p a y a b l eb y8 0h a l f y e a r l yi n s t a l me n t s( 4 0 y e a r s ) . L o wi n t e r e s t r a t e , b u t mo r t g a g o r c o u l dn o t r e p a ye a r l y .Mo r t g a g o r s o u g h t d e c l a r a t i o nt h a t t h e y we r ee n t i t l e dt or e d e e ma t a n yt i meo n6mo n t h sn o t i c e . HELD:NOTVOI D–i t d i dn o t p o s t p o n et h er i g h t t or e d e e m.Po s t p o n e me n t c a nb ef o r MOREt h a na r e a s o n a b l ep e r i o do f t i me . MODERNAPPLI CATI ON:p r o b a b l yo p p r e s s i v ea n du n c o n s c i o n a b l eg i v e nt h a t c a p i t a l i smo r er e a d i l y a v a i l a b l e cf Farclough v Swan Brewery Co Ltd F ACTS:L e a s e h o l dp r o p e r t y .Mo r t g a g ec o u l db er e d e e me do n l y6we e k sb e f o r ee x p i r yo f t h e1 7y e a r s l e f t o nt h el e a s e .L o a nc o u l dn o t b er e p a i de x c e p t b ymo n t h l yi n s t a l me n t s . HELD:VOI Da sac l o go nt h ee q u i t yo f r e d e mp t i o n–t h e yma d et h emo r t g a g o r ’ sr i g h t t og e t t h e p r o p e r t yb a c ki l l u s o r y .Mo r t g a g o r wo u l do n l yb ee n t i t l e dt oar e c o n v e y a n c eo f t h ep r o p e r t ywh e nt h e l e a s ewa sa l l b u t d u et oe x p i r e Collateral Advantage A collateral advantage is a benelt •owing to the mortgagee as part of the transacfon – will be valid (even in a mortgage that confnues beyond redempfon) provided: a )n o t u n f a i ra n du n c o n s c i o n a b l e ; o r b )n o t i nt h en a t u r eo f ap e n a l t yc l o g g i n gt h ee q u i t yo f r e d e mp t i o n ; o r c )n o t i n c o n s i s t e n t wi t ho r r e p u g n a n t t ot h ec o n t r a c t u a l o re q u i t a b l er i g h t t or e d e e m Kreglinger v New Patagonia Meat & Cold Storage NB CompeGGon and Consumer Act 2010 – many of these are not void due to compeffon issues Whether collateral advantage is clog on equity of redempRon A collateral advantage designed to end with repayment of debt will not be void unless it is harsh / unconscionable Biggs v HoddinoS F ACTS:mo r t g a g o r g r a n t e dmo r t g a g eo v e rh i sh o t e l t ob r e we r yc o mp a n y .Mo r t g a g ec o u l dn o t b e r e d e e me df o r 5y e a r s .T e r m–mo r t g a g o r mu s t b u yb e e r / s t o u t sf r o mt h emo r t g a g e ea n ds e l l o n l yt h e b r e we r ’ sb e e r sa n ds t o u t sf r o mp r e mi s e s HELD:NOTVOI Da sc l o go ne q u i t yb e c a u s et h er i g h t t or e d e e mwa sn o t a ff e c t e db yt h es t i p u l a t i o n A collateral advantage which is designed to confnue to operate aoer repayment will not be void if in reality it is a separate and independent transacfon from the mortgage Kreglinger v New Patagonia Meat and Cold Storage F ACTS:Mo r t g a g e e( wo o l b r o k e r ) l e n t mo n e yt omo r t g a g o r ( me a t c o mp a n y ) f o r 5y e a r s , r e p a y a b l eo n1 mo n t hn o t i c e .T e r mt h a t mo r t g a g o r n o t t os e l l s h e e ps k i nt oa n y o n eb u t mo r t g a g e ep r o v i d e dmo r t g a g e e wi l l i n gt op a yb e s t ma r k e t p r i c e .Mo r t g a g o rr e p a i de a r l y .Mo r t g a g e es t i l l wa n t e dt ob u yt oe n do f 5y e a r s HELD:NOTVOI D–e ff e c t i v e l yt woa g r e e me n t s : 1 ) l o a na g r e e me n t ; 2 ) a g r e e me n t t ob u ys h e e ps k i n sa t ma r k e t p r i c e A collateral advantage which is part of the mortgage transacfon and which is designed to confnue aoer repayment will be void Bradley v CarriS NO RIGHT TO REPAY BEFORE THE CONTRACTUAL DATE 9 0 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Where the agreement between the parfes speciles that the principal and other moneys owing must be repaid on a speciKc date: Mo r t g a g o r–h a sn or i g h t a t c o mmo nl a wo ri ne q u i t yt or e p a yb e f o r et h a t d a t e Mo r t g a g e e–h a sn or i g h t t od e ma n de a r l yr e p a y me n t Hyde Management Services v FAI Insurance Ltd F ACTS:l e n d e r c o v e n a n t e da n da g r e e dwi t hb o r r o we rt h a t i t wo u l dl e n d$ 3 0 0 ko nt e r msa n dc o n d i t i o n s i nad e e d .Cl a u s e2 ( a ) : t h eb o r r o we r c o v e n a n t e dt or e p a yt h ep r i n c i p l es u ma ss h a l l t h e nr e ma i n o u t s t a n d i n go n2 5No v e mb e r 1 9 8 1( fi x e dt e r ma n dn op r i n c i p l et ob er e p a i df o r 4y e a r s ) .Bo r r o we r a l s o c o v e n a n t e dt op a yi n t e r e s t a t 2 0 %, r e d u c i b l et o1 6 %u p o np r o mp t p a y me n t . HELD:t h ewo r d‘ o n ’ me a n t ONs ob o r r o we rc o u l dn o t r e p a yp r i n c i p l eb e f o r ed a t en o mi n a t e d . If before the date for repayment the mortgagor tenders the principle, the mortgagee not obliged to accept the money or re-convey the security Brown v Cole Most mortgages only require repayment by a speciled date – can ouer to redeem early If opfon to redeem early – may be subject to some Compensafon being paid to mortgagee for foregone interest 9 1 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 REMEDI ESOFAT ORRENSMORT GAGEE ACTION FOR DEBT ON THE PERSONAL COVENANT TO REPAY Personal covenant to repay principal and interest is either express or implied under the PLA see PLA s 78(1)(a) Personal remedy against the mortgagor, not against mortgaged property Morgagee can exercise its rights against the property (power of sale) and if debt not fully repaid by the sale proceeds, then sue the mortgagor on personal covenants Right available for 12 years aoer money became payable LAA s 26 ENTER INTO POSSESSION Arises either expressly or impliedly under the LTA in the case of default LTA s 78(2)(b) See cl 8.1(b) in example mortgage Entry into possession