Real Property
1 TENURE, ESTATES, AND NATIVE TITLE ......................................................... 5
1.1
Definitions
5
1.2
Tenure
6
1.3
Estates
9
1.4
Native Title
11
2 THE MEANING OF LAND ......................................................................... 16
2.1
The right to airspace
16
2.2
Legislation regulating airspace and ground-level access
19
2.3
The owner’s rights to minerals
21
2.4
Boundaries with neighboring land
22
2.5
Growing things
22
3 FIXTURES AND CHATTELS: ........................................................................ 23
3.1
Definitions
23
3.2
Tenant’s fixtures
24
3.3
Test for fixtures/chattels
25
3.4
Cases on Fixtures
28
4 WASTE ...................................................................................................... 35
4.1
Permissive waste
35
4.2
Voluntary waste
35
4.3
Equitable waste
35
4.4
Ameliorating waste
35
5 THE TORRENS TITLE SYSTEM...................................................................... 36
5.1
Essentials
36
5.2
Indefeasibility
38
6 TORRENS TITLE - EXCEPTIONS TO INDEFEASIBILITY................................. 43
6.1
Fraud (make flowchart)
43
6.2
The Personal Equity Exception
49
6.3
Prior folios (s 42(1)(a) of the Real Property Act)
53
6.4
Omitted/misdescribed easements (s41(1)(a1) of the Real Property Act)
53
6.5
Misdescribed/omitted profit â prendre (s 42(1)(b) of the Real Property Act)
54
6.6
Wrong Boundaries (s 42(1)(c) of the Real Property Act)
54
6.7
Short term tenancies (s 42(1)(d) of the Real Property Act) (Maybe read more)
54
6.8
Overriding statutes
55
6.9
Possessory title (Part 6A of the Real Property Act)
55
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7 TORRENS TITLE - PRIORITIES BETWEEN UNREGISTERED PARTIES .............. 56
7.1
Characterizing unregistered interests
56
7.2
Caveats (Part 7A of the RPA) (Todo: caveats by registrar general)
57
7.3
Injunctions
59
7.4
The difference between unregistered interests: legal and equitable interests.
59
7.5
Priorities between unregistered interests
62
7.6
Notice
64
8 TORRENS TITLE – UNREGISTERED INTERESTS: POSTPONING CONDUCT . 64
8.1
Different where a beneficiary is involved
64
8.2
Types of postponing conduct
64
8.3
Failure to take possession of Title Deeds
65
8.4
Failure to retain possession of title deeds by an act of gross negligence
65
8.5
The premature release of the title deeds by a vendor on sale or by a first mortgagee on
discharge of mortgage; and the inclusion of a receipt clause which wrongly states that the
proceeds of sales have been received.
8.6
66
Execution of a dealing which does not truly reflect the transaction, such as the execution
of a transfer by a registered proprietor, who has mortgaged but not sold a property (Holding
out) 69
8.7
The failure of the holder of an unregistered interest to create a caveat, where that person
was not in a position to take possession of the title deeds
70
8.8
The requirement for a purchaser to caveat
71
8.9
The requirement for a beneficiary under a trust to caveat
71
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9 OLD SYSTEM TITLE .................................................................................... 72
9.1
Chain of title
72
9.2
Interests in old-system title land
73
9.3
Deeds
74
9.4
Registration of deeds and s 184G of the Conveyancing Act
75
9.5
Converting old system land to Torrens Title land
77
10 MORTGAGES ......................................................................................... 79
10.1 Mortgages under Old System Title
79
10.2 Remedies available to a mortgagee
81
10.3 Tacking
88
11 CO-OWNERSHIP .................................................................................... 90
11.1 Types of Co-ownership
90
11.2 Creation of co-ownership
91
11.3 Severance (joint tenancy  tenancy in common)
92
11.4 Ending co-ownership
95
11.5 Rights of co-owners inter se
96
11.6 Taking accounts: after co-ownership ends
96
11.7 Entitlements (occupation, rent and profits)
97
12 EASEMENTS ............................................................................................ 99
12.1 Characteristics of an easement
99
12.2 Creation of Easements
102
12.3 Ancillary rights to an easement
111
12.4 Obligation on the owners of the dominant and servient tenement; deviations of a right
of way coming from obstruction
111
12.5 Changing an easement
111
12.6 Extinguishing an easement
114
12.7 Remedies
116
13 RESTRICTIVE COVENANTS ................................................................... 118
13.1 Introduction
118
13.2 Requirements for a binding covenant under OST
119
13.3 Restrictive covenants on TT land
121
13.4 Remedies/defences
122
13.5 Extinguishing a covenant
122
13.6 Etc.
123
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14 LEASES .................................................................................................. 124
14.1 Introductory issues
124
14.2 Essential characteristics of a lease
125
14.3 Types of leases
127
14.4 Covenants
128
14.5 Assignment and subleasing
135
14.6 Terminating/ending a lease (breach and consequences)
136
14.7 Waiver
139
14.8 Remedies
139
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Part 1 – Preliminary Matters
1 Tenure, Estates, and Native title
1.1 Definitions
Allodial system
Tenurial
Real property
Estate
Free and common socage
Terra Nullius
Reservation clause
Fee simple
Radical title
Sovereignty
Alienable
Intestate
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Where land holding is absolute
Where land is held “of” another party
Land, and interest in land, made up of:
 Corporeal hereditaments; and,
 Incorporeal hereditaments
(intangible rights, e.b. an
easement)
An interest of land, held “of” the crown,
entitling the holder to a parcel of rights
Land ownership without periodic
payment or military service
Land with no owner
A limitation on the rights enjoyed by the
holder of estate in fee simple
Unrestrictedly inheritable indefinite title
to land
“fee”  inheritability
“simple”  no restrictions on inheritance
A beneficial right the crown holds with
respect to land: practically, this is the
right to grant and manage land
The right to make laws with respect to
something: e.g. the crown’s sovereignty
with respect to Australia
Able to sell
Without will  bona vacantia 
ethsheat
5
1.2 Tenure
The system of tenure is where land is held “of” the crown

