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Tutorial Q&A
Week/ Subject
Page
INTRO TO RP & DOCTRINE OF TENURE
2
DOCTRINE OF TENURE & ESTATES
6
OWNERSHIP OF LAND & CO-OWNERSHIP
9
SALE 1: INDEFEASIBILITY
16
SALE 2: INDEFEASIBILITY & CAVEATS
22
LEASES 1: LEASES (INCLUDING INDEFEASIBILITY)
28
LEASES 2: COVENANTS & ASSIGNMENTS
34
LEASES 3: COVENANTS & TERMINATION
43
MORTGAGES 1: (INCLUDES EQUITY OF REDEMPTION)
50
MORTGAGES 2: (INCLUDING INDEFEASIBILITY & PoS)
55
COMMUNITY TITLE SCHEMES
60
INTRO TO RP & DOCTRINE OF TENURE
Ques%on 2.1 Read pages 16-58 of Brennan J’s judgment in Mabo v Queensland (No 2) (1992) 175 CLR
1 and address the following ques%ons.
(a) What is sovereignty?

The principle that a state exercises absolute power over its territory, its system of gov, and its
people within its territorial borders, be those ci%zens or people passing through

The exclusive right to exercise that supreme authority over a geographical region or a group
of people within it

Vested generally in a monarch, government or another poli%cal ins%tu%on - in Australia, it is
vested in Queen Elizabeth II, but the power is passed onto the Governor General, which is then
passed onto our elected governments 
there is a link between sovereignty and doctrine and tenure - the doctrine is the system of
land ownership that was introduced in Australia upon the Bri%sh acquisi%on of sovereignty
(b) What is the English theory of the doctrine of tenure?
Most fundamental principle underlying common law concepts of land law

The ul%mate owner of all land is the crown and a person in possession of it is by virtue of a
grant of the crown, a tenant of the monarch

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



In feudal %mes, much more complex doctrine - the monarch at the top of the pyramid and in
respect of each interest/parcel, the monarch would grant it to a tenant who could grant further
interests below them
Peasants were generally the ones in possesison who %lled or looked a_er the land, owing
obliga%ons to their Lords
System of tenure is much more simple now, but we imported this tradi%onal doctrine when
we assumed sovereignty over Australia
Complete answer: page 46 of Mabo
(c) How does the doctrine of tenure operate in Australia?
Aus law received all of the English law relevant to the circumstances that English seclers
found in Australia upon the crown assuming sovereignty of the country in 1789

Due to the legal reasoning of Jus%ce Brennan and other judges in the decision, we have a
modieed doctrine of tenure: the english system of doctrine of tenure, but where the crown's
interest is subject to naYve Ytle

Rather than saying the crown has an absolute interest in land, we have what is termed
a radical Ytle: absolute ownership interest in the crown is held subject to exis%ng na%ve %tle
interests

This acknowledges that indigenous peoples were here erst and their possession of land
preceded the seclement

Na%ve %tle rights exist only to the extent that they haven't been ex%nguished by an
inconsistent crown dealing

Where the crown has made a grant in fee simple (made with respect to land which a house
or a building sits on); a fee simpe interest is a right to exclusive possession for an indeterminate
amount of %me, which ex%nguishes na%ve %tle

Na%ve %tle only exists in areas outside of main cites and towns - the Wick Peoples case says
most pastral leases allow the con%nued existence of na%ve %tle; pastral leases are a grant
of non-exclusive possession, which in some situa%ons allow na%ve %tle rights to co-exist and
con%nue

At page 48, Jus%ce Brennan noted that the radical %tle which was adapted through feudal
theory has two limbs:
o
A postulate of doctrine of tenure
o
And a concomitant of sovereignty
o
"as the sovereign 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 land should be kept as the sovereign's
beneecial demean…by acribu%ng to the crown radical %tle over all land within a territory
which the crown has assumed sovereignty, the common law enabled the crown, in exercise
of its sovereign power, to grant an interest in land to be held of the crown or to acquire land
for the crown's demean. The no%on of radical %tle allowed the crown to become paramount
lord of all who hold a tenure granted by the crown and to become absolute beneecial owner
of alienated land acquired for the crown's purposes…but it is not a corollary of the crown's
acquisi%on of a radical %tle to land in an occupied territory, that the crown acquired absolute
beneecial ownership of that land to the exclusion of the indigenous inhabitants…if the land
were desert and uninhabited, truly a terra nullius, the crown would take an absolute
beneecial %tle…the English legal system accommodated the recogni%on of rights and
interests derived from an occupa%on of land in a territory, over which sovereignty was
acquired by conquest without the necessity of a crown grant"

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

In Australia, the posi%on here at CL is that Aus was a secled territory (ordinary not having
inhabitants when sovereignty was acquired, not the case here); his Honour did not go far as to
say that it was a conquered territory, but maintains it was a secled territory, but rejects the idea
that the crown acquired a full beneecial or an allodial %tle
Instead, the crown acuqired radical %tle which is subject to exis%ng na%ve %tle interests, but
recognises that the crown has the power and has used the power to ex%nguish na%ve %tle
interests
(d) What is allodial %tle and how does it dijer from %tle to lands subject to the doctrine of tenure?

Allodial %tle to land is independent of any superior power

Exists outside of feudal system or is an interest held by the crown itself

Is there any in Aus? No

Is there any in Scotland? Yes, up in the North-western corner of Scotland in the cold and
rocky island there are forms of allodial tenure
(e) What did Brennan J mean at the bocom of page 45 where he wrote that that the doctrine of
tenure “is a doctrine that could not be overturned without fracturing the skeleton which gives our
land law its shape and consistency”?

Our land law is based on it and that any recogni%on of na%ve %tle must be consistent with us
observing the doctrine

Decision in Mabo was a crea%ve one which allowed the existence and recogni%on of na%ve
%tle, but did not throw out the established legal reliance on the system of doctrine of tenure

Page 47: it is far too late in the day to contemplate an allodial or other system of ownership.
Land in Aus which has been granted by the crown is held on a tenure of some kind and the %tles
acquired under the accepted land law cannot be disturbed.

In CL, recognises the existence of na%ve %tle rights, but the recogni%on of those interests is
that they exist outside the doctrine; the doctrine is to some extent subject to na%ve %tle, but
only to the extent that they haven't been ex%nguished
(f) What is required for the recogni%on of na%ve %tle?

Na%ve %tle to land and those en%tled are ascertained to the laws and customs of the
indigenous people, by them with connec%on to the land, which has been con%nually observed
since the acquisi%on of sovereignty by the Bri%sh crown

Our recogni%on is that the indigenous people had a recognised system of customary law and
they had possessory rights and interests in respect of land according to the terms of those
customary laws
o
The dijerent tribes means there are many forms of indigenous law - the customs
might be similar but they are not iden%cal; a member of one tribe, in most instances, is not
subject to the law of other tribes
(g) How did na%ve %tle rights survive the Crown’s acquisi%on of sovereignty in Australia?
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
Na%ve %tle is not an allodial %tle and it survives the acquisi%on because the common law
recognises their validity, but it only does if those laws are con%nuously observed by the people
who want those rights - diocult to establish, because its diocult to porve and secondly
white australians have created barriers to their observa%on, such as forcibly removing them from
their lands
Ques%on 2.2 According to Brennan J at page 40 of his Honour’s judgment in Mabo v Queensland (No
2) (1992) 175 CLR 1: a Select Commicee on Aborigines reported in 1837 to the House of Commons
that the state of Australian Aborigines was "barbarous" and "so en%rely des%tute ... of the rudest
forms of civil polity, that their claims, whether as sovereigns or proprietors of the soil, have been
ucerly disregarded”. How might Australian society today be dijerent if this commicee reported
accurately in 1837?

No set answer for this because the possibili%es are quite obvious: two main ones
o
First, things could be quite dijerent for indigenous peoples today - if their interests
had been recognised at an earlier %me, dijerent arrangements might have been made and
arrangements similar to those made in new zealand which gives greater rights and greater
rights of indigenous rights and interests
o
Second, a more aggressive approach might have been taken by the Bri%sh crown and
sought to wipe out their exis%ng rights - it's hard to predict

Essen%ally this report was the basis for the crown having the view that australian was only
inhabited by unsecled peoples who had no recognised legal system and therefore no %tle to land
- it therefore allowed the crown to form the view that they had acquired by seclement and not
by conquest or accession; this was followed in a number of cases un%l Mabo - A-G v Brown is a
good one, as is Millipon v the Balco (Blackburn in the federal court)
Ques%on 2.3 Applying the bundle of rights theory, explain which rights a person has if the person
holds:
(a) a lease;
(b) a mortgage;
and (c) an easement.

The theory: a more sophis%cated understanding of property, that is the rela%ons between
people in respect of objects; the content of that bundle changes depending on the thing in
ques%on
o
A fee simple interest: the person has %tle to the land, the highest form they have;
they have the right to possess, own and exclude, dispose, lease, grant permission for
someone to come onto the property or secure a mortgage for a debt
o
A lease is a dijerent form of interest in a property; it is an interest granted by the fee
simple holder to someone else and a lease is a grant of exclusive possession which allows the
lessee (the tenant who holds the lease) to even exclude the fee simple owner of the lander

The interest of the lessee is described by the contractual terms of the
document, which is the lease

The rights of the lessee is to exclude others, possess and enjoy the land, but
the lessee doesn't have rights that the fee simple owner has such as mortgaging the land
or place it in a posi%on where the mortgagee could sell the land to recover the debt
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o
o
A mortgage is a right or an interest in land granted to a lender; the fee simple owner
who grants mortgage to the land, or they are a mortgagor who grants the mortgage to a
mortgagee such as a bank

The mortgagee does not have a right of exclusive possession, but does have
a right to take possession and sell it to recoup a debt owed by the mortgagor
An easement is a right of way over land; an example of where this occurs is where
there are two blocks and one is behind another next to the road; the only way into the road
is by passing through the other block

An easement does not grant a right to exclusive possession to the holder of
the dominant tenement (the person who takes the beneet of the easement) and the
servient tenement is the lot which contains the easement
DOCTRINE OF TENURE & ESTATES
Ques%on 3.1 What interest does each party, including the grantor, take in the following cases? In
each case the grantor G held a fee simple absolute. For the %me being disregard the implica%ons of
the Land Title Act 1994 (Qld).
(a) To A.
A takes a fee simple, and upon his death it will divulge amongst his heirs according to the Succession
Act; G retains nothing
b) To A in fee simple.
Same as above.
(c) To A for life, remainder to B in fee simple.
A takes a life estate and it is a present interest; he has an immediate right to possession. B only has a
future interest, and G retains nothing. If B dies before A, the gi_ will go to B's estate on A's death.
(d) To A, remainder to B for life.
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A takes a fee simple; B takes nothing because a remainder is void a_er a grant in fee simple; there is
nothing le_ to give to B.
(e) To A in fee simple on condi%on that A graduates from a law degree from an Australian university
during her life%me.
A takes a fee simple, but in a con%ngency since there is no guarantee that A will graduate; therefore
A's interest only vests upon her gradua%on; G retains a reversion that will vest in possession only if
the condiYon fails, and will be exinYnuighsed if and when the condiYon is saYs\ed
(f) To A (who is unmarried) for life, remainder to A’s widow in fee simple.
This is a con%ngent remainder, as there is no guarantee that A will get married; if A dies without
marrying, the estate will revert back to G; if A dies a_er marrying, the widow will retain a fee simple.
A's widow takes a condiYonal remainder (the consiYons being that she becomes A's wife and does
not die before him)
G retains a condiYonal reversionary merest that will be determined if A marries and predeceases
his wife
(g) To A for life, remainder to B for life.
A takes a life estate, having a present interest with an immediate right to possession; B only has a
future interest; if B dies before A the gi_ will revert back to G a_er A's death; if G dies before B, the
gi_ will go back to G's estate and redistribute according to his will
A takes a life estate; B takes a life estate on A's death; G retains a reversion
(h) To A for life, remainder to B for life, remainder to C in fee simple.
A takes a life estate; upon his death, B gets life estate; upon B's death, C receives the fee simple; if B
dies before A, upon A's death, C will receive the fee simple.
A takes a life estate; B takes life estate upon A's death (remainder); C has a remainder in fee
simple; G retains nothing
(i) To A for the life of X, remainder to B for life.
A is the life tenant; X is the measuring life and upon X's death, B will receive a fee simple; if A dies to
X, the gi_ of fee simple will go to B; there is a reversion to the grantor; this is known as an estate pur
autre vie
Ques%on 3.2 A, B and C were joint tenants. A transferred her interest to X. Describe the ownership
interests of B, C and X.
X takes a 1/3 interest as tenant-in-common; B and C retain their 2/3 ownership as joint tenants
inter se
When A passes his interest as a joint tenant, he breaks away that porYon of that property; this
quesYon does not tell you the interest has changed; A has no interest
Ques%on 3.3 Fred Smith died in 1995. Fred’s wife, Norma, had died two years earlier. In his will, Fred
le_ all of his real property, which comprised a house on a bend of the Brisbane river in Sherwood, to
his son Mark Smith for life, with a remainder to Mark’s sister, Charlene, then aged 20, in fee simple,
provided Charlene reached the age of 25. The property comprises over two acres of land and
contains a dilapidated shed (that was used previously to store farming and gardening equipment), a
chapel, and 600 radiata pine trees. This variety of tree is used for building in Queensland. Most of the
radiata pine trees grow on a steep slope near the river and have obviously been planted to prevent
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erosion. Mark has no desire to move into the house and instead he wants to rent the 10 house out
on AirBNB. Mark announced to Charlene that to make the house as acrac%ve as possible to the
“right clientele”, he intends to convert the dilapidated shed into a covered garage, covert the chapel
into a cinema, and cut down and sell the 600 radiata pine trees to ensure there is an uninterrupted
view of the river from the house. Mark said that he expects that the pine trees will be sold for a large
sum of money. He also said he intends to remove what he described as the staid of leadlight
windows, polished wooden roors, and iron balustrades on the verandahs that adorn the house to
replace them with something more modern. Mark has come to you for advice
In advising Mark, consider the following ques%ons.
(a) What interests do Mark and Charlene have in the property pursuant to Fred’s will?
Mark takes a life estate, whereby Charlene will receive a fee simple upon Mar's death; but it is a
con%gency as there is no certainty that Charlene will reach the age of 25; if she dies, there is a
reversion back to Fred; the estate will be then divided according to intestacy, meaning that Fred will
take fee simple.
(b) Can Charlene take any ac%on to prevent Mark making the changes he intends to make to the
properly?
Acts of Waste