occurs by taking actual possession or receiving rents and prolts from the mortgaged property Mortgagee can exercise power of sale without formal entry into possession (most commonly the case) Why mortgagees enter into possession t or e c e i v er e n t sa n dp r o fi t s ; t oe j e c t mo r t g a g o r i f v a c a n t p o s s e s s i o nn o t g i v e nf o rs a l e t op r o t e c t p r o p e r t ywh e r er e p a i r sn e e d e d/ wa s t ei st h r e a t e n e d( We s t e r nBa n kvSc h i n d l e r ) What dizculfes can the mortgagee face? d u t yt oa c c o u n t t ot h emo r t g a g o r ( Na t i o n a l Ba n ko f Au s t r a l a s i avUn i t e d ) ; l i a b l ef o rd a ma g et ot h ep r o p e r t yd u et on e g l i g e n c e( T a n n o c kvNo r t hQu e e n s l a n dSe c u r i t i e s ) ma yb el i a b l ef o rc e r t a i no u t g o i n g s( r a t e s/ l e v i e s ) Procedure Can enter into possession without court acfon where they will not disturb the peace (ie forcibly do it) LTA s 78(2)(a) APPOINT A RECEIVER Arises either expressly or impliedly under the PLA PLA s 83(1)(c) See cl 9 in example mortgage Mortgagor may appoint a receiver of the income / rents of mortgaged property if default occurs Receiver is agent of mortgagor – mortgagor liable for receiver acts unless instrument of mortgage provides otherwise PLA s 92(2) Receiver to apply money in the following order: 9 2 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 a )d i s c h a r g eo f r e n t s , r a t e s , t a x e sa n do t h e ro u t g o i n g sf o rt h ep r o p e r t y b )p a y me n t o f a n n u a l s u ms/ o t h e r p a y me n t swh i c hh a v ep r i o r i t yt ot h emo r t g a g e et h a t a p p o i n t e dt h e r e c e i v e r c )p a y me n t o f r e c e i v e r ’ sc o mmi s s i o na n di n s u r a n c ep r e mi u ms , a n dc o s t o f a n yn e c e s s a r ya n dp r o p e r r e p a i r s d )p a y me n t o f a ni n t e r e s t d u eo nt h emo r t g a g ed e b t e )d i s c h a r g eo f t h ep r i n c i p a l i f s od i r e c t e db yt h emo r t g a g e e PLA s 92(8) FORECLOSURE Power to foreclose retained in Torrens legislafon: LTA s 78(2)(c)(ii) Remedy of foreclosure enables the mortgagee to take benelcial ftle to the mortgaged property in full safsfacfon of the mortgaged debt Heath v Pugh Mortgagee applies to the Court for an order that the mortgagor could no longer exercise its equitable right to redeem: u t i l i s e dwh e r emo r t g a g ed e b t e x c e e d sv a l u eo f s e c u r i t y t r a n s f e r i n t omo r t g a g e e ’ sn a mea b s o l u t e l y f r e ea n dc l e a r o f t h emo r t g a g o r ’ si n t e r e s t a n yo u t s t a n d i n ga r r e a r so f t h emo r t g a g ed e b t n o t r e c o v e r a b l e–p e r s o n a l c o v e n a n t si nt h emo r t g a g e e x t i n g u i s h e d( Cf e x e r c i s eo f p o we r o f s a l e ) LTA s 78(2)(c) (applicafon to the court) Fink v Robertson (exfnguishment of personal covenant) Procedure Procedure for foreclosure: a ) De f a u l t b yt h emo r t g a g o r b ) Mo r t g a g e ea p p l i c a t i o nt oc o u r t : s7 8 ( 2 ) ( c )L T A c ) Or d e rn i s i ( i f mo r t g a g e es u c c e s s f u l ) d ) Ac c o u n t t a k e n e ) Mo r t g a g o r g i v e nr e a s o n a b l et i met op a y( 6 mt h s ? ) f ) Or d e ra b s o l u t ef o rf o r e c l o s u r e g ) Ve s t i n go r d e r r e g i s t e r e d h ) Mo r t g a g e er e g i s t e r e da so wn e rf r e eo f mo r t g a g ea n df r e eo f t h ei n t e r e s t o f mo r t g a g o r . ESects Euects of foreclosure: Mo r t g a g e e–b e c o me st h er e g i s t e r e do wn e ro f t h es e c u r e dp r o p e r t y Mo r t g a g o r–L o s e st h er i g h t t or e d e e m Mo r t g a g ea sac h a r g eo v e rt h el a n d–r e l e a s e d De b t –e x t i n g u i s h e d Pe r s o n a l c o v e n a n t si nmo r t g a g e–e x t i n g u i s h e d 9 3 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 EXERCISE POWER OF SALE Amount owed Most commonly used remedy to recover outstanding principal and interest Mortgagor owes the diuerence between the loan amount and the sale price (can be posifve / negafve) If proceeds > loan amount aoer costs, outstanding distributed to other mortgagee or mortgagor PLA s 88 Source of the power of sale Either: i nt h emo r t g a g ed o c u me n t i t s e l f Cl a u s e8 . 1 ( a )o r i mp l i e du n d e rPL As8 3 ( 1 ) ( a ) Enftled to spend money on the sale PLA s 83(2) PLA s 83 relates to mortgages of Torrens land LTA s 78(1) PLA s 83 relates also to mortgages of land under LTA LTA s 83(5) Pre-condiHons Mortgagee cannot exercise power of sale unless: a ) De f a u l t b yt h emo r t g a g o r b ) Ap p r o p r i a t en o t i c es e r v e d( i nF o r m4PL A) c ) De f a u l t c o n t i n u e sf o r3 0d a y s PLA s 84(1) Pre-condifons apply irrespecfve of a contrary intenfon PLA s 84(3) If no nofce provision in mortgage, must deliver in personally to mortgagor or by any other ways set out in PLA PLA s 347(1) Must follow PLA s 84 exactly: Us eo f t h ea p p r o v e df o r m4i sn o t ma n d a t o r yPL As8 4 ( 2 )( a d v i s a b l e ) No t i c emu s t b ei nwr i t i n g , s i g n e db y / o nb e h a l f o f t h emo r t g a g e e , s p e c i f yt h ed e f a u l t a n dr e q u i r ei t t ob e r e c t i fi e d De f a u l t mu s t c o n t i n u ef o r3 0c l e a rd a y sf r o ms e r v i c e( NOTt h ed a t eo f t h en o t i c e )( Ha l l vHa l l ) Errors in PLA s 84 noHce Nofce may be rendered invalid if it contains errors which substanfally mislead the mortgagor So consider: a )i st h ee r r o r s u b s t a n t i a l ? b ) Wo u l dt h emo r t g a g o r h a v eb e e nmi s l e db yt h ee r r o r ? 