The crown holds all land, and people have interest in land via grants

The interest you may hold of the crown is called an “estate”
1.2.1

History
Early history:
o
People (after fall of rome) transferred land to a leader in exchange for
protection

These people maintained possession, but paid the leader with
either cash or military service
o
When William the Conqueror conquered England in 1066, the legal
fiction was created where “all land is held of the crown”

At the same moment, all land was regranted to those who
owned it in the first place


This made the King paramount lord
Transmission to NSW
o
By the time of transmission to NSW, the state of tenure in England
was as follows:

There could be only one level of tenancy (Land held “of” the
crown, rather than a Lord as a middleman)

The only form of land holding (tenure) still around was “free
and common socage”
o
The common law of England was brought to Australia with
settlement (settled as opposed to conquered because the English
considered it Terra Nullius)

An Englishman brings as much of the common law with them
as is relevant to the circumstances of the colony (Cooper v
Stuart)

We imported the feudal law of tenure (Attorney-General v
Brown)
1.2.2 Attorney-General v Brown
This case is Authority that the doctrine of Tenure is valid in Australia.
1.2.2.1 Facts
 A man owns land in Newcastle
o

Finds coal, starts digging for it
The crown says it was the crown’s coal, not his
o
When the land was granted, there was a reservation clause granting
the land but reserving mineral rights
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1.2.2.2 Held
 Brown argued
o
Reservation clause was valid
o
But, the English tenurial system did not apply:

Whereas England had sovereignty here,

He argued that sovereignty and ownership of all land are
necessarily connected

The court held
o
Brown admitted that the Crown had sovereignty
o
Thus, in creating his parcel of land, they were fully within their rights
as sovereigns to create reservation clauses

Regarding the system of tenure
o
The crown owned land since 1788
o
Tenure, in England, is a fiction

In Australia, it is a reality, because of Terra Nullius

Thus, tenure in Australia is on an even more solid legal basis
than in England
1.2.3 Mabo (No 2)
This argument put forth in this case were very similar to those put forth in Brown,
but the conclusion was different: this redefined the tenurial system, stating that, with
sovereignty, the Crown has the option to exercise power to own land (Radical Title),
but this only extinguishes prior interests if exercised with the creation of an estate
that allows for exclusive possession.
1.2.3.1 Development of native title
 Mabo was not the first attempt at establishing Native Title
o
Gove Land Rights Case (1971)

There, the aboriginal people had a spiritual, not economic
connection to the land

The court could not create native title in this case, since the
aboriginal concept of land was so different to Western land
concepts

The court did find native title in an earlier case in Papua New Guinea
1.2.3.2 Arguments made to the court
The plaintiff argued that traditional rights to country survived the crown coming to
Australia, and should be recognized as native title.