ConverYng the shed into a garage (Doherty v Allman) and the chapel into a cinema (Hyman
v Rose) is pulling down or altering buildings; voluntary waste: Marsden v Edward Heyes Ltd

As pine tree is able to be used for building in Queensland, the cu`ng of it is voluntary
waste: Honeywood v Honeywood; Re Hart




In regards to the shed, it was said in Doherty v Allman that the conversion of dlipaidated
sheds into a dwelling was beneecial, and was only an act of ameliora%ng waste which the House
of Lords would not intervene and order and injunc%on – the facts are so similar here that it can
be said the covered garage would be of more use and beneet than a unrepaired shed, and it is
not something that Charlene could stop happening; the court would not intervene
In regards to the chapel conversion, the court will not intervene either: Hyman v Rose
As for the pine trees, in Re Hart it was held that pine treets are not %mber tees, but that was
on the basis that there was lacking evidence for their use as %mber. This case is dis%nguishable
from Crocombe v Pine Forests, because in that case there was evidence that the trees were for
millable %mber for structural building; the court has to arrive in ques%on that the trees are
%mber, that is intended for building (Honeywood v Honeywood); here there is no evidence of
the like and they are only there to prevent erosion; therefore Mark would be liable for cutng it
down, and would be liable for waste; there is some argument for making an injunc%on to stop
him doing so.
Finally, concerning the removal of the windows, roors and balustrades, Mark is a life tenant
of the estate – "If a dwelling-house is let and something which is not a dwelling-house is
delivered up (to Charlene) the contract to deliver up in a tenantlike condi%on is broken";
therefore like the tenant in Marsden v Edward Heyes, Mark would be commitng voluntary
waste and would be responsible for it because he is supposed to be delivering up the premises to
Charlene as it is
o
Vane v Lord Barnard - even though father was unimpeachable for waste as a life
tenant, equitable waste showed that he would; a life tenant who is granted an estate
without an impeachment of waste may not commia acts of bagrant destrucYon
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(c) What would your advice to Mark be if, instead of intending to makes these changes, Mark simply
wanted to sell the property, and Charlene wanted to ensure that he did not?

As Mark is a life tenant, he is a statutory trustee (s 6)

He must exercise his powers habving regard to the best interests of Charlene who is
beneecially invested in the property: s 7

He is en%tled to exercise his power to sell it: s 32 (1)

and can only sell it with court approval: s 31; court might consider the ques%on of whether
it would be in Charlene's best interests for the selling to happen

But the capital of the sale proceeds must be preserved for the beneet of Charlene who is the
fee simple owner

I would advise Mark that he can go ahead with court approval, but should be aware that
Charlene can s%ll apply to the court to prevent the sale because she is a future interest holder;
however it is only a discre%onary remedy and there is no certainty that the court would
intervene

If C is unsccuessful, then mark will be en%tled to income from the proceeds of sale for his
life
ACTUAL TUT

Types of estate
1.
Freehold
1.
Fee simple
2.
Life estate (ordinary or life of another)
3.
Fee tail (abolished)
1.
1.
2.
3.

1.
1.
1.
1.
2.
1.
1.
1.
1.
Leasehold
Leased from crown
ParYcular purpose (agriculture, mining, naYonal parks)
99 years
Doctrine of waste
Permissive
Omissions; leaving in state of decay or disrepair
Voluntary
PosiYve acts
S 24 PLA - liability does not apply to those not responsible for waste
Equitable
Reckless acts that a prudent and reasonable person would not do to their own;
wanton acts of desutrcYon: s 25 PLA
AmelioraYng
Acts which alters or improves the value of the land
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OWNERSHIP OF LAND & CO-OWNERSHIP
Clarifying on QuesYons from past weeks

What is the english theory of the doctrine of tenure?
o
The most fundamental principle underlying CL concepts of land
o
The ul%mate owner of all land is the Crown
o
The person in possession of land is ther eby virtue of a grant from the Crown and is
merely a tennat of the Monarch

o
o
o
o

o
o
o
o
How the doctrine of tenure operates in Astralia?
Modieed doctrine of tenure
Crown has radical %tle: absolute ownership interest subject to exis%ng NT interests
The HCA in Mabo 2 rejected th arugmen chat rejec%on of nt is inconsistent with
radical %tle and doctrine of tneure
Fundamnetal restatement of the doctrine of tenure as it applies in Australia
Doctrine of Estates
An estate is an interest in land that exists for a period of %me
An estate involves a right of possession either presently or in the future
Allows for present interests and a succession of future interests in land to be created
Tyepes of estate

Freehold: s 19 PLA

Fee simple

Largest estate the crown can grant a private individual

Fee means inhereitable

Simple means no restric%on as to who can the land

To A

To A in fee simple

To A and her heirs
Life estate
Ss 6, 7, 31 and 32 Trusts Act
A right % possession for the dura%on of the named persons



life
At the end of the life estate, the interest will
Revert back to the grantor (reversion); or
Pass on to someone else (remainder)





o
o
Leasehold
Present interest:

Confer a present right to possessio

Vested in possession
Future Interest:

A present right to take possession of the land at a %me in the future

S 30 PLA: equitable rather than a legal interest
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Vested in interest
Reversion
Remainder



o


Con%ngent interest

Condi%on applies which may not eventuate
Q: what is the dijerence b/w "To A in fee simple on the condi%on she completes a law
degree" and "To A in fee simple provided she does not sell the land"
o
Second one is void, because you cannot put a condi%on on the land; you want to
have the and used for poten%al and you want people to be able to do what youw ant with
the land
o
First is allowed as it is a con%ngent interest
Restrains on aliena%on: determinable and condi%onal estates
o
An inherent characteris%c of property is alienability
o
Landowners may acempt to limit the free disposi%on of property, eg:

Grant to my son S provided that S does not dispose of the land

A total restraint on aliena%on (void)
Grant to my son S provided if he sells, he must sell to another member of the

family


A par%al restraint on aliena%on (poten%ally void)
Q: How does s 6 of the trust act operate to allow the life tenant to be considered a
statutory trustee (ie, wouldn't the executor of the estate be the statutory trustee)?
o
Executor: ini%ate probate of a will, collect and inventory the assets
and distribut ehte prperty to be beneeciaries (incl the life tenant). This role ends when the
executor has collected and distributed the assets of the estate
o
Testamentary trustee: carries out con%nuining du%es, such a administering real
property for someones beneet. A trustees role is to manage any assets that form part of a
trust for so long as the trust remains in existence and the asssets form part of the
trustee ie an estate has not been granted in the property
o
Life tenant

A statutory trustee in rela%on to the property which the life tenancy relates
during the term of the life tenancy

If the life tenant fails to protect the assets by commitng vokuntary waste
the remainderman can bring an ac%on for damages or an injunc%on
o
Tesamentary trustee (under will) or executor

Relived during he term of the life tenancy and only re-enlivens a_er the life
tenant's death

For example, to ensure the property is passed on to the remainderman, or
where there is no remainderman, to the estate (which the executor manages) and
managed under the Succession Act
o





Doctrine of waste
Permissive waste
Failure to keep land in sa%sfactory repair; omissions
Equitable waste
Amelioa%ng waste
Altera%ons that enhance the value of the land
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
Remedies: nominal damages or injunc%on only
Voluntary waste
Posi%ve act that damages the value of the land and they will
responsible for unimpeachable: s 24 PLA

S 25 PLA prohibits equitable waste even if the life tenant is
unimpeachable for waste

Vane v Lord Barnard
A
Ques%on: how/why is a joint tenancy broken into tenants-in-common?
At common law there is a presump%on in favour of joint tenancy, unless

One of the four uniits is absent

Words of severance are used or

There is a clear inten%on create a tenancy in common

PLA ss 35, 36
While there is a presump%on in favour of joint tenancy at common law

Anything which in the slighest degree indicates an intent to diuviude the
property must be held to abrogate the idea of a joint tenancy and create a tenany in
common: Robertson v Fraser



o
o

QuesYon 4.1
Development Ltd acquired several parcels of rat land upon which it intends to build a commercial
and residen%al development.
The proposed development is to contain commercial buildings, residen%al complexes (both freehold
and community %tle), streets, a spor%ng ground for cricket and football, and several parks.
One of the buildings in the proposed development is a four-story building. The ground roor of that
building is to contain six retail shops plus a major supermarket. The remaining roors one to three are
to contain commercial ooce space for businesses to buy or rent.
In your groups, discuss what %tling op%ons there are for the space within the proposed
development.
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



A surveyor goes out and examines the boundaries of all the dijerent types of land
Then there is a building format plan - deenes land using structural elements of a building,
including walls and ceilings
Volumecric format plan - a plan of survey using three dimensional points to locate the
Explanatory format plan (quite rare, but worth men%oning because the Land Titles Act
men%ons them)
o
Only applies to state tenure land where theres easements and covenants, or a


o
o
o
What do we need to do with this single block of land to divide into tenancies?
survey plan, which will subdivide the land into four
If we wanted to make those four lots into a single one again, you use a plan of
amalgama%on
Standard format plan would be used in rela%on to the houses within the four

For the building

Volumetric plan 
Six tenancies in bocom roor for retail purposes (broken up into a building format plan)
o
Developer has many op%ons - it is a commercial decision
o
Ren%ng to par%cular tenants (each store) under lease agreements

Elevator
o
Tenants who make more use of it contribute more to the relevant levy





A plan of survet s a diagramma%c representa%on of a aprcel of land showing loca%ons and
dimensions
A plan of subdvision may provide 1 or more of the following
o
Divion of 1 or more lots
o
Amalgama%on of 2 or more lots
o
Dedica%on of land to public use
o
Redeeni%on of a lot on a resruevy
A plan of subdivision may rrquire planned approval
Spa%al characteris%cs depend on format of the plan used: standard, building, volumetric and
explanatory: Div 2A LTA
Survey plans generally registered with DNRM
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Title search

If you do a %tle search on your house, you would get a certain document
QuesYon 4.2
On 9 January 2008, three siblings, Garry, Hazel and Janelle, became registered owners of a house
they purchased together. The siblings were registered as tenants in common in equal shares. Each
contributed $200,000 to the purchase price, and each took out a loan to enance their contribu%ons
and in exchange for the loan gave a registered mortgage over the land as security.
Three years ago to the day, Hazel and Janelle both moved out because they decided to live with their
respec%ve boyfriends. Garry con%nued to live at the property alone.
A_er the sisters moved out, Garry constructed a lock-up garage on the property at a cost of $15,000,
and refurbished the bathroom at a cost of $30,000, the costs of which he bore himself. Prior to the
sisters moving out, they had shared to cost of council rates equally, but a_er the sisters moved out
Garry paid the council rates in full himself.
Hazel and Janelle wish to sell the property so they can free up some capital to enable them to
purchase houses of their own. Garry refused to agree to sell when his sisters broached the topic.
Hazel and Janelle obtained a valua%on report for the property from a real estate agent. The valua%on
report states that the present market value of the property is $800,000 and that the value of the
house has increased by an 12 amount of $35,000 as a consequence of the improvements having
been made (the remainder of the increase was due to the increase in property prices generally). The
valua%on report also states that the property’s current rental value is $600 per week.
Hazel and Janelle seek your advice as to whether they can force a sale of the property. They also
want to know whether they can charge Garry rent for the %me he has been living in the house since
they moved out.
At your request, Mr Peter Sheehy and Nigel Markey, both partners of PKMFTR Accountants, have
consented to act as statutory trustees on any forced sale.
The property is located at 22 Gwindam Street, Annerley, and is described as Lot 311 on RP37992,
County of Stanley, Parish of Yeerongpilly, %tle reference 50913537. None of the three siblings have
paid oj in full the loans they took from their respec%ve banks or discharged the mortgages taken by
those banks.
(a) Can Hazel and Janelle force a sale of the property, and if so, by what means?

o
o
o
S 38 PLA 1974 (Qld)
Discre%onary remedy
BUT upon an applica%on the court has only limited discre%on to refuse to make an
order under s 38
Re Permanent Trustee Nominees (Canberra) Ltd [1989] 1 Qd R 314 (Connelly J)
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(i) Joint tenant or tenancy in common?
Tenancy in common due to being registered as such
On other hand, joint tenancy may be shown by four uni%es being possibly present:

Unity of possession is shown by the fact that, all three have a right to possess the land; Garry
cannot exclude Hazel or Janelle; also shown by default if they are tenants in common

Unity of interest: they have equal shares

Unity of %tle: shared ownership arrives from the same source which is the house

Unity of %me: all interests vested at the same %me when they purchased together




Presump%on at common law not applicable as, all four uni%es are present, no words of
severance are used and there is not necessarily an inten%on to create a tenancy in common,
except by the fact they were registered as such
PLA s 36 suggests they may actually be tenants in common because they hold the shares
equally
In equity they would also be seen as tenants in common
o
Any joint tenancy that might have been present will be held as tenants in common;
all three hold the legal estate on trust for themselves as tenants in common in equity
because they have taken an interest as mortgagees (they all gave a registered loan)
Ques%on now arises whether they can make a court order for sale or par%%on as tenants in
common
o
Hazel and Janelle would be en%tled to apply for the appointment of a statutory
trustee, which they have done for Sheehy and Markey under s 38 PLA; it is then lel to
whether the court would on applicaYon vest the property to be held on statutory trust for
sale
(b) Can Hazel and Janelle charge Garry rent for the %me he has been living in the house since they
moved out, and can Garry claim from them the cost of improvements he made to the property and
the cost of council rates?