9 4 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 The nofce is to enable the recipient to understand with reasonable certainty what is required to be done Clarke v Japan Machines (Aust) Pty Ltd Errors in PLA s 84 noRces a ) No t n e c e s s a r i l yi n v a l i db e c a u s et h ewr o n ga mo u n t i sd e ma n d e d b ) Co n s i d e r t h eq u a n t u mo f t h ee r r o r c ) Co n s i d e r a l s ot h ef o r mo f t h en o t i c e : Di di t g i v et h emo r t g a g o rar e a s o n a b l eo p p o r t u n i t yt od owh a t i t i s o b l i g e dt od o ? Clarke v Japan Machines Australia Pty Ltd Court will look to the extent of the error-is the nofce misleading in advising what the mortgagor has to pay to prevent the sale? d ) Amo r t g a g e ema yb ep r e v e n t e df r o me x e r c i s i n gp o we ro f s a l eu n d e ra ni n v a l i dn o t i c e . e ) Pu r c h a s e rf r o mmo r t g a g e en o t b o u n dt oe n q u i r ei n t ov a l i d i t yo f n o t i c eo rp r o c e s se gp r o p e rs e r v i c eo n mo r t g a g o r-c a na s s u mea l l i no r d e r( s8 7PL A) Not an in personam excepfon to indefeasibility see LTA s 185(1)(a) Mortgagee duty of care (subsumes duty to act in good faith) Mortgagee must take reasonable care to ensure that the property is sold at market value PLA s 85(1) PLA s 85(1A) – use for prescribed mortgages Test – objecfve test – more onerous duty to take reasonable care to obtain what has variously been described as the ‘best possible price’ or the ‘best price reasonably available’ or the ‘true market value’ CAGA v Nixon Se t t l e d–t e s t h i g h e r t h a ns i mp l yn o t a c t i n gr e c k l e s s l yi ns a c r i fi c i n gmo r t g a g o r i n t e r e s t s–r e q u i r e me n t i s h i g h e r : Ma s o nJ General law duty – to act in good faith and not wilfully and recklessly sacrilce the interests of the mortgagor and take reasonable care to obtain the best possible price Both these dufes have been subsumed under s 85 and the remedy for breach is limited to damages Cameron v Brisbane Fleet Sales Pty Ltd To discharge duty, generally have to: a d v e r t i s ea d e q u a t e l y d i s c l o s ea l l r e l e v a n t f a c t s ma i n t a i np r o p e r t yb yu n d e r t a k i n gr e a s o n a b l er e p a i r su n t i l s a l e s c h e d u l i n ga u c t i o nf o r a p p r o p r i a t et i me ANZ v Bandadilly HELD:b r e a c ho f d u t ya smo r t g a g e ef a i l e dt of o l l o wu po np r o s p e c t sa n da u c t i o ns c h e d u l e da t a n i n a p p r o p r i a t et i me( 2d a y sb e f o r eCh r i s t ma s ) , a n dh a dn o t b e e na d e q u a t e l ya d v e r t i s e d ResidenRal mortgage sales – prescribed mortgage Prescribed mortgage is residenfal PLR s 3 (yes regulafons…) 9 5 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 A same overall duty as in s 85(1) but with parfcular requirements to discharge duty: a )a d e q u a t e l ya d v e r t i s es a l e b )o b t a i nr e l i a b l ee v i d e n c eo f p r o p e r t y ’ sv a l u e c ) ma i n t a i np r o p e r t yb yu n d e r t a k i n ga n yr e a s o n a b l er e p a i r su n t i l s a l e d )s e l l p r o p e r t ya t a u c t i o ni f a t a l l p o s s i b l e PLA s 85(1A) Mortgagee duty to adverRse adequately Necessary to adverfse a reasonable fme prior to sale in a place where adverfsement likely to be seen by maximum number of potenfal buyers McKean v Maloney F ACTS:p r o p e r t yi nPr o s e r p i n e , a g e n t a n dmo s t a d v e r t i s i n gi nMa c k a y .V a l u a t i o n=$ 6 2 k .Sa l ep r i c e= $ 5 0 k .Ma r k e t v a l u e=$ 6 0 k HELD:b r e a c h Mortgagee duty to properly cx reserve price Mortgagee must take reasonable care in lxing reserve – obliged to consider who of valuafon reports Cameron v Brisbane Fleet Sales Pty Ltd Un d e r s . 8 5 ( 1 ) , amo r t g a g e ee x e r c i s i n gi t sp o we ro f s a l eb ywa yo f a u c t i o nwa sr e q u i r e dt ot a k e r e a s o n a b l ec a r ei nfi x i n gt h er e s e r v e . I t sd u t ywe n t b e y o n ds i mp l yc o mmi s s i o n i n gar e p o r t f r o ma ne x p e r t v a l u e r a n da c t i n gu p o ni t . I t wa so b l i g e dt oc o n s i d e r t h ewh o l er e p o r t , t os e e kc l a r i fi c a t i o na sn e c e s s a r y a n dn o t t oa d o p t t h ev a l u a t i o ni nt h ea b s e n c eo f ar e a s o n e dc a s ei ns u p p o r t o f i t Mortgagee has to commit fraud or collusion to be in breach Southern Goldaelds Ltd v General Credits s t F ACTS:1 mo r t g a g e ewa so we d$ 3 0 0 k .Se c o n dmo r t g a g e eo we d$ 3 5 0 k .Va l u a t i o n so f $ 7 1 5 ka n d $ 7 3 0 k .Sa l ep r i c eo f $ 3 6 0 k HELD:a b s e n c ef r a u do r c o l l u s i o n , fi x i n gt h er e s e r v eh a sn oe ff e c t o nt h ea mo u n t p o t e n t i a l b u y e r swi l l b i d .T h ea u c t i o nmu s t b ep r o p e r l yc o n d u c t e d , a n di nt h i sc a s ei t wa sa n d$ 3 6 0 kwa st h eb e s t p r i c eo n t h ed a t ed e s p i t ev a l u a t i o n s Duty to ensure independent bargain (good faith) Sale must be made independently and bona lde (not be made in bad faith) ANZ v Bandadilly Pastoral Co s t F ACTS:1 mo r t g a g e e( H)s o l dt op r i v a t ec o mp a n y( B) .Bo t hc o mp a n i e so wn e d/ c o n t r o l l e db ys a me p e o p l e .Own e r ss e t t h er e s e r v ea n da st h ed i r e c t o r so f t h ep u r c h a s e r , k n e wt h er e s e r v e .T h e ya l s o k n e wt h ep r i c et h a t t h ep u r c h a s e r( t h e i r c o mp a n y ) wa sp r e p a r e dt op a ya n dwe r et h eo n l yt r u eb i d d e r sa t t h ea u c t i o n . HELD:n oe v i d e n c et os u p p o r t afi n d i n gt h a t t h e r ewa sa ni n d e p e n d e n t b a r g a i na n do r d e r e dt h es a l eb e s e