How could aboriginal land rights and the Crown’s ownership of all land (as
in Attorney-General v Brown)?
o
The crown said that when the land was vested in the crown, native
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title was extinguished
o
The Plaintiff said that native title survived
To find for the plaintiff, the court would have to overrule Attorney-General v Brown.
1.2.3.3 What did the court decide?
The court decided to rethink tenure, rather than to remove it (“To abolish tenure
would fracture the skeleton of the common law” – Brennan)

This did not come out of judicial activism, but, rather, this let Australia catch
up with the world (i.e. this decision was made in light of international
agreements on discrimination)
So, if Tenure was essential, but the policy of native title had to be created, what
possible solution was there?

There is tenure
o
Where no one holds land absolutely, but, rather, holds land of the
crown

Thus, the crown has a notional interest in the land.
o

What was this notional interest?
This case created Radical Title
1.2.3.4 Radical Title
 “Radical title is the concomitant of sovereignty” – Brennan
o


Sovereignty is the crown’s independence and right to rule
How does sovereignty link with ownership?
o
Radical title is sovereignty in land-law
o
The power to create and manage interests in land
Thus, the crown has Radical Title, a beneficial interest in all land, rather than
a notional interest

Thus, they don’t own the land, but have the power to grant and control it
Thus, the crown’s Radical Title did not extinguish Aboriginal land rights, unless the
power to grant was exercised.
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1.3 Estates
Estates are the bundle of rights that proprietor holds “of” the crown

Estates are, generally, alienable  no restrictions on selling

Estates give you respect to physical land (rather than actual ownership)
1.3.1 Types of estates
Note, estates may be created by the government (grants) or by people (subdivision)

Freehold estates (uncertain duration)
o
Fee simple (pl. fees simple)

This has the most rights out of any estate

This can be passed on

In the common law, given by:



“to A and his heirs”
Now under Conveyancing Act s 74(1), may be given by

“To A forever”

“To A in fee simple”
Also created by default if it is attempted to create a fee tail
(Conveyancing Act ss 19, 19A)
o
Life estate

An estate for the life of the person granted

After the death, the estate in fee simple falls back on
the remainderman

This is often embedded in a trust

This often occurs out of familial situations

This grants use of the property for life


Though you do not have right to “waste” the land
In common law, created by

“to A for the life of A (or B if it is a case of pour autre vie
 for the life of another)

Now, you must show an intention to create a life estate, also, it
is created by failing to make a fee simple (Conveyancing Act s
47(2))

Note:

If sold, it is still for the life of the original holder of the
life estate

Note, if the fee simple is sold, on which there is a life
estate, the fee simple is still subject to the life estate
o
Fee tail (abolished)

Inheritability is “entailed”  “cut”

i.e. to the oldest married child
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
Leasehold land (certain duration)
o
1.3.2


Simultaneous estates
Reversion
o
To A for life, reversion to grantor
o
Grantor has a fee simple in reversion
Remainder
o

i.e. purchasing a 99 year lease, etc.
To A for life, remainder to B in fee simple
Alienability:
o
You can sell your reversionary interest, but you cannot grant
possession
1.3.3 Estates as a bundle of rights
Real property is not ownership of a thing, but a bundle of rights with respect to land

These right are a set of inter subjective rights exercisable against the world
with respect to a particular thing (in rem)
o
As opposed to an in personam right, excerciseable against someone in
particulat

An estate in fee simple gives you 11 rights, including:
o
Alienability
o
Possession, and, thus, excludability
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1.4 Native Title
Note that native title is a Western concept, not an indigenous concept. Thus, it
reflects western land concepts, not aboriginal ones.
1.4.1 Early history
Mabo was not the first native title case in Australia


International
o
Aboriginal title in Canada
o
Johnson v Macintosh in the US (1823)
Gove land rights case in NT
o
Gove could not have succeeded because aboriginal relationship with
the land was spiritual, not economic

Sao v Gerber (PNG), native title was found, heard in the High Court of
Australia
1.4.2 Mabo (no. 2)
This created Native Title in Australia.
Note, Mabo was one of seven plaintiffs
The fact that Mabo was Melanesian made the case much easier for the court to find
for Mabo, because:

The land was important for its economic use

There was a clear direct heritage

It was as close to western land ownership as could be
However, the Melanesian people’s clear land use made it difficult for subsequent
aboriginal peoples to claim as precedent
The Queensland Supreme Court found (and they went to the island, too):