PLA s 42: in an ac%on for sale or par%%on a court can order an account to be taken to adjust
the rights of the par%es
Ordinarily cant charge another rrent a_er s/he chosoes to move out unless:
o
The co owners have contractually agreed that the occupying coowners wll pay
an occipa%on fee
o
That coowner has been ousted from the property - the ousted co owner may claim

o
o
o
In rela%on to Garry
A party makes improvement shas an equitable lien, en%cling them to contribu%on
from other coowners upont ermina%on of the coownership which runs with the land for the
beneet of a successor in %tle: Brickwood v Young
If a party claims a contribu%on to the cost improvements that party must do equity
and pay an occupa%on fee where the party from whom the contribu%on are sought is not in
occupa%on: he who seeks equity must do equity
Ryab v Rdries; Forgard v Shanahan

Therefore hazel and janelle cannot chargew garry an occupaYon rent for
the Yme he occupied the premises aler they chose to move unless garry seeks a
contribuYon for the cost of the improvements he made to the property
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o




o


o


o



ControbuYon: a co owner in possession can claim the lesser of
Th coet of improvements and the increased value of the land aaributable
to the imrpovements
Foregard v Dhanahan
Here valuaYon indicates value of hoise icnreased by $35K as a
consequence of the improvements
This is the amount carry could claim
OccupaYon rent
400 per week (which is 2/3 of 600 and coreesponds with the area hazel
and janelle would other have occupied) x 52 x 3 years = $62, 400
Mount exceeds the icnrease in value to the house =
no ene\t to garru claiming a conYrbuYon those costs
Council rates:
Joint debt: council rates are not improvements but joint debts: ryan v
dries; goregard v dshanahan
Gary has paid alone = enYtled to claim contribuYon inr espect of them
Other points
Property vests int rustees on appointment: s 38 (3A PLA

Co owners lose their interest in land

Co owners acquire right to have trustees to carry
out ststutorey trust and to receive shares of sale proceeds
Trustee appointed for stat sale must sell the land out of the proceeds pay
the costs and cexpenses (incl mortgage): s 37A PLA
Trsutee appointed for stat parYYon must:

Mortgageege consent and give erect to the parYYon
but ransferring ownershipn of each new porYon to the person enYtled to it: s 37B
PLA

Gary

o
o
En%tled to claim payment for the council rates from Hazel and janelle, as he paid the
council rate debt in full: Foregard v Shanahan
As for rent, Gary has an equitable claim for the cost of improvements, as he did incur
costs in doing so ($15K and $30K); but he who seeks equity must do equity; therefore the
quantum will be calculated by him receiving the costs of improvements, deducted by
payment for the rent on the %me that Hazel and Janelle did not occupy the house
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SALE 1: INDEFEASBILITY
Question 5.1
**NOTE: important you are on top of Breskvar v Wall
In your groups discuss the following.
Harry Jones was the registered owner of a house in Enoggera in Brisbane, which he
agreed to sell to Veronica Smith.
a.
What is the nature of Jones’ and Veronica’s interests in the land at the
following times?
i.
Immediately after both parties signed the contract of sale, assuming
the contract was unconditional?
i.
Jones remains the RO of land in fee simple
ii.
Veronica from the time the K is entered into takes an equitable
interest in the property that being the equitable fee simple
iii.
I.e Jones is the legal owner, but in equity holds it on trust for
Veronica and Jones is then entitled to a balance of the purchase of
the price
iv.
As trustee, Jones must preserve the land and any improvements
on it for Veronica's benefit
v.
Veronica has a caveatable interest and should lodge a settlement
notice to preserve a position in the queue for registration: pt 7A LTA
i.
i.
ii.
iii.
iv.
i.
i.
ii.
If the contract was conditional as to finance for 10 days, would the
answer to (a) be the same?
Yes it would.
The subject to finance clause is a condition subsequent which
does not affect the parties' interests at law or in equity
Veronica still has an equitable fee simple
It will disappear if the condition subsequent is not satisfied or
fulfilled
Immediately after settlement of the transaction (that is when Veronica
paid the purchase price and obtained possession of the instrument of
transfer and the certificate of title but before registration)?
Note this is before registration of instruments
The interests are the same

Jones remains RO of fee simple

Veronica holds equitable estate in fee simple

S 181 LTA: instrument does not transfer or create an
interest in a lot until it is registered
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i.
i.

i.

After registration of the transfer in favour of Veronica?
At the point of Veronica taking all the instruments, lodge it and
sometime thereafter those documents are registered

Jones has no interest

Veronica becomes RO in fee simple

Jones has an equitable interest in the right of rectification if
there has been fraud or any other exceptions to indefeasibility

In the absnece of that, Jones has no interest

S 182 LTA: registration of an instrument transfers or creates
the interest specified in in it

S 191 LTA: seller has no lien for any unpaid purchase
moneys
o
Parties finalise their transaction upon registration
At what point should Veronica get insurance for the property?
Ordinarily upon signing a K, risk passes to the buyer
This is risk of a destruction or loss of the property or any
structure on it
Very important advice: V could get insurance upon signing
o
or before
o
o
S 63: where seller has positive insurance but buyyer does
not, the buyer can rely on the seller's insurance policy even though there is
no privity of K between buyer and seller's insurer

Only availble if the seller actually has insurance
S 64: provides right to rescind K upon damage or
destruction of dwelling on the land making it unfit for dwelling
o
Question 5.2
Veronica is the registered owner of an estate in fee simple. Veronica’s cousin Fred
house-sat for her while she was away in America for a year-long sabbatical. During
that time, Fred ran into serious financial trouble and forged a transfer of the
registered title to himself with the intention of borrowing money on the security of the
property. He intended to pay back the money and transfer the property back into
Veronica’s name once his financial problems had been solved. The transfer to Fred
was registered. Subsequently, a mortgage granted by Fred in favour of Profitable
Bank Ltd was registered. The bank had no knowledge of Fred’s fraud.
c.



Does Fred have legal title to the property?
Does, but Veronica has exception to indefeasibility in fraud and
could recover
Upon registration, Fred takes good legal title to property even
though procured registration by fraud: ss 38, 184 and 182 LTA; Breskvar v
Wall
Torrens system is a title by registration: ss 181, 182 LTA
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
d.




Instrument was registered when the particulars were recorded on
the freehold land register: s 174 LTA
Can Veronica recover title to the property?
V can recover, but only from Fred
If Fred transfers to TP, they take indefeasible title free of any
unregistered interests: s 184 LTA
o
Would destroy any right V has
o
To protect her equitable interest, she should lodge caveat
immediately freeze register which will prevent Fred from having any
further dealings with it such as transferring to TP or registering another
mortgage

Has caveatable interest because right of rectification
is one
Fraud exception applies: means actual dishonesty and must be
by the RP of the interest we are seeking to set aside: Bahr v Nicolay
Therefore V can get title back by either suing Fred or the Court
has power to order rectification to the register OR V can make application
to registrar who has power in the case of fraud to correct register: s 15, 19
LTA

o

o


Have not dealt with mortgage granted to Fred by bank
Separate issue and cannot assume simply because transfer to Fred is set
aside the mortgage will be – it will not
Does the bank have indefeasible title to its mortgage?
S 184 LTA: yes bank does, subject to any other exceptions that apply

Fraud exception

However bank was not party to fraud – had no reason to believe it
happened or perpretrated it on its own
In conclusion: Veronica has equitable title, but must take it subject to bank
mortgage
Remedy: Can seek compensation from the state pursuant to s 188 for value of the
mortgage that affects her land
Question 5.3
Assume now that Fred was unable to convince a bank to loan him money and
instead sold the property to Peter, who knows nothing of the fraud or Veronica and is
a bona fide purchaser for value. The transfer from Fred to Peter has been
registered.
e.

Can Veronica recover the property from Peter?
Peter acquired indefeasible title upon registration
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
o


f.
Exceptions
Fraud exception: but peter knows nothing of it and he is the
RP, so it will not apply – it is Fred's fraud and fraud must be by the RP: s
182 LTA
Remedy: deprivation -> seek compensation from state as
consequence of fred's fraud: s 188 (1) (a), (2)
Will state governemnt get money from Fred?
o
If fred has used it no
o
If he does, state can sue him: s 190 LTA

Step into fred's shoes and pay compensation to V
Would your answer differ if Veronica discovered the fraud before the transfer
to Peter was registered and she lodged a caveat to prevent Peter’s transfer being
registered?

Yes, it would because Peter would not yet have indefeasible title
since the registration could not be affected in the register

Fraud would still apply in respect of the RP who is Fred

But Peter would still have an equitable interest
o
Competition between Peter's (equitable fee simple) and
Veronica's (equity of rectification):

Short answer: difficult to resolve – covered in later
tutorial
Question 5.4
Assume that instead of transferring the land to himself, Fred, purporting to act on
Veronica’s behalf, transferred the land directly to Rick in circumstances where Rick
was unaware of the fraud. Assume also that Rick borrowed from ABC Bank Ltd to
fund the purchase and that both the transfer to Rick and the mortgage to ABC Bank
Ltd were registered.
g.


h.
Can Veronica recover the property?
Rick has registered title: s 184 LTA
No exceptions to indefeasibility apply – rick was not party to
fraud; no fraud by the RP
Would your answer change if Rick knew of Fred’s fraud and offered to keep
quiet about it if Fred sold him the property for a cheap price?

In this instance, Rick is a party to fraud and the exception would
be enlivened

Could recover property either by s 187 LTA court order or
pursuant to registrar: ss 15, 19 LTA

What is the practical advice? Urgent?
o
VERONICA NEEDS TO LODGE CAVEAT
o
i.
What happens to the mortgage?
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



Bank has indefeasible title to mortgage subject to any exceptions
to indefeasibility applying
None apply, because Bank is not party to fraud: Grgic v ANZ
Veronica will take registered title subject to the bank's registered
mortgage
Can claim compensation from state: s 188 LTA because of
suffering partial deprivation in interest of a lot
Question 5.5
Drafting exercise: Special conditions are additional conditions can be inserted in a
standard form contract for the sale of land.
You act for a client who wishes to buy and renovate a house. Your client and the
seller have agreed upon a price. However, your client wants his tradespeople to
commence renovating before settlement of the purchase occurs so the work can be
finished before he and his family move in. The seller is willing to allow renovations to
occur after the contract becomes unconditional, provided that the buyer completes
and pays for all the work, irrespective of whether the transaction proceeds to
settlement.
Draft a special condition for inclusion in an REIQ contract for the sale of land that
satisfies your client’s wishes and is likely to be acceptable to the seller. You do not
need to describe or define the scope of the renovations.
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SALE 2: INDEFEASIBILITY & CAVEATS
Question 5.1
Construction Suppliers Pty Ltd (“Construction Suppliers”) is a manufacturer and
seller of various building supplies.
On 9 January last year, Development Ltd ordered and was supplied with a quantity
of concrete pipe by Construction Suppliers. Development Ltd used the concrete pipe
to construct drains on land upon which it is building a shopping centre. The concrete
pipe segments that Development Ltd obtained cost $276,000.
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The contract used is Construction Suppliers’ standard sale form. The contract
contains a number of clauses, in small print, on the back of the form. Clause 5
provides:
“As security for all moneys owed by the purchaser to the supplier, the purchaser
agrees to charge any or all real property owned by the purchaser with the repayment
of the monies. The purchaser agrees that the supplier may at any time lodge a
caveat over the purchaser’s land and consents to a Caveat or other registrable
instrument being lodged to register such charge.
Development Ltd paid Construction Suppliers a $20,000 deposit and agreed to pay
the balance of the purchase money six months after the date of delivery. Mark and
Georgia Smith signed the Construction Suppliers standard form on Development
Ltd’s behalf without reading it. Construction Suppliers did not lodge a caveat at the
time it entered into the contract with Development Ltd.
After the drains were constructed, a number of segments of the concrete pipe
that Construction Suppliers provided cracked. Development Ltd’s engineers say
the pipes cracked because they are defective.
Development Ltd refused to pay the balance of the purchase money and has
demanded that Construction Suppliers provide it with replacement concrete
pipes. Construction Suppliers refused and Development Ltd sourced replacement
pipes from another supplier.
Development Ltd is the registered owner in fee simple of the land. It entered into
a contract to sell the land last month to Bestfeld Shopping Centres Ltd
(‘Bestfeld’). Bestfeld did all the usual searches before The contract of sale is due to
settle on 14 December this year during the final stages of construction.
Last week Development Ltd received a notice from the Registrar of Titles advising
that:
a.
b.
c.
Construction Suppliers lodged a caveat over the land upon which the
shopping centre is to be constructed;
the caveat claimed an interest in the land as “an equitable chargee pursuant
to clause 5 of a contract between Development Ltd Pty Ltd and Construction
Suppliers Pty Ltd dated 9 January [this year]”; and
a copy of the contract of sale was deposited with the caveat when it was
lodged.
You are to advise Development Ltd. In doing do, you should address the following
issues and questions.
**This question is loosely based on facts in Clark v Raymor, Qld Estates
v Collas and Circuit Finance Australia Ltd v Registrar of Titles
A) Does Construction Suppliers have a caveatable interest?