t a s i d e .Al s oHEL Dt h a t mo r t g a g e ea n dp u r c h a s e r f a i l e dt od i s c h a r g eo n u so f p r o v i n gt h a t s a l ewa s b o n afi d e Problems in ANZ v Bangadilly: r d Ch o i c eo f a u c t i o nd a t e( 2 3 De c e mb e r ) Br e a d t ho f a d v e r t i s i n g( n ol o c a l ; l i mi t e dt oSy d n e ya n dMe l b o u r n e ) L e n g t ho f t i mef o ra d v e r t i s i n g( v e r ys h o r t ) Se c o n dmo r t g a g e en o t i n f o r me d Re s e r v ep r i c e( Ha l c o *s e t r e s e r v eo f $ 2 5 00 0 0&Ba n g a d i l l y *d e c i d e dt ob i d$ 2 6 50 0 0 ) 9 6 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Sa l et oac l o s ea s s o c i a t e Consider: Wa st h eb u y e ra wa r eo f t h er e l a t i o n s h i pb e t we e ns e l l e ra n dmo r t g a g o r ? I f t h ed i ff e r e n c ei nv a l u a t i o na n dc o n t r a c t p r i c es u ffic i e n t l yg r e a t t oi n f e rab r e a c ho f d u t yo nt h ep a r t o f t h emo r t g a g e e ? Wa st h e r ea n ye v i d e n c eo f c o l l u s i o nt oi n f e rt r a n s a c t i o nt a i n t e d ? ? Mortgagee can NEVER sell to itself ANZ v Bandadilly Fraud establishes a lack of good faith Latec Investments v Hotel Terrigal Damages for breach of mortgagee duty Aoer sale, mortgagor (or guarantor) may get damages from mortgagee where a ) mo r t g a g e ef a i l s“ t ot a k er e a s o n a b l ec a r e“ t h a t p r o p e r t yi sn o t s o l da t“ ma r k e t v a l u e ”a n d , a sar e s u l t , b )t h ep r o p e r t yi ss o l da t a nu n d e r v a l u e PLA s 85(3) Damages amounts to the diuerence between market value as established by the evidence and the contract price for which the mortgagee sold MORTGAGOR RIGHTS ON POWER OF SALE Sale Process a ) De f a u l t b ) PL As8 4n o t i c es e r v e d , wa i t 3 0d a y sb u t b r e a c hn o t r e me d i e d c ) Pr o p e r t ys o l d( b ya u c t i o no r p r i v a t es a l e )a f t e rv a l u a t i o n d ) En f o r c e a b l ec o n t r a c t e n t e r e db e t we e nmo r t g a g e ea n db u y e r e ) Se t t l e me n t u s u a l l y3 0–9 0d a y s( d e c l a r a t i o nt h a t d e f a u l t c o n t i n u e du pu n t i l s e t t l e me n t a n dt h a t F o r m4 No t i c ep r o p e r l ys e r v e do nmo r t g a g o r ) f ) Se t t l e me n t e x c h a n g eo f mo n e yf o rt i t l e , t r a n s f e rs u p p o r t i n gd o c u me n t st ob el o d g e di nT i t l e sOffic eb y b u y e r g ) Re g i s t r a t i o n Before contract of sale GP – mortgagor may seek an injuncfon (inherent SC jurisdicfon) restraining exercise of the power of sale if a vifafng factor is evident However, mortgagor may have to pay money into the court Inglis v Commonwealth Trading Bank of Australia Where amount owing by mortgagor has not been paid, court will not generally interfere to deprive the mortgagee of the benelt of its security unless an ‘equivalent safeguard’ is provided to the mortgagee Relief from payment into court Where a mortgagor seeks an injuncfon, it is not unreasonable to require the mortgagor to pay into court the amount demanded by the mortgagee or otherwise to provide an equivalent safeguard as a prerequisite of an injuncfon 9 7 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Court looks at all the relevant facts to determine what amount, if any, should be paid into Court to do complete jusfce between the parfes Clarke v Japan Machines (Australia) Pty Ltd HELD:mo r t g a g o r h a ds u ffic i e n t o t h e r s e c u r i t y( a l r e a d yr e p o s s e s s e dg o o d s ) f o r t h emo r t g a g ed e b t a n d p a y me n t i n t oc o u r t n o t r e q u i r e dt oo b t a i ni n j u n c t i o n ExcepRons Court may exercise its discrefon and restrain the sale without payment into court where the mortgagor establishes an issue based on: a ) Th ev a l i d i t yo f t h emo r t g a g ei t s e l f e gf r a u d , u n d u ei n fl u e n c e , mi s l e a d i n g / d e c e p t i v ec o n d u c t ; o r b ) Th ep r e s e n t a v a i l a b i l i t yo f t h ep o we r o f s a l ep e r h a p sb e c a u s e : a .t h ea l l e g e db r e a c ho f c o v e n a n t wh i c hi sr e l i e du p o nb yt h emo r t g a g e ei sc h a l l e n g e d ; o r b .t h eo c c u r r e n c eo f s o meo t h e rp r e c o n d i t i o nt ot h ea r i s i n go f t h ep o we ro f s a l eh a sn o t b e e nme t A\er contract (power of sale exercised), but before seclement Mortgagor may seek: a )d a ma g e s–a r i s e sf o r b r e a c ho f PL As8 5 b )o r d e r t or e s t r a i nc o mp l e t i o n–mu s t a mo u n t t of r a u d Damages The mortgagee is under a duty to take reasonable care to ensure the property is sold at market value PLA s 85(1) If the mortgagee breaches this duty, the mortgagor can seek damages and the sale to the purchaser can sfll stand PLA s 85(3) No injuncfon will be granted where there has been negligent exercise of power of sale – appropriate remedy is damages under PLA s 85 McKean v Maloney Order to restrain compleRon Likely to be restrained if the mortgagee has acted fraudulently or in reckless disregard of the mortgagor’s interest Forsyth v Blundell F ACT S:mo r t g a g e ee x e r c i s e dp o we ro f s a l e , s e l l i n gt oSh e l l f o r $ 1 2 0 k .Mo r t g a g e ek n e wa t t h et i met h a t a n o t h e ro i l c o mp a n ywi l l i n gt op a y$ 1 5 0 k .Sh e l l h a dn on o t i c eo f i mp r o p r i e t ya t t h et i meo f s a l e . Mo r t g a g o r c o mme n c e dp r o c e e d i n g ss e e k i n ga ni n j u n c t i o nt or e s t r a i nc o mp l e t i o no f t h ec o n t r a c t a f t e r c o n t r a c t e n t e r e di n t o , b u t b e f o r ec o mp l e t i o n HELD:i n j u n c t i o nr e s t r a i n i n gc o mp l e t i o ng r a n t e d .Mo r t g a g e ea c t e dwi t hc a l c ul a t e di ndi ffe r e nc et ot h e mo r t g a g o r ; r e c k l e s s l ys a c r i fic e dmor t ga gor ’ si nt e r e s t .T h e r ewa sl a c ko f goodf a i t hb yt h e mo r t g a g e e NB:i nQl dt o d a y , t h a t i n j u n c t i o nwo u l dn o t l i e–a na c t i o nf o r d a ma g e swo u l db ea d mi t t e d Includes lack of good faith in the process Forsyth v Blundell 9 8 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 A\er seclement (power of sale exercised), but before registraHon Where mortgagee has acted in bad faith / fraudulently: Wh e r ep u r c h a s e r h a sn on o t i c eo f mo r t g a g e ec o n d u c t u pt oa n di n c l u d i n gs e t t l e me n t –c o u r t wi l l n o t s e t s a l ea s i d e , s omo r t g a g o rma yg e t d a ma g e si f l o s sp r o v e n McKean v Maloney Wh e r ep u r c h a s e r h a sn on o t i c ewh e ne n t e r i n gc o n t r a c t b u t fi n do u t b e f o r es e t t l e me n t –c o u r t n o w u n l i k e l yi nQl dt oo r d e r t h a t s a l eb es e t a s i d e , s omo s t l i k e l yd a ma g e s cf Forstyth v Blundell pre PLA s 85 Wh e r ep u r c h a s e r e ff e c t i v e l yi n v o l v e da sap a r t yt ot h ef r a u d/ b a df a i t h–c o u r t wi l l a l mo s t c e r t a i n l yo r d e r t h a t t h es a l eb es e t a s i d e ANZ Banking Group v Bangadilly A\er registraHon (power of sale exercised) Buyer in usual circumstances has indefeasibility subject to fraud or in personam excepfons Collusive buyer’s ftle would be auected and buyer would not gain indefeasible ftle –in personam excepfon would upset indefeasibility – sale to mortgagee would be set aside and mortgagor’s ftle subject to mortgage restored CAVEATS Power of sale being exercised by mortgagee Consider – was the relafonship between the mortgagee and buyer such that the mortgagor could sustain anon-lapsing caveat to set aside contract on equitable grounds based upon conduct? LTA s 126(1)(a) This likely requires collusion Re McKean’s Caveat Post registraHon Registrafon confers indefeasible ftle (PLA s 184) subject to in personam excepfon PLA s 185(1)(a) Mortgagee has benelts of indefeasibility LTA s 184, 185 CONSIDER – fraud / in personam… If indefeasibility can be set aside for fraud / in personam, an exercise of power of sale may be vifated LTA ss 184, 185 Fraud – court must be safsled that cogent evidence existed of the fraud allegafon before it will grant an injuncfon Inglis v Cth Trading Clarke v Japan Machines (Astralia) Caveatable interest – Consider whether a mortgagor (or ex-mortgagor) can “claim and interest in the lot” and would be able to lodge a caveat to protect such an interest LTA s 122(1)(a) 9 9 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 MERE EQUITY May arise to support a caveat where there has been fraudulent conduct on the part of the buyer / mortgagee 1 0 0 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 EASEMENTS EASEMENTS General A right over the land of another person granted for a specilc purpose Creates an interest in land but is not an estate in land: Mu s t b ec r e a t e di nwr i t i n g–s e ePL As s1 0 , 1 1 , 5 9 I f u n r e g i s t e r e d , i t i sa ne q u i t a b l ei n t e r e s t c a p a b l eo f s u p p o r t i n gac a v e a t The person who gives the easement is the “grantor” (the servient tenant)and the person who benelts from it is the “grantee”(the dominant tenant) It is a proprietary interest, not personal, and will confnue for the benelt of successors in ftle to the land beneljed (the dominant tenants) The land burdened by the easement (the servient tenement) remains in the ownership of the grantor of the easement subject to the rights of the grantee to exercise the rights granted by the easement Easements can be posifve and negafve: Apos i t i v ee a s e me ntg i v e st h eg r a n t e ear i g h t t od os o me t h i n g–e gt og a i na c c e s st h r o u g har i g h t o f wa y Ane ga t i v ee a s e me nt ma yg i v ear i g h t t os o meb e n e fi t wi t h o u t t h en e i g h b o u ro b s t r u c t i n gi t –e gl i g h t o r a i r( ar i g h t n o t t oh a v et h en e i g h b o u rab u i l d i n gc o n s t r u c t e dc l o s et ot h eb o u n d a r y ) EssenHal CharacterisHcs There are 4 essenfal characterisfcs from Re Ellenborough Park: a )T he r emus t beadomi na nt a nds e r v i e ntt e ne me nt A dominant area may be small and benelts thus may be limited R v Registrar of Titles; Ex parte Waddington There must be a benelt conferred on the dominant tenement’s land, otherwise it is a mere licence Rangeley v Midland Railway Hanbury v Jenkins g r a n t e er i g h t t oc r o s sg r a n t o r ’ sl a n di no r d e r t oe x e r c i s et h er i g h t t ofi s hs u ffic i e n t b) Ane a s e me ntmus ta c c ommoda t et hedomi na ntt e ne me nt –mu s t b ef o rt h eb e n e fi t o f d o mi n a n t t e n e me n t Riley v Pentla Clos Farming Estates (see below) This is subject to excepfon of easement “in gross” – ie not ajached to or used with other land but only for “public uflity providers” (drainage, gas or electricity providers, public right of way, infrastructure corridore) LTA ss 81A, 89 c )T hedomi na nta nds e r v i e ntowne r smus tbedi ffe r e ntp e r s ons–s u b j e c t t ob e l o w Registrafon may sfll occur even if the lot beneljed and burdened have same RO or the owner of the lot beneljed holds an interest in the burdened lot LTA s 86 1 0 1 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 If the same person becomes the RO of the lot beneljed and the lot burdened, easement is exfnguished only if the RO asks the registrar to exfnguish the easement LTA s 87 d) T hee a s e me