Caveat would have effect of transferring ownership to TP or a mortgage
in favour of TP being registered

Notice giving function – fact it was lodged will show up in a historical
title search

Focusing on primary function

Who can lodge it?
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o


S 122 (1) (a) person claiming an interest in a lot
S 36 AIA QLD: legal or equitable interest in land
Cl 5:
o
The charge is a mortgage

Charge over land to secure payment of
an interest in debt is an interest in a lot that will support a
caveat: Clark v Raymor; Queensland Estates Pty Ltd
v Collas
o




Agreement and consent on caveat
Consent not sufficient to
support caveatable interest: Collas
A mere personal or K right is not
sufficient: Collas
Must be a recognised or equitable legal
interest in the land: Collas
-> First sentence in cl 5 sufficient to
make caveatable interest
B) Would it have been advantageous for Construction Suppliers to lodge a caveat at
the time it entered into the contract with Development Ltd (and if so, why)?

Would have because it would have warned TPs of the charge that was
an interest in land had they searched the register OR may have given
constructive notice to future chargees who as a matter of course should
search the register

Danger: by lodging the caveat to give notice launches prohibition on
launching further caveat
o
Caveator cannot lodge second caveat on same grounds without
leave of the court: LTA s 106

Grounds would be charge being created by cl 5 of the K
C) Is the caveat that Construction Suppliers did lodge last week a lapsing or nonlapsing caveat (and why might this be important)?

Lapsing caveat – s 122 (2) provides that an equitable mortgagee can
only lodge a lapsing caveat
o
Circuit Finance v Registrar of Titles
o
Why important? Because caveat lapses
o
Construction suppliers needs to bring action to support that
interest within time limit specified in s 126 LTA
D) Can Development Ltd have the caveat removed if it does not lapse?

Lapsing of caveats dealt with in s 127
o
Caveatee may apply to SC to have caveat removed
o
The terms caveator and caveatee: s 4

Caveator is construction suppliers, whom the caveat has
been lodged in support of

Caveatee is development ltd, as they are the RP of the lot
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o
Action to remove caveat is in the nature of an interlocutory
injunction

Onus lies with caveator who must establish that

Serious Q to be tried

Whether Construction suppliers is entitled to
payment and is entitled to maintain SI in land that secures the
payment development Ltd owes to it, being the cost of the pipes

Balance of convenience favours the maintenance of the
status quo until trial

Evenly balanced – favours development Ltd to an
extent that allowing the caveat to remain will prevent them from
transferring title to Bestfit and also impede from Development ltd
from fulfilling its K obligations

Doing so will also affect the TP bestfield by
preventing or taking title to land

However favours construction suppliers to the extent
that in removing the caveat it will extinguish construction
supplier's interest in the land as mortgagee once a transfer in
favour of bestfield is registered
o
This is because bestfield will take benefits of
indefeasibility: s 184 LTA, s 184 (2) taking
registered propertior takes benefits irrespective of any other
notice they have an unregistered interest in the land
o
Mere notice of construction supplier's interests
would not enliven any of the exceptions to indefeasibility
o
Therefore a transfer would most certainly
extinguish construction supplier's equitable interest in the
form of its charge
o



o

o

Undertaking as to damages
Might include payment to the court of an
amount representing the caveator's claim in interest
Development ltd will be asked to give
undertaking to pay any damages as a result of the caveat
being removed
If refuses, that will lay against the
company in assessing the balance of convenience
Fairly evenly weighed
Would be difficult to advise which way
the court would go because there would innocent parties
affected from either maintenance or removal of the caveat
Better view: caveat should be removed
To allow the transfer to happen because
construction suppliers has K rights against development
ltd; no evidence that development ltd is insolvent and
unable to pay the debt
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Keep in mind the risk that the caveat would not
o
be removed


Provide advice to development ltd that it
should serve notice under s 126 (2): the hurry up notice
Enforces the caveator to bring
proceedings within 14 days rather than 3 months
Question 6.2
Monica, a partner in a Queensland law firm, and her husband, Toby, bought a house
in Brisbane in 2005 for $800,000. The property was registered in Toby’s name
(indefeasible title) and is encumbered by a mortgage in favour of Bank of Brisbane
Ltd (indefeasible title). No certificate of title has been issued.
The couple separated last month. Toby moved out and Monica continues to live in
the house.
After Toby left her, Monica resolved to spice up her life by buying a new Porsche for
$400,000. To finance her purchase, Monica forged Toby’s signature on a second
mortgage over the property for $380,000. (raud)
No questions were asked when she presented the forged mortgage documentation
to one of the bank’s managers, a Mr Petersen, because he knew the couple well
from the local church and had dealt with them in the past when they took out loans
for holidays and other expenses. (careless mortgagee) Monica did not mention her
separation from Toby and she told the bank manager that Toby was very excited
about splashing out on a new car.
That night Toby was sitting in his local pub drinking beer. When one of the bank’s
female employees approached him to ask cheekily whether he might give her a ride
in the new Porsche he became suspicious.
He called Monica, who told him that she feels entitled to the car.
He now seeks your advice. You have done a title search, which reveals that the
instrument of mortgage in favour of the Bank of Brisbane Ltd has been registered.
Advise Toby of his legal position and of any action he should take.

Pursuant to s 184, Toby is RP takes interest subject to other registered
interests of bank mortgage, unless any of the exceptions apply
o
Fraud exception

Must be attributable to RP – not enough to show someone
was merely induced by fraud to affect registration: Mercantile v
Mutual; Grgic v ANZ
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

o


o




RP is bank; any fraud by bank or its agents? Here the fraud
cannot be shown, but is by Monica and Bank has no knowledge or
involvement
Cannot be relied on to set aside mortgage
Personal equity exception
Must be legal or known equitable cause action raiseable
against the bank: Mercantile; Grgic
No cause of action – bank did nothing more than what they
normally do
Careless mortgagee exception
S 185 (1A): RP will not take benefit of indefeasibility where it
has not complied with requirements of s 11A or s 11B of the Act
S 11A: circumstances whereby lender takes new mortgage
s 11B: circumstances where there is a transfer of mortgage
(I.e where RP wants mortgage to move from one bank to another
because second bank provides better rate of interest or first bank is
running out of money_
S 11A releevant

Requires mortgagee to take reasonable steps to
ensure the person who executed the instrument of mortgage as
mortgagor is identical with the person who is or is about to
become the RP of the lot or interest in a lot

I.e is the person who is purportedly granting the
mortgage to the bank actually a person who is able to, a RO in the
land?

Bank manager has not done these steps
because he solely relied on Monica's word rather than seeking
proof that Toby has executed the mortgage

Person needs to cite the mortgagor and also
100 points of identification – not done


o


As careless mortgagee exception applies, bank's
entitlement to the mortgage will be set aside and it will not be able
to enforce mortgage against Toby
This section was made because it filled the gap
where the fraud exception could not be invoked even though
there has been quite careless dealings
Remedies
S 188: compensation for deprivation of a lot or an interest
in it

Toby still RP, therefore not deprived and also
mortgage set aside and removed from register – so has not been
deprived in whole or partially
188A: compensation for loss or damage
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
Therefore not invoked because he is still RP, property
burdened for temporary period but difficult to prove any damage
sustained
Bank


S 188: no compensaiton available to bank because s
189 (1) (ab) compensation not available where loss caused by own
failure to comply with s 11A
Question 6.3
Drafting exercise: Development Ltd is the sole registered owner of a parcel of vacant
land in Enoggera that it has contracted to sell to William Stanley Baldwyn and Nellie
Alma Baldwyn for $640,000.
The property is located at 112 Grant Avenue, Enoggera, and is more particularly
described as Lot 2 on RP234567, County Stanley, Parish, Enoggera, title reference
number 98765432.
The purchasers will take as tenants in common in equal shares.
You are instructed to draft the Form 1 Transfer (a blank copy of which can be found
online) that will be used to effect the transfer of this property to the purchasers. You
have not at this stage been asked to complete the Form 24 Property Information
document is lodged with a Form 1 Transfer.
You are also to explain to your client the obligations the witnessing officer must be
aware of under section 162 of the Land Title Act 1994 (Qld).
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LEASES 1: LEASES (INLUDING INDEFEASIBILITY)
Question 7.1
Development Ltd has just finished the first stage of a commercial and retail precinct
in its Nirvana development and has negotiated a number of arrangements with
prospective tenants. Development Ltd has engaged QUT Lawyers review the
arrangements and advise it on a number of issues.
a.
Development Ltd entered into an agreement described as an Agreement For
Lease with Eat Cheap Pty Ltd (‘Eat Cheap’), an Australian company that runs and
franchises a restaurant chain and which is hoping to compete with McDonald’s on a
global scale. The Agreement For Lease contains a term that provides that it is
‘subject to a formal lease for 5 years being signed by the parties’ prior to
commencement.
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The Agreement For Lease contains a provision requiring Eat Cheap to undertake
and to fit out the premises so that Eat Cheap is ready to begin trading from the
premises by the centre’s grand opening on 1 July this year. The Agreement For
Lease also provides that time is of the essence.
Eat Cheap has advised Development Ltd that due to a late start by its
subcontractors, it will not be ready to begin trading in time for the grand opening.
Development Ltd is having second thoughts and wants to know the legal status of its
agreement with Eat Cheap.

Requirement that the agreement is 'subject to a formal lease for 5 years
being signed by the parties'
o
Masters v Cameron has relevance during the negotiation stage –
several different categories whereby it might be that the parties have
formed a deal
1.
Parties have reached finality on all terms and intend to be
immediately bound by the performance of those terms, but at the
same time propose to have terms restated in a form which will be
fuller or more precise but not different in effect

If our lease contains a term thatt is say its subject to
a lease being signed into, they do not intend to be immediately
bound even though Development had let Eat cheap commence
work
2.
3.

b.
Parties have completely agreed upon all terms of the
bargain and intend no departure from or addition to that which their
agreed terms express or imply, but nevertheless have made
performance of one or more of the terms conditional upon the formal
execution of the document
The intention of the parties is not to make a concluded
bargain at all unless and until there is an execution of a formal K

Likely the third category because there is only an
intention to conclude the agreement until the lease is signed

However if we say it is this category of Masters, it is
not actually a lease
AFL requires respective lessee to make sure the fit out is ready for the grand
opening, with time being of the essence
o
This means its an essential term – if they do not do in time, the
other party can terminate
o
Development Ltd would be able to terminate the whole of the
arrangement based on the breach of the essential term
A document entitled ‘Lease’ has been signed between Aroma Florals Pty Ltd
and Development Ltd for a small space in the middle of the retail area on the first
floor for a florist’s shop. The agreement permits Aroma to operate from 1 July this
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year paying weekly rent of $500 for 1 year. The space does not have any permanent
fixtures and Aroma is required to store the counter and any buckets for flowers in an
adjacent store room each night. Aroma is given the key to the store room. No other
tenant has a key to the store room. Development Ltd has a new tenant willing to pay
more for the area but requires the space immediately.
Can Development Ltd terminate the agreement and demand possession
immediately?
Students are not required to consider the provisions of the Retail Shop Leases Act
1994 (Qld).