ntmus tbec a pa bl eoff or mi ngt hes ubj e c t ma t t e rofagr a nt–e gl i g h t , a i r , d r a i n a g e , n o i s e , BUTNOTav i e wo r r i g h t t op r o t e c t i o nb yan e i g h b o u rf r o mt h ee ff e c t so f we a t h e r Must be suzciently delnite to be capable of (a) forming the subject majer of the grant AND (b) must not give grantee exclusive use over servient tenement Re Ellenborough Park Consider: a )p r o p o r t i o n a l i t y–b e t we e ns e r v i e n t t e n e me n t a n dt h a t wh i c ht h ee x c l u s i v er i g h t i sg i v e n b )e x t e n t o f e x c l u s i v i t yc l a i me d c ) wh e t h e r t h ee a s e me n t a r o s eb yp r e s c r i p t i o no rb ye x p r e s sg r a n t ; a n d d )t h ep r a c t i c a l i t i e s Weigall v Toman (see below) Re Ellenborough Park F ACTS: HELD:a na b i l i t yt ou s et h es e r v i e n t t e n e me n t f o r ap l e a s u r eg r o u n do r g a r d e ni sc a p a b l eo f b e i n gt h e s u b j e c t ma t t e r o f a ne a s e me n t .T h er i g h t o f r e c r e a t i o nd i dn o t a mo u n t t oaj o i n t o c c u p a t i o nwi t ht h e p r o p r i e t o r s SUM: Clos Farming Estates Pty Ltd v Easton F ACTS:av i n e y a r da n df a r mc o mp r i s i n g8 0r e s i d e n t i a l l o t s , t h es e r v i e n t t e n e me n t s , p r o v i d e de a s e me n t s t ot h ed o mi n a n t t e n e me n t t h a t wa sas ma l l p a r c e l o f n e i g h b o u r i n gl a n d .T h e s ee a s e me n t swe r eg r a n t e d f o r t h ep u r p o s eo f p e r mi t t i n gt h es e r v i e n t t e n e me n t st ob eu s e df o r v i t i c u l t u r ea n dc r o pf a r mi n g .Th e p r o c e e d so f t h a t a c t i v i t ywe r et ob ed i s t r i b u t e dt ot h eo wn e r so f t h es e r v i e n t t e n e me n t s .Wh e nt h e s c h e mer a na t al o s st h ev a l i d i t yo f e a s e me n t sb r o u g h t i n t oq u e s t i o n HELD:e a s e me n t sd i dn o t a c c o mmo d a t et h ed o mi n a n t t e n e me n t a st h e r ewa sn or e a l a n di n t e l l i g i b l e c o n n e c t i o nb e t we e nt h ee a s e me n t r i g h t sa n dt h eo r d i n a r yu s eo f t h ed o mi n a n t t e n e me n t o r a n y a d v a n t a g eo r e n h a n c e me n t SUM:t h ee a s e me n t si ne ff e c t s t e r i l i s e dt h eu s eo f t h es e r v i e n t l a n da n dma d ei t i mp o s s i b l ef o r s e r v i e n t t e n e me n t st oh a v ea n yr i g h t si nt h el a n di t s e l f … How does an easement dider from other interests in land? (useful for element (d) above) A lease gives exclusive possession of the land to which it is subject and is an estate in the land An easement gives limited rights to uflise the land burdened for a sfpulated purpose and /or a specilc fme – eg a right to access property between certain hours in a speciled manner Weigall v Toman F ACTS:e a s e me n t c o n f e r r e do nRPo f d o mi n a n t t e n e me n t t h er i g h t t oe x c l u s i v eu s eo f t h el a r g e r o f t wo g a r a g e so ns e r v i e n t t e n e me n t . Th i swa ss u b j e c t t ot h er i g h t o f RPo f s e r v i e n t t e n e me n t t oh a v ee x c l u s i v e u s eo f t h eo t h e rg a r a g e .I SSUE: h o wmu c ho f s e r v i e n t t e n e me n t d o e se a s e me n t o c c u p y ? HELD:o n l yas ma l l p r o p o r t i o ni na r e ao f s e r v i e n t t e n e me n t , s owi t h i np r o p o r t i o n a l i t yi t wa ss u ffic i e n t t o b ea ne a s e me n t A disproporfonate easement may sfll be valid where the right is not exclusive over the greater part of the dominant tenement Registrar General v JEA Holdings A prolt a prendre confers a right to take something from another’s land – eg fmber, soil 1 0 2 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 CREATION OF EASEMENTS Express Grant Must be created in wrifng: a ) wr i t t e nme mo r a n d u m( i na p p r o p r i a t ef o r m–F o r m9 ) b )s i g n e db yg r a n t o r PLA s 11 (see also ss 10, 59) Must be registered to create an easement at law LTA s 181 An easement may be created only by registering an instrument of easement – must state: a )n a t u r eo f t h ee a s e me n t b )i t st e r ms c )t h el a n dt ob eb e n e fi t t e da n db u r d e n e db yt h ee a s e me n t ( e x c e p t wh e n“ p u b l i cu t i l i t y ” ) LTA ss 82(1), (3) Registrar must record parfculars of easement on both lots beneljed and burdened by easement LTA s 85A ParRal easement – a plan or survey designafng the easement must also be registered where the easement is over part of a lot – it should also be signed by the RO of both the lot burdened / beneljed by easement LTA s 83 Summary: Ea s e me n t c a nonl ybec r e a t e di nr e g i s t e r e dl a n db yr e g i s t e r i n ga ni n s t r u me n t i nF o r m9u n d e rt h eL T A ( s s8 2 ( 1 ) c o n t a i n i n gc e r t a i ni n f o r ma t i o n–p l a no f e a s e me n t : s8 2 ( 3 ) ) Do e se x c e p t i o nu n d e rPL As1 8 1i mp o s i t i o no f s t a t u t o r yr i g h t o f u s e rb yc o u r t a p p l y ? Common types of easements created Easement of right of way – gives rights to dominant tenant (grantee) to pass and repass over land subject to easement usually with vehicle – does not give right to park on easement S & M Ceramics Pty Ltd v Kin Right to park vehicles Moncriej v Jamieson Easement not to obstruct light or air eg by construcfon on confguous land (negafve easement) Underpinning easement – HOWEVER, statutory obligafon to not withdraw support from land or buildings PLA s 179 Implied easements No implied easements in Queensland – no right of way or prescripfve easement capable of creafon since 1 December 1975 PLA s 198A Only excepfon is permi}ng body corporate to enter any lot to carry out work; implied easements for services over lots Body Corporate and Community Management Act 1997 (Qld) ss 67-9 1 0 3 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 EXTINGUISHING EASEMENTS Summary Exfnguishment can occur by: a )e x p r e s ss u r r e n d e rb yg r a n t e ea n da c c e p t a n c eb yg r a n t o r b )b yme r g e r o f e s t a t e so r g r a n t e ea n dg r a n t o r( u n i t yo f o wn e r s h i p ) c )b yo r d e ro f t h eSCu n d e rPL As1 8 1 By release or surrender (a + b) Owner of the dominant may release the easement by deed If registered, it may be wholly or partly surrendered by registering an instrument of surrender If RO becomes RO of both lots, easement is exfnguished only if the RO asks register to exfnguish easement LTA ss 87, 88 Pursuant to PLA s 181 – SC order Requires proof that: a )e a s e me n t h a sb e c o meo b s o l e t ed u et oc h a n g e si nn e i g h b o u r h o o d b )o r d e ri sn o t c o n t r a r yt op u b l i ci n t e r e s t c )e a s e me n t h a sb e e na b a n d o n e db yg r a n t e e d ) Pr o p o s e de x t i n g u i s h me n t wi l l n o t s u b s t a n t i a l l yi n j u r ee i t h e rg r a n t o r/ g r a n t e e PLA s 181(1)x Easement become obsolete Change in user of any land having the benelt of the easement or in character of neighborhood… easement ought to be deemed obsolete Re Rollwell Australia F ACTS:Ea s e me n t n o t u s e ds i n c e1 9 6 4a n dp a r t sc o v e r e di nh e a v yv e g e t a t i o nwi t hd e e pwa t e r d r a i ni n l e n g t h . I en o t u s a b l e .Nor e a l e v i d e n c ewh yg r a n t e di nfi r s t p l a c ee x c e p t t og i v ea c c e s st owa t e r p u mp wh i c hwa sn ol o n g e r n e c e s s a r yb e c a u s eo f t h ea d v e n t o f r e t i c u l a t e dt o wnwa t e r HELD:e a s e me n t wa so b s o l e t ea n do r d e r e di t t ob ee x t i n g u i s h e d Averano v Mduzi F ACTS:Do mi n a n t a n ds e r v i e n t t e n e me n t sn e i g h b o u r so wn i n ga d j a c e n t b l o c k s–h a de a s e me n t s r u n n i n ga c r o s se a c ho t h e r ’ sl a n d .Dr i v e wa yr a nd o wnmi d d l e .Be n e fi t a n db u r d e ne a s e me n t so nb o t h b l o c k s .On en e i g h b o u r wa n t e dt op l a c ef e n c ed o wnd r i v e wa ya n do t h e r p a r t ys o u g h t i n j u n c t i o nt o r e s t r a i nt h i s .Pa r t ywi s h i n gt of e n c ea p p l i e df o r e x t i n g u i s h me n t HELD:a p p l i e ds1 8 1–f o u n dn e i g h b o r h o o dd i s p u t es on oe x t i n g u i s h me n t .F o u n dt h e r ewa sn o e v i d e n c et h a t t h eo b j e c t o f e a s e me n t c o u l ds t i l l n o t b er e a c h e do r t h a t e a s e me n t wa so b s o l e t e . I no t h e r wo r d s , c o u r t l o o k e da t r i g h t su n d e r e a s e me n t a n df o u n dc a s ef o r e x t i n g u i s h me n t b a s e do nPL As1 8 1 c r i t e r i awa sfl i ms y Not contrary to public interest 1 0 4 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Confnued existence of the easement would: i mp e d es o mer e a s o n a b l eu s e ro f t h es e r v i e n t t e n e me n t ; a n d d o e sn o t s e c u r et ot h ep e r s o n sb e n e fi t t e da n yb e n e fi t so f a n yp r a c t i c a l o rs u b s t a n t i a l v a l u e ; o r i sc o n t r a r yt op u b l i ci n t e r e s t Re Eucalypt Group F ACTS:e a s e me n t c r e a t e di n1 9 2 4g i v i n ga c c e s st ob e a c h f r o n t p r o p e r t i e swh i c hr a nb e t we e nb a c k f e n c ea n db e a c hi t s e l f .Du et oe r o s i o n , 2 / 3o f e a s e me n t a r e au n u s a b l e .Co u l dn o t b eu s e df o rp u r p o s e f o r wh i c hi t wa sf o r me d .Ho we v e r , e a s e me n t d i dh a v es o mev a l u e–( l o o ka t ( 1 ) ( b ) ( i ) ) –a l t h o u g hn ou s e a sr i g h t o f wa y , i t wa sv a l u a b l eb e c a u s ei t d i dp r o t e c t t h ev i e wo f t h eb e a c h f r o n t o wn e r sf r o mb e i n g o b s t r u c t e d HELD:e x t i n g u i s h me n t r e f u s e d–we n t b e y o n dp a r t i c u l a r b e n e fi t a n dt o o kwi d e rv i e wa n ds a i dt h a t u p o n p r o p e r c o n s t r u c t i o no f t h es e c t i o n , t h eb e n e fi t o f ar i g h t o f wa yd o e sn o t c o n s t i t u t et h ewh o l er a n g eo f t h e b e n e fi t s , l i k et h eb e n e fi t o f t h ev i e wwh i c hi sc o l l a t e r a l / i n c i d e n t a l t oc o n t i n u a t i o no f t h ee a s e me n t . Mo n e t a r yc o mp e n s a t i o nf o r t h el o s so f v i e wsi f e x t i n g u i s h me n t g r a n t e dwa si n s u ffic i e n t Easement has been abandoned Persons enftled to the easement … have by their acts or omissions may reasonably have considered to have abandoned or waived the benelt of the easement Treweeke v 36 Wolseley Road Pty Ltd F ACTS:Ea s e me n t r e g i s t e r e di n1 9 2 7 .Ea s e me n t wa sar i g h t o f wa y , h a db e e ni mp a s s a b l eb yr e a s o no f v e r t i c a l r i c kf a c e sa n d , s i n c e1 9 2 8 , b e c a u s eo f a ni mp e n e t r a b l eb a mb o op l a n t a t i o n .I n1 9 5 6–o wn e ro f s e r v i e n t t e n e me n t i n s t a l l e das wi mmi n gp o o l a c r o s st h er i g h t o f wa y ; i n1 9 5 8s h ee r e c t e dan e wf e n c e a c r o s st h ewa y .Ac h a i nwi r ef e n c ewh i c hh a db e e ne r e c t e di n1 9 3 3a n dr e n e we di n1 9 6 7a l s oc r o s s e d t h ewa y .At n ot i meh a dt h eo wn e r so r o c c u p i e r so f t h ed o mi n a n t t e n e me n t u s e dt h ee n t i r er i g h t o f wa y . I n1 9 6 7a no c c u p i e ro f t h ed o mi n a n t t e n e me n t o b t a i n e das u r v e ya sar e s u l t o f wh i c ht h eo c c u p i e r so f t h el o t d i s c o v e r e dt h ee x i