Subject matter of the lease needs to be clearly identified

Louis v Bell (horse stable; designated area not clearly defined)

Raddaich v Smith

Therefore it is a license and can be terminated because Aroma doesn't
have a pty interest in the area and Aroma would not be able to get specific
performance as opposed to a lease; Aroma might have action for breach in
termination, but that would not leave it open to an action in specific
performance

Raddaich v Smith discusses differences between lease and license and
their remedies
c.
Etraders Pty Ltd signed a Letter of Intent to Lease to occupy a large area on
the ground floor at the back of the building as a warehouse for its growing online
business. The document stated:
Etraders agrees to lease shop 4 on the ground floor of Nirvana Plaza from
Development Ltd on the following terms:
Term: 4 years + 2 options of 4 years each
Commencement date: 1 July [this year]
Rent: $200,000 per annum
Rent review: increase of 4% per annum on 1 July each year
Use: storage and warehouse
Lessee to pay for fit out and ‘subject to approval of lease by lessee’s solicitors’ by 1
June [this year].
Development Ltd also signed the letter of intent.
i.

o
o
Can Development Ltd enforce the terms of the Letter of Intent to Lease?
General issues
Act of signing agreement
Interplay between ss 11 and 59 of PLA

Grant of a lease to be enforceable against the lessee
must comply with these sections in being in writing and signed

S 11 is focused on the PERSON CREATING
INTEREST: No interent in land be created/disposed except by in
writing signed by the person creating: ss 11 (1)(a）
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

ii.
Would it make any difference if Development Ltd had not signed the letter of
intent?

d.
S 59 focused on the PERSON TO BE CHARGED: No
action shall be brought unless it is signed by the party to be charged:
s 11
Duff v Blinco explains difference: involves a profit
a prendre, but principles can be applied to leases

Note its called "Letter of Intent" - is it a lease?
o
Must satisfy s 11 – grant must take
immediate effect...commencement says its 1 July this year
o
To comply with s 59 must be sufficient
writing to form terms of lease – satisfied here
o
Signed by both parties – complies with
both sections
o
HOWEVER, it is "subject to approval of
lease by lessee's solicitors"

Condition precedent or
subsequent? Traditionally subsequent – all indicators
suggest this is an enforceable lease
S 59: only requires it to be signed by the party to be charged aka the
lessee
Development Ltd’s previous property manager signed up a friend for the
prime space in the centre to operate a coffee shop. An agreement to lease was
signed containing provision for the names of the parties, a description of the
premises, the rent and outgoings and it provided that it commenced in 1 July “for
such duration as the lessee requires” and “on such terms as customarily
apply to leases of this kind”.
Development Ltd is not happy with the rent and wants to cancel the deal. Is there an
enforceable agreement?

o
o
o

For such duration as the lessee requires:
Duration has to be for a certain period: Lace v Chantler where
lease was invalidated because it was stated to go for duration of war
and who knows how long it would go on for
As long as you can identify with accuracy when it begins and
ends its fine – so for example "when the fit out is completed" would be
fine
Needs also to have clearly identifiable commencement date
On such terms as customarily apply to leases of this kind
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o
Could be enforceable because there are commercial practices
which people commonly adopt – so wouldnt be unenforceable because
of this term
-> Development Ltd could cancel the deal

Question 7.2
Development Ltd has another commercial building in a previous development,
Haven Island, and is looking to transfer title to the building to its property investment
company, Property Investments Ltd. As at 1 June on the proposed date for
settlement there will be 5 tenants.
(a) Tenant 1 has a lease for 6 years expiring on 30 September 2018. The lease was
never registered because the tenant did not pay the registration fees.
(b) Tenant 2’s lease for 5 years was registered, but the lease has expired. Tenant
has been paying rent on a monthly basis for the last 3 months.
(c) Tenant 3 has a lease for 2 + 2 + 2. First lease was registered and is currently in
the second term of 2 years with an unregistered lease. There was no amendment of
the original registered lease. The second option has not been exercised.
(d) Tenant 4 has a lease for 3 years plus on option for a further 2 years. The lease is
not registered and is currently in its second term of 2 years.
(e) Tenant 5 has a lease for 5 years with an option for a further 5 years. The tenant
has exercised the option for the second 5 years but the next 5 years is to commence
on 1 July. The lease is registered.
Property Investments Ltd is aware of each of the status of each of the
arrangements.
If Development Ltd merely signs a transfer in favour of Property Investments (to
keep paperwork to a minimum) what is the legal position of each lessee at
settlement and after registration of Property Investment as the new registered owner
of the land in fee simple?
In the case of each lease consider whether Property Investments Ltd is bound by the
lease and any options.
(a)

o
o
Unregisted lease: s 185 (1) (b) provides exception to
indefeasibility of RO in favour of holder of short lease; since it is for six
years it is not a short lease and does not take benefits
When property investments becomes the RP it takes the
indefeasible subject only to other registered interests; so won't be
subject to tenant's 1's lease
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


Can Property Investments eject tenant 1 then? Depends on
whether they accept any rent when they become RO: s 129 PLA
tenancy
If they accept rent it would be a s 129 tenancy, but they
could terminate it by 1 month's notice in writing
If not, they could terminate them at any time
(b)

o
o
o
Depends on whether there is a holding over clause on the lease
If there is, it would create a month to month tenancy, but it could
be terninated by a month's notice in writing: s 134 PLA
If no express holding over clause in the expired agreement, there
would be a tenancy with no agreement as to duration - could terminate
within 1 month's notice: s 134 PLA – effectively no difference between
(a) except different provision invoked
©

o
o
o
o
o
o
Done with first term and we are within second term
Second term is a short lease and operates as an exception to
indefeasible title: s 185 LTA
Because the first lease contains two options and the first lease
was registered, both the options take a benefit into indefeasibility – it
attaches to what is recorded in the registered lease; both the term and
the options
When property becomes RO, they take the land subject to other
registered interests – one of the registered interests contains the
options so they are bound by the two options
Tenant 3 is entitled to exercise the second of those two year
options
Relevant provisions are ss 184, 185
(d)

o
o
Lease for 3 years plus option for further 2 years; lease no
registered and currently in second term
S 185 (1)(b) short lease exception would apply – Property
investment would be bound by that two year lease
(e)

o
o
o
o
Tricky thing here is that Property investments will become RO
either on or a few days after 1 June
Tenant 5 has exercised the second option for that 5 yr period but
that period can only commence on 1 July
Tenant 5 has an equitable interest – an option to renew the lease
would be binding on Development Ltd because of a privity of K between
the two parties BUT is it enforceable against property investments
where there's no privity? NO
Tenant 5 is stuck between two different stools because by the
time Property becomes RO, it still only has an equitable interest in the
second 5 yr period which has not yet commenced; if it had commenced
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before property became registered, it would be ok because it would
have an enforceable interest in the land

Here it does not: s 184 (2) - RP taking interest free of any
unregistered interests of the land of the land even if they had notice
of those unregistered interests

Different to cases of Bahr v Nicolay and Valbirn v Powprop

Valbirn where involved covenant made by new RP to
abide by the existing leases in any options that attached to those
leases

In Bahr, the new RO agreed to be bound by the right
to retransfer on demand

Re De Jersey deals with this scenario
LEASES 2: COVENANTS & ASSIGNMENTS

What we are doing this week
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o
o
Gain an understanding of the usual implies and express
covenants in leases – particularly the covenants for quiet enjoyment,
non-derogatio from the grant and repair (q 8 (a) (d))
Gain an understanding of the impact on the enofrcement of
covenants following an assignment of the lease or transfer of the
reversion
Question 8.1
Development Ltd owns several retail buildings on a site adjacent to the Nirvana
development. This was part of another neighbouring development. The buildings
include a service station, fast food stores and convenience store. Five years ago
when the site was leased, the highway to the Gold Coast was directly adjacent to the
building bringing in a lot of customers. The service station is leased to Fuel Co under
a 10 year registered lease. The rent provision in the lease provided for rent of
$60,000 per annum with rent to increase at 5% a year. Development Ltd used its
standard lease (You will need to refer to the Lease on Blackboard).
A number of issues have recently arisen which Development Ltd has referred to its
solicitors QUT Lawyers. You are requested to advise Development Ltd.
a.
The gutters on the building are constantly blocked with leaves from gum trees
located on an adjacent parkland owned by Development Ltd. Development Ltd has
refused to trim the trees and Fuel Co has not cleaned the gutters and as a result
they overflow in moderate rain fall. The guttering is now corroded and requires
replacement. Development Ltd has served a notice on Fuel Co requiring the gutters
to be replaced. Fuel Co is denying responsibility claiming it is part of Development
Ltd’s responsibility to replace items of a structural nature. Fuel Co is also alleging
that the problems are due to defects in the construction of the building that were
present at the time of entry into the lease. Issue: Who is responsible for replacing
the gutters?

Authority:
o
Ss 105 & 107 PLA
o
The terms of the lease itself
o
Common law

Quiet enjoyment

Cl in lease that deals with quiet enjoyment: cl
10.1 (a): gives Fuel Co quiet enjoyment (or quiet possession) of
the premises during the term of the lease, subject to the rights of
Development Ltd in the lease

Cl follows the law in that the covenant for quiet
possession would be implied if not express

Aussie Traveller Pty Ltd v Marklea: authority
for quiet enjoument

Non-derogation from grant
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By virtue of the fundamental relationship of

landlord & tenant




o








Do something upon adjoining land owned b
Development Ltd to make the leased area materially less fit for the
purpose for which it was set
Mainly in relation to adjoining properties
Martins Camera Corner Pty Ltd v Hotel Mayfair
Ltd was in relation to block gutters; was breach of quiet
enjoyment
Application
Covenants implied by PLA
Payment of rent
Repair and replacement by tenant: s 105 (1) (b) PLA
Lessee has obligation to keep premises in
good and tentable repair having regard to:
o
Condition at commencement
o
Damage from fire, flood, storm,
lightening and tempest
o
Reasonable wear and tear
What is repair: premises must be kept in a state of
repair so that it can be used safely by class of persons for which
premises occupied for, having regard to age, character and locality of
premises: Proudfoot v Hart
The condition at the beginning of the lease is relevant
to the state of repair required
Repair is the renewal or replacement of defective
parts that are not substantially the whole of the subject matter (as
opposed to renewal, which is the reconstruction of substantially the
whole of the subject matter)
The distinction is a matter of
degree: Lurcott v Wakely & Wheeler; premises let where external wall
determined by council to be dangerous because not properly affixed
premises; landlord asked tenant to replace; tenant was responsible
because in terms of the entire premises replacing one wall Iis not
substantial, so they had to undertake it

Cf reconstructing substantially the whole of
the premises
NB Clause 8.5: exempts Fuel Co from havign to
undertake structural work to the premises or building unless that
work is required by Fuel Co's "use or occupation of the premises
(not relevant here) or the act, omission, negligence or default" of Fuel
Co

Clause applies

Arguable the guttering are part of the
structure and would be D's responsibility to main and keep in
repair
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

o
b.
Subject to Fuel Co's failure to keep them free
of leaf litter (I.e if negligence)?
Express covenant read subject to overriding
implied obligation
o
Cl 8.1 read subject to D's overriding
implied obligation not to derogate from grant
o
Arguably here, D's failure to trim trees
has caused gutters to fill with leaves, which led to pooling
water in guttering and corrosion
o
This may be a derogation from the grant
by D = liable and not affected by cl 8
Conclusion: Fuel Co may not be liable to repair the
guttering damage regardless of cl 8
The adjacent fast food store was running a promotion for the month of May
which resulted in a line of cars past the service station blocking access for hours at a
time. Fuel Co has complained to Development Ltd about this nuisance and about the
fact the fast food store has relocated its gas burners too close to the fuel tanks in the
service station. Fuel Co has been advised by its insurers that this will result in an
increased premium for its public liability insurance. Fuel Co is claiming Development
Ltd is responsible for this cost.

Quiet enjoyment – lessor might be substantially inferfering with
lessee's possession fo premises because of Fast food blocking access to
it

Non derogation from grant
o
Fuel tanks -> Harmer v Jumbil; could be a breach of
covenant to lease to fast food store because of it constructing gas
burners near fuel tanks
o
Blocking cars -> although lessor (development ltd) did not
directly authorise fast food activity of car line, because they did not take
steps to eliminate or prevent this from happening which are interfering
with the lesssee's occupation

Might be awarded damages for breach of covenant


Issue: Is D responsible for the fast food store's conduct AND if so, what
damages are available?
Relevant law/authority
o
Ss 105 & 107 PLA

None relevant
o

Terms of the lease itself
Cl 10.2 (b) (iii) fast food store covenants with D "not to do
anything that interferes with, obstructs access to, damages or
overloads the services of the Building or the Buildings of the
facilities including the Common Areas"

Common Areas important to define
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o
o


Cl 1.1: "Common Areas" defined as "those
parts of the Building or Land which the lessor provides for
common use from time to time"
"Land" means the land dscribed in item 2 and
any additional land the Landlord decides to develop, manage
or operate in connection with the Building"
NB cl 11.3 (b): D "may refrain from enforcing the
Lessor's rights against other lessees or occupiers who are
interfering with (Fuel Co's) use and occupation of the premises
o
I.e the landlord does not have to act upon
another tenants breach
o
But read subject to overriding implied
obligation not to derogate from grant
Conclusion: by not taking action against the fast food store
prevent the blocked acces to the service station D is in breach of the
implied term not to derogate from the grant notwithstanding cl 11.3
(b)

It is essential for vehicles to access the service
station and regardless of cl 11.3 (b), development ltd would have
to take action to ensure acess: Aldin v Latimer Clark Muirhead Ltd
where tenant merchant had drying sheds and landlord undertook
works

Also, the fact Fuel Co's insurance premiums have
increased is not a derogation from the grant unless the cost
would be so high as to make the operation of the service station
business impossible or prohibitive
not merelu moere expensive: O'Cedar Ltd v Slough Trading Co
Ltd where tenant paid portion of rent in contribution to insurance
policy landlord took out in relation to business carried on and
development generally; landlord let to neighbouring tenancy that
made it impossible to maintain insurance; because the landlord
was undertaking the business in a business-like manner it was
not illegal; fact the insurance premium was not maintainced was
not a breach because it did not affect premises subject of the
lease
o





Common law
Quiet enjoyment:
Cl 10.1 (a) gives fuel co quiet enjoument (or quiet
possession) of premises during the terms of the lease, subject to
rights of development ltd in lease
Cl follows the law in that the covenant for quiet
possession would be implied if not express: Aussie Traveller
Non-derogation from grant
By virtue of the fundamental relationship of landlord
and tenant
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
c.
Do something upon adjoining land owned by
development ltd to make the leased area materially less fit for the
purpose for which it was let: Martins Camera Corner v Hotel
Mayfair
Development Ltd after notice was given to Fuel Co commenced an extensive
renovation and extension of the building. Scaffolding was erected around the
building and also in front of the large sign for Fuel Co facing the highway. This
caused a loss of custom. As part of the renovation the electricity was turned off for
significant periods over the course of1 month. Each time Fuel Co had to close the
service stating as electricity was required for the fuel pumps and air conditioning.
Staff were required to go home or wait around until the electricity was turned back
on.

Issue:
o
Is D liable for Fuel Co's loss of custom etc?
Relevant law/authroity:
Ss 105, 107
Terms of lease
Common law

o
o
o

o



Application
Covenants implied by CL
Quiet enjoyment
Cl 10.1(a) gives fuel co quiet enjoyment (or
quiet posession) of premises during term of lease, subject to
rights of D
Clause follows law in that he covenant for quiet
possession would be implied if not express

Covenants implied by PLA
None relevant

Clauses in lease
Quiet enjoyment cl 10.1 (a), subject to rights of


D
"if D takes reasonable steps to minimise

interference"


o
The construction of scaffolding around
building and osbcuring of large sign fronting highway would be
breach of covenant for quiet enjoyment and cl 10.1 (a): JC Berndt
Pty Ltd v Walsh
Whether exemption in cl 11.4 from liability for
breach of cl 10.1 (a) would apply depends upon q of fact as to
whether fuel co could still carry on business with temporary
inconvenience
Conclusion
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



d.
Might not be the case where electricity supply to fuel
Co was cut for "significant periods over 1 month"
Would lead to measurable loss of profits
In which case D (if they had not made alternative
arrangements for supply of electricity for fuel co) would be in breach
of cl 10.1 (a)
Breach would attract damages for loss of profits. Qs
of fact
Fuel Co without the knowledge of Development Ltd entered into an
arrangement with Discounters Pty Ltd to operate the business in partnership.
Discounters provided a new range of products to sell and share expenses of the
business. The business name is changed to reflect the partnership and new bank
accounts are opened. The rent is paid by the new business from this account.
Development Ltd has just discovered this arrangement. Is there a breach of clause
12.1 of the lease?

Issue: does partnership arrangement constitute an assignment of
the lease between D and Fuel Co to the new entity?

Authority
o
Terms of lease

Application
o
Cl 12.1 tenant cannot 'licence or part with possession of the
premises or deal with its interest in the premises except in accordance
with clause 12.2
o
Cl 12.2 tenant can only transfer lease with landlords
consent and on satisfaction of conditions in clause

o
o
o
o
o
Conclusion
Cl 12 beached
Partnership operates on business and creates a different
legal entity to fuel co (tenant named on lease)
D's consent neither sought nor obtained
Lam Kee Ying Sdn Bhd v Lam Shes Tong whether licensing
of an area during the terms of a lease is assignment; here
it wasnt because licensing is not a possessory right
Unauthorised assignment exposing the lease to forfeiture
particularly as consent was not even sought
e.
e.
Fuel Co approaches Development Ltd for consent to assignment of the lease
to Gascorp which is given by way of letter. Gascorp is aware that Development Ltd
and Fuel Co entered into an agreement to amend the registered lease to reduce the
rent by 50% due to the renovations taking place over the next year. No formal deed
of consent to assignment is signed. The transfer of the lease is registered.
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After Gascorp commences business Development Ltd demands the full rent under
the lease. Gascorp refuses to pay. Can Gascorp insist on the reduced rent?

Issue: is the agreement to reduce the promotional levy a covenant
that attaches to the land?

Authority
o
Terms of the lease
o
Terms of deed of covenant (none)
o
Sections 62 LTA

o



o





o




Application
Has consent been obtained?
Formal consent sought and obtained in form of letter
BUT does not comply with requirements of cl 12.3
(deed of covenant required)
Transfer of lease – registered
Privity of K and privity of estate?
No deed of covenant = no privity of K between D
and Gascorp
Privity of K remains between D and Fuel Co (as Fuel
Co not released from lease)
Privity of estate exists between parties as Gascorp is
in possession as tenant with D's consent
As transfer is registered = s 62 applies and 'all the
rights, powers and privileges and liabilities of [Fuel Co] in relation to
the lot vests in [Gascorp]
S 62 (3) LTA: without limiting subsection (1), the
registered transferee of a registered lease is bound by and liable
under the lease to the same extent as the original lessee
Application of s 62 LTA
Some uncertain about operation of s LTA and whether
it operates to transfer rights and liabilities under personal covenants
not just covenants that touch and cocnern the land
s 62 only operates to transfer the covenants that
touch and concern the lessor's estate in the land and not personal
covenants: Jodaway Pty Ltd v Langton (leases);
Measures McFayden (mortgages); Queensland
Premier FReehold Mines Pty Ltd v French (mortgages)
But s 62 (3) purports to bind lessee upon transfer of
the lease 'to the same extent as the original lessee'
Karacominakis v Big Country Developments
(considered NSW equivalent to s 62 LTA):

[134] That is the position at common law, but
the position in the present cases turns on s 51 (equivalent of s 62
LTA) of the Real Property Act. It provides:
o
Upon the registration of any transfer, the
estate or interest of the transferor as set forth in such
instrument, with all rights, powers and privileges
thereto belonging or appertaining, shall pass to the transferee,
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

o


f.
and such transferee shall thereupon become subject to and
liable for all and every the same requirements and liabilities to
which the transferee would have been subject and
liable Iif named in such instrument originally as
mortgagee, chargee or lessee of such land, estate or interest
[135] The effect of s 51 is that the transfer of
a lease creates privity of estate and privity of K between the
lessor and the transferee of the lease: a statutory replication of
the privity of estate co-existent with privity of K between the
lessor and the original lessee
Its effect is not expressly restricted to creating
privity of K only for so long as there is privity of estate, that is, for
so long as the transferee is registered as proprietor of the lease
Application on how s 62 should be applied
Reference made to: Murphy v Harris

A transferee of a lease argued that the
equivalent provision in s 61 of the Real Property Acts 1861-1877
(Qld) had relieved him of his CL obligation to indemnify the lessee
against the lessee's liability to the lessor for the transferee's
breach of covenant, on the ground that the provision freed the
lessee from all further liability

Argument was rejected – so we are left with no
clarity
'Does the covenant re promotional levy touch and
concern the land or is it only personal?'

A covenant that touches and concerns the land
will be one that affects the nature, quality or mode of use of the
land and is not merely collateral to that use

The obligation in the lease in this case is a
requirement to pay money to the lessor for a purpose that is not
directly concerned with use of the premises

Arguably a personal covenant

Whether Gascorp is required to pay will
therefore depend upon the effect of s 62 (1) when read with s 62
(3) LTA

If the approach to s 51 of the Real Property Act
1900 is followed, the lesee will be liable on the personal
covenants and required to pay the promotional fund amount
Development Ltd has been offered a great price by Chinese billionaire
investor, Jing Juh for the complex. Due to increased building and development costs
in Nirvana, Development Ltd decides to sell. Under the contract of sale Development
Ltd assigns to Jing Juh all its ‘rights and benefits’ under the lease. No tripartite deed
is signed by the parties and the guarantor (who is a director of Fuel Co) does not
provide formal consent to the transfer.
i.
After registration of the transfer will the guarantee given under the
lease by the director be enforceable by Jing Juh for breaches of the lease
by Fuel Co?
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i.
ii.
Issue: whether the guarantee of the Fuel Co director is a covenant
which relates to the land
Authority

S 117 PLA

S 62 LTA

Gumland Property Holdings Pty Ltd v Duffy Bros Fruit
Market
iii.

i.
i.
ii.
Application
Does the guarantee touch and concern the land?
o
a guarantee can be treated as a covenant that
touches and concerns the land Iif it guarantees the
performance of covenants that do not touch and concern the
land under s117 PLA
o
Conclusion

Here the benefit of the guarantee without a
tripartite deed of covenant creating privity of K between
Fuel Co and Jing Juh

Jing Juh = sue the guarantor directly if Fuel Co
breached the lease
Fuel Co paid a security bond to Development Ltd under clause 4.1 at
the time of entry into the lease. Upon expiry of the lease will Fuel Co be
able to claim the security deposit paid to Development Ltd from
Jing Juh under clause 4.4?
Issue: is the right to recover a security deposit a personal right or
does it tocuh and concern the land?
Authority

s 118 PLA

Hua Chiao Commercial Bank v Chiuapua Industries Ltd
iii.