s t e n c eo f t h er i g h t o f wa y . HELD:t h en o n u s e r o f t h er i g h t o f wa ya n dt h eo t h e r a c t sa n do mi s s i o n so f t h eo wn e r so f t h ed o mi n a n t t e n e me n t d i dn o t r e q u i r et h ei n f e r e n c eo f a b a n d o n me n t o f t h er i g h t o f wa y Court may also give euect to an agreement to release an easement against a subsequent RP of the dominant land who was not a party to the agreement Pieper v Edwards No substanRal injury Requires that the proposed modilcafon / exfnguishment will not substanfally injure the persons enftled to the easement, or to the benelt of the restricfon Substanfal injury determined according to: a ) ma t t e r sa ff e c t i n gmo n e t a r yv a l u eo f t h el a n d b ) wh e t h e r o wn e rwi l l b ed e p r i v e do f p r a c t i c a l b e n e fi t s c )v a l u et ot h eo wn e ro f t h o s eb e n e fi t s Guth v Robinson 1 0 5 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 STATUTORY IMPOSITION OF RIGHT OF USER The Supreme Court may on applicafon impose a statutory right of user over land PLA s 180 Statutory right of user delned very widely – includes any right of, or in the nature of, a right of way over, or access to, or of entry upon land, and any right to carry and place any uflity… PLA s 180(7) Court will require applicant to pay just compensafon PLA ss 180(4)(a), (b) The court must be safsled that: a )I t i sc o n s i s t e n t wi t hp u b l i ci n t e r e s t b )r e a s o n a b l yn e c e s s a r yi nt h ei n t e r e s t o f t h ee ff e c t i v eu s ei nar e a s o n a b l ema n n e ro f a n yl a n d c )t h eo wn e r o f t h es e r v i e n t l a n dc a nb ea d e q u a t e l yc o mp e n s a t e di nmo n e yo ra n yl o s s/ d i s a d v a n t a g e s s u ff e r e db yi mp o s i t i o n d )t h eo wn e ro f s e r v i e n t l a n dh a su n r e a s o n a b l yr e f u s e dt oa g r e et oa c c e p t PLA s 180(3) Public interest (a) Do not need to show in public interest; merely that it is not inconsistent with it (eg planning scheme) Re Seaforth Land Sales Pty Ltd Reasonably necessary (b) It does not have to be shown there is no euecfve use unless imposed, nor does it need to be shown the owner plans to use in a parfcular way; it is merely reasonably necessary in the interests of one euecfve use in a reasonable manner of the land, but one does not have to show the land is useless without imposifon of the easement GriSner v Hadley F ACTS:a p p l i c a n t s o u g h t t oi mp o s ee a s e me n t t oe n a b l ev e h i c l e st oi n g r e s s/ e g r e s sf o r t h ep u r p o s eo f s t o r a g ea n dp a r k i n g .Th es e r v i e n t t e n e me n t u s e da sd a n c es t u d i ob yc h i l d r e n .Own e r a n dp a r e n t s o b j e c t e du p o ns a f e t yg r o u n d st oi mp o s i t i o no f s u c ha ne a s e me n t HELD:ma yb ed a n g e r o u swh e nt a k i n gi n t oa c c o u n t t h es e r v i e n t t e n e me n t a si t s t o o d .Th u s , n o t s u ffic i e n t e v i d e n c et oj u s t i f yi mp o s i t i o no f h ee a s e me n t a si t wa sn o t r e a s o n a b l yn e c e s s a r yf o r t h e e ff e c t i v eu s eo f t h ed o mi n a n t t e n e me n t ( c o u l dp a r t e l s e wh e r e ) Adequate compensaRon (c) Based on market value of loss / disadvantage cause; not the benelt / uplio in value Ex parte Edward Street ProperGes F ACTS:o n er e s p o n d e n t h a dp l a n st oe x t e n dh o u s e+g o o dr e a s o n sf o r d o i n gs oa n dt h a t t oi mp o s ea n e a s e me n t o v e r l a n dwo u l dc r e a t eh a r d s h i p .An o t h e r r e s p o n d e n t wa n t e dt or e l o c a t ea n de n l a r g eg a r a g e HELD:a p p l i c a t i o nf a i l e db e c a u s er e s p o n d e n t sc o u l dn o t b ea d e q u a t e l yc o mp e n s a t e d Unreasonable refusal (d) Obligafon to negofate with respondent with a view to making a reasonable ouer Paciac Coast Investments v Cowlinshaw 1 0 6 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com) lOMoARcPSD|3076807 Co u r t i mp o s e ds t a t u t o r yr i g h t i nf o r mo f d r i v e wa y , i mp o s i t i o no f wh i c hh a da l r e a d yb e e na c c e p t e db y o wn e r o f s e r v i e n t t e n e me n t s o met i mei np a s t . Ad e q u a t ee v i d e n c et h a t s e r v i e n t t e n e me n t h a dp r e v i o u s l y a c q u i e s c e di nt h ec o n s t r u c t i o no f t h ec a r p a r kwh i c hwa su s e db yt h ed r i v e wa yt ob ei mp o s e dt ot h er o a d SUM:o wn e r o f b u r d e n e dl a n dh a dv i r t u a l l ya l r e a d ya g r e e db u t c h a n g e dt h e i r mi n d .J u d g ef o u n da t t i me o f h e a r i n g , c o n t i n u i n gr e f u s a l wa su n r e a s o n a b l e Naylor v Pierce F ACTS:a p p l i c a n t p u r c h a s e dwi t hk n o wl e d g eo f a c c e s sd i ffic u l t i e sa n dh a dt r e a t e dr e s p o n d e n t l a n dwi t h d i s r e g a r d , e n f o r c i n gt h e i r p e r s o n a l r i g h t t oc r o s st h el a n da st h e yp l e a s e d .Th eo ff e r o f c o mp e n s a t i o nb y t h ea p p l i c a n t wa sf o u n dt ob en o mi n a l a n dt r i fl i n ga n dt h e i r a s s e r t i o nt h e yh a dar i g h t t oa ne a s e me n t wa sf o u n dt ob eu n r e a s o n a b l eg i v e nt h e i ra t t i t u d et oc o n t i n u i n gt ou s et h el a n d HELD:r e f u s a l o f r e s p o n d e n t t og r a n t a c c e s se a s e me n t f o r p a s s a g eo f c a t t l ea f t e r e x p i r yo f at e mp o r a r y a c c e s sa g r e e me n t wa sr e a s o n a b l e .Th ea p p l i c a n t ’ sc o n d u c t p r i o r t op r o c e e d i n g swa sc o n s i d e r e d u n r e a s o n a b l e 1 0 7 Downloaded by Mojtaba Dani (mojtaba.dani@gmail.com)