Application
Is the right to recover the security deposit personal or does
it touch and concern the land?
o
The right to recover a security bond by a lessee is a
personal right between the original lessor (Development Ltd)
and the lessee (fuel co) and is not a covenant which touches
and concerns the land
o
Lessor's liability to return the security deposit does
not pass with the transfer of the freehold as the burden of
personal covenants cannot be assigned without the assignee
expressly creating the obligation
o
Section 118 PLA only applies to covenants that touch
and concern the land
o
If fuel co wished to recover its security deposit at the
end of the lease, it would have to sue development ltd directly
What should have happened on transfer of lease?
o
Jing Juh, Development and Fuel Co should have
entered into a tripartite deed of covenant
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o
o
The deed would have novated the obligation to repay
the security bond to Jing Juh, in which case fuel co at the end
of the lease could have sued Jing Juh directly upon the
novated covenant to repay
Hua Chiao Commercial Bank Ltd
v Chiuapua Industries
LEASES 3: COVENANTS & TERMINATION
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Question 9.1
Development Ltd is has issues with the tenants in the service station and fast food
complex considered last week and is now seeking advice about steps to terminate
the leases.
Consider each of the following situations.
The convenience store is leased to Load & Go Pty Ltd under a 3 year
lease which has expired on 1 December.
There is no holding over provision under the lease but Load & Co has remained
in possession and continued to pay rent on a monthly basis until March which
Development Ltd accepted.
No rent has been paid after that date.
Development Ltd has heard rumours that Load & Go is secretly negotiating a new
lease at premises down the road and will be leaving in the next month.
Development is in the process of negotiating a replacement to eject the tenant and
put in a new national operator who has agreed to lease the premises provided they
can take immediate possession.
Can Development Ltd eject Load & Go immediately?
a.
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b. Fuel Co is required to pay rent in advance on the first day of each month. The
lease was entered into on 1 January 2010 for 10 years and is registered. The rent
under the lease for 2016 is $80,405 per annum ($6700.40 per month). The payment
of rent for the last 6 months has been erratic. The following table sets out details of
the rent transactions after the September 2015.
Date
Rent Received
17 Sept
$4000
15 November $8000
19 December $6000
2 January
$4000
2 March
$10,000
20 March: On 20 March, Development Ltd issued a Notice in Form 7 of the Property
Law Act 1974 which, in substance, states that the lessee is in breach of the covenant
to pay rent on 1 September, 1 October, 1 November, 1 December, 1 January, 1
February and 1 March and that the covenant can be remedied by the payment of
$14 902.80. The Notice gives the lessee a period of 5 days to make good the
arrears.
21 March: The Notice is served on 21 March. No rental payment is received by
26th March.
1 April: On 1 April, the lessee pays a further $3000.
5 April: As at 5 April the total amount outstanding is $18,603.20 (taking into account
the payment due on 1 April).
6 April: On 6 April, Development Ltd’s CEO telephones the lessee demanding
possession of the premises. The same day, the Development Ltd commences an
action for possession against Fuel Co who, upon being served with the application
responds by seeking relief against forfeiture.
If this goes to trial and no further money has been received from the lessee,
advise the lessor of the chances of success in maintaining the action for
possession taking into account the factors which may be considered by the
court in the cross application for relief against forfeiture.
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(c) One of the fast food stores leased to Burgers on the Go Pty Ltd has been
successfully prosecuted for a breach of the health regulations. The lease is a
registered lease for 4 years. Under the lease this is a breach of the covenant by the
tenant to comply with all laws and regulations related to use of the property in clause
5.2. (See lease on Blackboard) To remedy the problem Burgers on the Go has made
alterations to the premises to extend the exhaust system without consent of
Development Ltd. Can Development Ltd terminate the lease for these breaches as
they have an offer from Hungry Jacks to take up the space at a higher rent? What
steps should they take?
1. Lease: Fixed
2. Breach: cl 5.2
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MORTGAGES 1: (INCLUDES EQUITY OF
REDEMPTION)
Question 10.1
Tom is the registered owner under the Land Title Act 1994 (Qld) of a dilapidated
dwelling house. He does not have the funds to have it refurbished. It is worth
approximately $500,000 in this condition but with refurbishment would be worth
$800,000 on the open market.
The house is subject to a registered mortgage to Tom’s bank, Eastern Credit Ltd.
The sum of $450,000 remains outstanding. Tom is in default under the principal
security (a mortgage over his business premises) and Eastern Bank Ltd has served
Tom with a Notice of Exercise of Power of Sale demanding repayment of the
$450,000.
Tom approached his brother Jack for help. Tom wishes to keep the house and
refurbish it for sale. Jack agrees to discharge Tom’s liability for the mortgage debt to
Eastern Credit Ltd upon the following terms.
1.
2.
3.
4.
Tom enters into a contract of sale to sell the dwelling house to Jack for
450,000.
Tom is to execute a Transfer in Form 1 in favour of Jack, and upon the
payment by Jack of $450,000 to Eastern Bank. Jack can register the transfer into his
name.
Tom has an option of a re-conveyance of the property within two years. To
exercise the option, Tom must pay Jack $450,000 plus compensate Jack for any
money Jack spent on refurbishing the property prior to the option being exercised.
This condition is contained in an informal letter signed by both Tom and Jack. There
is no consideration expressed for the grant of the option.(fact no consideration
expressed is immaterial because the option is part of a larger transaction
between the two; fact the condition is contained in a separate document is
immaterial because any consideration that is required will be found in K of
sale
Jack is to keep any rental money received for the property during the two-year
period, but this is to be credited against any amount Tom must pay to gain a
conveyance.
About 26 months later, Jack has spent $50,000 on repairs and collected $30,000 in
rent from the property. The property is now worth $900,000 in its present state. Tom
proffers Jack $470,000 and demands a re-conveyance. Jack claims that the
transaction is an outright sale and tells Tom: “You can keep the $30,000 but you are
not getting the property back.” Tom seeks your advice.
In advising Tom, you are to answer to the following questions.
a.
Can a transfer be made by way of charge in respect of Torrens system land?
i.e can a transfer of legal title be made by way of charge? Yes, a mortgage
of torrens land can be affected in the same way as a mortgage in respect of old
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system title - i.e by transferring legal title to the lender and placing obligation
on them to retransfer title back once the debt has been paid
How this works in the Torrens system: the mortgage of Torrens title land can
be affected by registering instrument of the transfer of legal title from the
mortgagor (borrower) to the mortgagee (the lender) and at the same time
entering into a separate agreement that confirms that the intention behind
the trransfer of legal title is to give the property as security only: Abigail v
Lapin pages 65 - 66
b.
c.
What must be proved to demonstrate that the transaction is a mortgage and
not an outright sale?

Answered that already

Party's intention, contractually established, is that the transaction
is intended as a mortgage and not a sale: Kreglinger and New Patagonia
Meat and Storage Co Ltd where Lord Parker said 'Only if according to the
real intention of the parties, the property was to be held as a pledge or
security or payment of honey and as such to be restored to the mortgagor
when the money was paid, was the conveyance considered to be a
mortgage?

George Engelfield at page 27-28 Lord Justice Roma: 'it apepars to
me that the matter omits a very short answer if one bears in mind the
transactional differences between a sale and a mortgage or charge.
o
In a transaction of sale, the vendor is not entitled to get the
subject matter of the sale by returning to the purchaser the money that
has passed between them.
o
In the case of a mortgage or charge, the mortgagor is
entitled, unless he has been foreclosed, to get the subject matter of the
charge by returning to the mortgagee the money that has passed
between them.

Gurfinkel v Bentley at 113 (similar facts to these): involved the
question as to whether
o
a transaction by which the D became the proprietor of land
previously owned by the plaintiff was entered into for the purpose of
securing a payment of a debt lent by the P (arrangement which has an
equity of redemption) OR
o
Whether the P had sold the land to the D upon terms that he
should have an option to purchase it upon certain conditions
o
Pages 115-116 of Windeyer's Judgment

a court will be reluctant to hold that a bargain is not
as the party's expressed it. It will ordinarily take at their word,
persons who execute a particular agreement, unless it can be shown
by parole evidence that the parties adopted the document as
disguise or sham

Here it appears to be legitimate – a mortgage
arrangement to help Tom get through his financial difficulties for
2 years; Jack merely takes legal title to the premises as a security
to secure the payment of the debt that Tom owes him
What factors would you identify to support the conclusion you have reached?
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
o
o
o
d.

Factors are obvious
Clear from the existence of the informal letter which
contains the option that this was intended to be an arrangement
whereby Tom has the right to reconvey the property if he pays back to
the money which was the same amount described in the K as the
purchase price
Arguably letter is evidence that Jack was holding legal title
on trust for Tom, pending repayment of loan and any expenses that Jack
incurred by way of refurbishing the property
Arguably on Bahr v Nicolay, there's no need for separate
consideration in respect of the option to purchase (as we discussed
earlier)
How could Tom have avoided this issue arising?
SImple answer: Torrens system provides for a form of mortgage
which is a statutory charge
o
Torrens mortgage allows RO of property to maintain
ownership and create an encumberance in the form of a registered
mortgage or a charge in favour of the lender
o
That registered interest which affects the property in favour
of the lender, gives the lender the right to sell the property if the
borrower defaults on repayment
o
It has a convenient and efficient way of managing
mortgages which provides perfect recognition of rights for borrowers
and lenders
o
Using a conventional Torrens mortgage would have allowed
Tom to retain ownership of property and could have included a clause
that said that the amount borrowed had to be repaid in full two years
after borrowing
o
Upon tender of the amount due, Jack would have had to
release the mortgage or face a redemption action
o
If Jack refused, his registered mortgage would be subject to
the personal equity's section
Question 10.2
In May 2010, Tammy purchased a business from Jason for $400,000. Tammy only
had $100,000 of her own funds to put toward the contract price. Given the nature of
the business and the fact that it appeared to have been well overpriced, she had
difficulty obtaining a loan from a commercial financier.
Jason agreed to being paid the balance of the sale price owing ($300,000) by
accepting a mortgage from Tammy over the freehold and other assets of the
business. However, due to Jason’s complex tax arrangements, Jason wanted the
mortgage to be paid out in full after a specified date and only interest paid in the
meantime.
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At the settlement of the purchase on 1 June 2010, Tammy handed Jason a signed
mortgage over the business property being transferred into Tammy’s name. The
mortgage is dated 1 June 2010.
1.
2.
The relevant clauses in the mortgage deed read as follows.
The mortgagor (Tammy) shall repay the principal sum ($300,000) to the
mortgagee (Jason) on 1 June 2020.
The mortgagor shall pay interest upon the principal sum at the rate of 6% per
annum payable monthly in advance whilst the principal remains outstanding.
By 2105, Tammy has built up the business sufficiently and wishes to place it on the
market for $500,000. She eventually enters into a contract with Mabel to sell the
business (including the freehold) for that figure. The contract provides for Mabel to
take the assets of the business free from encumbrances. The settlement date in the
contract is 1 July 2015.
Tammy informed Jason of this sale and seeks a release from the mortgage on the
settlement date. Jason responds by refusing to agree saying, “We have a deal and
the terms of that deal place no obligation on me to release the mortgage.” Tammy
replies by telling Jason that if he doesn’t agree to a release that she will be in breach
of her contract with Mabel.
a.
Does Jason have to release the mortgage upon tender of the sum of
$300,000 on 1 July 2015?

Difficulty Tammy faces: having bought the business on 1 July
2010 and agreed she will not repay any of the principal of $300K before 1
June 2020 and shall repay some of the principal sum at that date -> having
entered into that arrangement, in 2015 built up business and wanted to
place it on mortgage

Fixed term mortgage she wishes to get out of

Settlement of purchase occurred on 1 June 2010 at which point
Tammy handed Jason an assigned mortgage over the business property
which was being transferred into Tammy's name

Tammy wants to sell business halfway through fixed 10 yr period
(cl 1) and wants to know whether she can end the mortgage early

Does he have to release?
o
Leading case on this point: Hyde Management Services Pty
Ltd v FAI Insurances Ltd

CJ Barwick 542: an agreement to repay oney lent on
a day certain imports in my opinion two consequences

That the lender may not demand payment
before that day

That the borrower may not without the
concurrence of the lender, repay the whole or any part of the
money borrowed before that day
o

She cannot force Jason to give a release of the mortgage
and redeem it prior to the date agreed
Another issue: does the arrangement render the equity of
redemption illusory?
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o


o
o
o
o
b.


c.


J Mason in Hyde v FAI: page 543
The rule at CL and in equity is that the borrower has
no right to repay the principal before the day named for repayment in
loan agreement unless the agreement itself gives him such a right
If before the K date for repayment the mortgagor
renders to the mortgagee the principal outstanding, interest up to the
K date and costs, the latter is not bound to accept the money and
reconvey the security
In Brown v Cole [1845] 62 ER at 424: court refused to make
a decree for redemption before the day appointed before that purpose
had arrived, holding that the mortgagor cannot before the time of
payment, insist on acceptance of a tender of the principal or take
proceedings to redeem
Knightsbridges Estates Trust Ltd v Byrne at 741 is to the
same effect
As is Kreglinger and New Patagonia Meat and Cold Storage
Co Ltd
Can the right to redeem be postponed: A covenant that
postpones the right to redeem will be void as a clog on the equity of
redemption provided it renders the right to redeem illusory, or not able to be
exercised in a meaningful way or is
oppressive/unconscionable: Knightsbridge where it was held that a loan
period of 40 years was not unconscionable or oppressive to the
borrower for the reason that the two parties were adults and had
entered into an arrangement as a consequence of their own free will

Here we have 10 years; not oppressive and as a
consequence cannot isnist on the release of the mortgage;

Placed herself in breach of K with Mabel
If Tammy did not repay the sum by 1 June 2020, what is her position?
Tammy will be in default
Mortgagor must give six months notice of intention to redeem
mortgage: Smith v Smith
o
Rule of equity that he or she must give this intention when
in default -> rationale is that it gives the mortgagee another opportunity
to find an investment
o
Cited in Hyde v FAI Insurances as being QLD law
How could Tammy have avoided this situation?
Difficult to have avoided this situation becausese she did not get
offered loan by bank and went with proposal Jason gave her
One view is that Tammy should have insisted upon the insertion
of the word "by" instead of "on"
o
Except the problem is that Jason wanted the money by then
so he probably would not have entered into the agreement
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MORTGAGES 2: (INCLUDING INDEFEASIBILITY &
PoS)
Question 11.1
Development Ltd granted a first registered mortgage dated 1 March 2012 to Giant
Bank Ltd over a large tract of vacant land totalling 15 hectares all comprised in a
single title. The mortgage is in the terms set out in the mortgage document on the
Blackboard site (in the CMD) and was granted to secure a loan of $2 million. The
land is to be used for residential purposes in the future.
Development Ltd has also leased two hectares of this property to Tenant Pty Ltd for
a period of two years from 1 July 2014. Development Ltd did not seek Giant Bank
Ltd’s consent to the lease.
The $2 million principal was borrowed to undertake infrastructure works on that land
like kerbing, channelling and the laying of underground pipes and wiring.
Development Ltd has been under financial pressure and is having difficulty repaying
the loan. In fact, Giant Bank Ltd had been in constant communication with
Development Ltd regarding an arrears of $120,000 principal and interest (comprising
four instalments of $30,000 each).
Giant Bank Ltd took action and served a Form 4 Notice of Exercise of Power of Sale
on Development Ltd on 3 March 2016
The covering letter and the Notice are on the following page.
You act for Development Ltd. You are instructed that Development Ltd may be able
to pay the sum of $120,000 within 30 days, but cannot raise $1,750,500 within that
period to comply with the demand. As well, Development Ltd will be unable to
remove Tenant Ltd before the expiration of the Notice period.
Write a short memo to Development Ltd advising of their rights to resist Giant Bank
Ltd taking any further action.
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
Note: Vacant possession means the removal of the tenant
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

Start by answering the following quesYon: if the only default that D has made is that it is
late on paying this $20, 000 and did not obtain consent to lease the land, why is Bank asking
for full mortgage to be paid up?
o
S 95 PLA: a mortgagee can take advantage of acceleraYon cl in cl 7.2 ("If any Event
of Default occurs then, during the period it subsists, at the opYon of the Mortgagee and
despite any delay or previous waiver of the right to exercise that opYon: (a) the secured
money becomes immediately due and payable on demand from the mortgagee; and
o
S 95 PLA provides relief -> if D seeks relief

(2) D has to tender that amount owing into court which they cannot do if
they do not have cash available

(3) Court has discreYon to grant relief that it sees \t
Lease invalid according to Bank: Cl 5.8 (c): "no consent to assignment without mortgagee's
prior wriaen consent, cause or permit any lessee or licensee under lease or license of
Mortgages Property to assign, transfer, demise, grant any sub-lease or license pursuant to,
mortgage charge or otherwise"
o
LTA s 66: excepYon to indefeasibility – even though lessee might have registered
lease, if it appears on the Ytle aler the mortgage is registered, the mortgagee is only
bound by the lease if they have consented to it
o
Cl 7.1 de\nes events of default – granYng of lease without consent of mortgagee is
breach of 7.1 (b) "mortgagor defaults in performing or observing any provision of any
Finance Document...and if that default is capable of remedy it has not been remedied
within [10] Business Days of its occurrence"

Presumably not capable of remedy in that period – in event of default

Giant Bank has the right of mortgagee to exercise power of sale
from 30 days of the noYce being given: s 84 PLA
o
This gives D opportunity to remedy Breach and also right to
get rid of tenant such as paying them to end lease early

Has Giant bank failed to do anything that would
invalidate s 84 noYce:

Done everything it needs to do




o
o
Tenant will have breach of K as cause of acYon
But D does not have to eject Tenant
Would it be a problem that there would be no privity of K between Tenant
and Giant Bank if Giant lel them?

A lease touches and concerns the land: Giant Bank could direct the
tenant to pay rent to it rather than the former lessor D

A few opYons:
o
Can sell the land with the tenant on it or;
o
Can eject the tenant;
o
Or take possession of land without intenYon to sell and
take rent from tenant
o
For purposes of this quesYon, it’s a sale – so they would
either sell land with tenant or eject tenant before selling
Essence of memo
S 84 notice is valid
Very little prospects of pursuing relief under s 95 PLA
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Tenant Pty Ltd will have action against you for damages in breach
o
of K
Question 11.2
On 15 March 2016, Development Ltd contacted Giant Bank Ltd advising that
Development Ltd wished to sell the property itself to avoid the publicity surrounding a
mortgagees’ sale, given that it is in the middle of a large marketing campaign in
relation to the sale of already constructed property.
Giant Ltd refused because one of its customers, Small Operator Pty Ltd, offered to
buy the property for $2 million. Giant Bank Ltd wishes to get the loan to Development
Ltd “off its books” before its annual audit.
Small Operator Pty Ltd’s directors know nothing of any dealings between
Development Ltd and Giant Bank Ltd. They are prepared to settle the transaction as
soon as documents can be signed, happy that money will be saved on auction fees
and valuations. Further investigations have revealed that Small Operator Pty Ltd has
agreed to pay Giant Bank Ltd’s legal fees and take the property subject to the lease
to Tenant Pty Ltd and that Giant Bank Ltd is lending $2 million to Small Operator Pty
Ltd to fund the purchase.
Development Ltd has been advised that the property has a market value of $2.3
million.
Without further contact with Development Ltd, at the expiration of the notice period, a
contract subject to the existing lease to Tenant Pty Ltd is signed between Giant Ltd
exercising the power of sale and Small Operator Pty Ltd for $2 million with settlement
on 1 May 2016.
Upon hearing of this, Development Ltd instructs you to advise on whether it can stop
the sale proceeding at such low value. You are to advise as to:
a.



the possibility of stopping the sale;
Involves checking to see whether what Giant Bank has done is in
accordance with s 85 PLA
S 85 PLA imposes duty on mortgagee to take reasonable steps to
sell property at market value – dispute here between $2M sale and $2.3M
advise
Two duties - to exercise duty to care to mortgagor when selling
property and second is to exercise Power of sale in good faith
o
First selling property at market value and putting property
on market (not pre-arranged buyer)
o
Must be sold as an independent bargain
o
Advertise to sufficiently wide audience, sufficiently long
time
o
Important question: Is this an arms length transaction as
opposed to a transaction where there's something else going on?
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
Transaction between unrelated entities that would
exist in the absence of their prior dealings – here there is, but is that
of itself a problem?

Looking for fraud or bad faith – is the
transaction not at arms length because there is fraud being
perpetrated by one of the parties?
o
No fraud under Small Operator: unaware
of unaware of pasting dealings and also $2M is not necessarily
a gross undervalue
o
In the absence of fraud, is the mortgagee
acting recklessly or indifferently to the mortgagor's interest?

Relevant cases are Forsyth v
Blundell and Latec Investments v Hotel Terrigal

On facts given, not possible
to allege that Giant Bank was fraudulent,
but maybe recklessly indifferently (maybe)
o
We have a lack of
facts – we do not know whether they obtained an
independent valuation of the property

In looking at Forsyth, D would not be able to get
an injunction to prevent sale going ahead

And for the same reasons, D should not lodge a
caveat because they cannot be successful lodge a
proper caveat which would allow Giant Bank to
take action in damages
o
o
a.
b.

c.

Only possibility that D has is an action
for breach of s 85 (1) PLA if it can show that Giant Bank did not
take reasonable steps to obtain valuation; but just because D
obtains one valuation, there could be another – can have
different, but equually valid views on valuations
If the facts said it was worth $2.3M and
Giant bank did not obtain valuation, or did but disregarded it,
there would be bad faith, but here we do not have this
The possibility is very low
the conditions upon which it might be done; and
The condition is just seeking an order of the court pursuant to s 85 PLA
and possibiltiy seeking injunction
what method would be most suitable to use.
same answer as b.
Question 11.3
A transfer in favour of Small Operator Pty Ltd was registered on 6 May 2015.
Development Ltd sought your advice on 9 May 2015 as to what can be done.
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You are to write a memo to Development Ltd advising it of its legal position and what
action, if any, can be taken against Giant Bank Ltd or Small Operator Pty Ltd.


o
o
Quizzes your understanding on indefeasibility and how it works on these circumstances
StarYng point: s 184 LTA
RP (Small Operator) of interest in land gains bene\t of indefeasibility
S 185 excepYons

Fraud requires actual dishonesty: Bahr v Nicolay – does not apply as not on
facts

In personam s 185 (1) (a)

No


Careless mortgagee excepYon: no; no mortgage here
No excepYons apply – therefore Development Ltd, if it has any rights at all,
only has rights in breach of s 85 PLA

But given its not clear the sale was not for market value, that’s an
awfully hard case to make
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COMMUNITY TITLE SCHEMES


NOTE: many of the cases referred in the textbook and podcasts
are indicative only
o
No force of law or precedental value
o
Only used as a guide on how legislation and bylaws play out in
fact situations
o
Cannot refer to them as authoritve sources of law
o
Authoritive sources are

The act

The standard module regulation

Any relevant bylaws
THE QUESTION WILL BE VERY SIMIALR TO THIS TUTORIAL,
REQUIRING THE SAME KINDS OF ISSUES AND METHODOLOGY
Question 12.1
a.
Refer to the example CMS in Blackboard. Identify:
The by-laws relating to parking.
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b. Whether a tenant in a lot may have a pet.
How do bylaws impact upon what you currently understand to be a landowner’s
‘rights’? Discuss
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

Necessary evil to create extra rules above and beyond those that exist in
CL and statute to impose restrictions on those living in these shared living
arrnagements so that all the occupiers can get along harmoniously and
impose a uniformity in how everyone operates
It affects the bundle of rights – your enjoyment must interact with
everyone else's
o
Bylaws add to the bundle because it gives an occupier's rights to
interfere with enjoyment
o
Bylaws subtract from bundle because it can restrict what
occupiers can do e.g before you get a cat you must seek everyone else's
permission
.
Question 12.2
Assume that all the current bylaws are valid. Development Ltd has sold a number of
the lots in Nirvana Towers II; however it still owns Lots 7, 19, 21, 23, 34 and 35.
These are being rented out and will be sold as investment properties as soon as
possible.
1.
2.
3.
Bob Big, a new tenant in Lot 7 of Nirvana Towers II, owns two cats and likes to have
parties and aims to have one at least every three weeks. Bob’s cats are both indoors
cats and (almost) never go outside. The secretary has received the following
complaints
:
Bob’s cats are very friendly and miss Bob when he is not there and so they
spend many hours mewing for him. Last week one escaped through a partially
opened window and spent time wandering around the complex;
While his parties are mainly held in his unit, always finish by 11pm, and are
very quiet, visitors at Bob’s last two parties kept partying on afterwards in the fenced
pool area until at least 3am. Several neighbours complained about this noise.
Bob complains that one of Julie’s regular guests is now parking in his
designated car park despite being told by Bob not to park there.
a.





b.

What are the body corporate’s obligations in the above scenarios?
Lets assume Bob has been given permission for cat
S 59 (2) provides that the CMS and the bylaws within it are binding
on both owners and occupiers
s 94 (1) provides that the body corporate has a duty to enforce the
bylaws
Body corporate also has duty to maintain common property: s 94;
152
s 159 of Standard Module Regulation (requires BC maintain
common property in good order and condition)
What are Bob’s obligations regarding in the above scenarios?
Bobs cats
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o
o
o

o
o
o

o
o
c.
d.
Unclear whether he has permission
If not he is in breach of bylaw 12
Assuming he does have approval, is there any cause of
action that arises from cats wandering over to common property?

Breach of bylaw 2 NOISE; even though he may not
directly do so, the cat could create noise which might interfere with
the peaceful enjoyment of a person lawfully on another lot or
common property

Breach of s 167 BCCMA

Nuisance – specifically prohibited; exists
regardless of bylaws

Tough argument to run that cats making noise
could constitute nuisance, but this might depend
Parties
Bylaw 12.2 refers to guests passing over common property;
unlikely that an argument that "my guests are all standing still" would
take you outside the scope; probably a breach of 12.2
Bylaw 22.2 says occupier will take reasonable steps to
make sure he does not interfere with peaceful enjoyment of common
property
Bylaw 34.1 (b) liable for hours of operation of recreation
areas after 10pm

Must be observed by guests...invitees of such owner
Parking spot
Invitees are required to use parking lot in accordance with
3.1 (b) invitee being allowed to park regularly on lot without body
corporate permission
37.1 refers to schedule which specifies which occupiers get
which carparks
What are Julie’s obligations regarding in the above scenarios?
Separately from any recourse under the bylaws, is there any action that the
neighbours could take regarding Bob’s cats or the parties?

Reference to where you might look outside the bylaws – relevant
s was s 167 of BCCMA
Refer to relevant sections and or cases in your advice.
Question 12.3
The Secretary of the Nirvana Towers II Body Corporate – one of the residential
apartment (CTS) schemes in Nirvana – has come to you for advice.
Due to a number of non-visitors parking in designated visitor parking bays (i.e. the
workers from the adjacent construction sites) the BC Committee recently entered
into an arrangement with a local towing firm to tow unauthorised vehicles. This was
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supported by a sign posted at the entry to the carpark which states “Visitor Parking
Only. Maximum parking time = 6 hours. Contact details and number of unit visiting
must be visible through windscreen. Unauthorised vehicles will be towed at owner’s
expense.”
Julie Jones a long-time resident, living in Lot 6, is complaining that the parking bylaw
“is not legal”. On two occasions her overnight visitors – one who placed a sign on
their dashboard which read “my mobile is [ number ] and I am staying at Lot 23” and
one who did not – both had their vehicles towed. To recover their vehicles the
owners were required to pay $650 to the towing company.
The newly appointed secretary comes to you for advice as a member of the property
law team at QUT Lawyers. To advise the secretary of the Body Corporate you must
answer the following questions:
(a) What are a Body Corporate’s obligations regarding common property?

Obliged to maintain and administer CP and may entered into
transactions that affect the CP
(b) Can the Committee enter into agreements on behalf of the BC?

Committee may entered into agreements that affect the CP and they are
also allowed to engage the service of contractors: s 100

However lot owners have the privilege or right of allowing visitors to
park in the visitor parkings:

Privilege has been changed and as such becomes restricted issue
which the committee may not make decision about: s 42 (1) (b)
(c) Can the Committee authorise the towing of vehicles? Consider in your answer
whether:
1.







The relevant bylaw is ‘legal’.
s 94
BC must act reasonably – action has not been put before the members
of the BC itself
o
Notice needs to be given and voted upon
People who had their cars towed away may have action against BC –
recourse would follow because BC is conferred with title to sue and can be sued:
s 36 (1)
This has the effect of amending bylaw 3 – it allows visitors to park
in designated visitor parking areas
But this places a restriction on that bylaw
BC has power to make or amend bylaws
BC management committee does not have power to make or
amend bylaw
o
No authority to engage someone else to tow cars from the
premises
o
And if the committee has exceeded their power, they can be
liable for doing so: s 100 relevant; s 101B
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Note that s 100 (1) attributes management committee
decision to BC, but it does not vest management committee with the
powers of the BC
The two people who had their cars towed perhaps have actions in
trespass, detinue, conversion, etc depending on circumstances against the
BC itself, against the company that did the towing as well


2.
The process is ‘legal’?
Refer to relevant sections and or cases in your advice.
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