There was market gardening

There were plots of land divided

There was exclusive possession
Thus, the use of land was considered “appropriate”, that is, productive (important
because of Locke’s labor theory)
“appropriate” as contrasted with “adverse possession” (move onto land, openly, use
in a certain way which is possession, after 12 years, you get ownership  because
the law does not like “land lying fallow”
Thus, the “radical title”, which allowed for the preservation of native title, was more
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easily created
1.4.3 What is native title?
Origins are in the traditions of aboriginal law (Yorta Yorta)

Thus, custom is central

Every claim has different law based on different customs

We can get information from oral traditions, writings about the people
o
E.g. in Yorta Yorta

Aboriginal oral evidence was not favored because there was
the diary of a “gentleman ethnographer”

Since oral evidence was problematic because of hearsay
It is not the best possible system for aboriginals

Very expensive

The rights given are minimal

Culture may be offended (they may have to give evidence that is sensitive)
Note, Native title is the “recognition” of aboriginal rights and interests, rather than
their creation (WA v Ward)
1.4.4

Elements
Ongoing, “substantially uninterrupted” connection to the land
o
What about dispossession? This would have counted as interrupted
connection to land

Customs and traditions  use of land must maintain its traditional nature
(Yanner v Eaton)
o
E.g. in Yanner, fishing happened traditionally, but aborigine used a
spear gun and a motorboat, now
o
Note, traditional right to fish is not commercial right
o
So, what can be granted (Mabo  Brennan)
o

Hunting, fishing, subsistence

Ceremonial use

Exclusion

Use of resources (i.e. use of ochre)

Right to live on land
In Bullan Bullan, intellectual property was held to be outside of native
title
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1.4.5 Extinguishment
The person claiming has to prove that the native title right has not been extinguished
Once this right is extinguished, it is extinguished forever
1.4.5.1 Mabo
Brennan:

Where the crown exercises sovereign power with an intention to extinguish
(as shown by an inconsistent grant)

Or where the connection with the land is lost “tide of history is washed
away”
Deane and Gaudron:

Inconsistent dealings

Or abandonment
Toohey:

Clear legislative intention (though compensation is allowed)
1.4.5.2 Fejo
Here, the creation of an estate in fee simple was seen as extinguishing, since it is the
exclusive right to possession.

Thus, native title is extinguished (because it is legally inconsistent with
exclusive possession)

Native title, thus, “yields” to an estate in fee simple
1.4.5.3 Wik
This case was with regards to pastoral leases

Giant leases, created by the State Lands Act

Designed for grazing
Issue: did Pastoral lease extinguish native title?


Brennan
o
Pastoral lease is a lease, and confers exclusive possession
o
Thus, it extinguishes native title
Toohey (Majority)
o
Label “lease” is insufficient to immediately distinguish (substance, not
form)
o
Thus, the lease must be interpreted in light of the purpose of its
creation (a light footprint on the land)
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o
Was there an intention to confer exclusive possession?

o
Probably not, since there lease was conditional:
As such, there is no exclusive possession, and it does not totally
extinguish possession.
Thus, have to list native title right (e.g. hunting, living, etc.) and pastoralist rights
(running cattle, building a farmhouse, etc.) and we smoosh them together to see
where they are inconsistent. If a native title right cannot coexist with a pastoralist
right, it is extinguished.
1.4.6

What is the effect of native title?
It is an inalienable right (it cannot be sold)
o

It is communal
o

It also cannot be mortgaged or economically developed
It is vested in the group of native title right-holders
It is a bundle of rights (different to the 11 rights conferred to a holder of an
estate in fee simple) that is not fixed, but changeable, based on culture.
1.4.7 The native title act
Replaces most of the common law.

It provides a claim mechanism.

It sets out a difficult mechanism for future governments to change this law

It defines native title (s 223)
o
Rights and interests are part of the definition (sub-s 1)
o
Right with respect to land or water (sub-s 1(a)(b)
1.4.8 Who is an aboriginal person
Brennan J in Mabo:

Membership is based on biological descent

As well as recognition by the group
WA v Ward:

Ancestral connection is required between the original native title holders and
the present claimants
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1.4.9


Mabo, discussion
Brennan
o
Cannot get rid of tenure (fracture the skeleton)
o
Tenure exists, and the crown grants land
o
Sovereignty is not the same as a benificial interest in the land
o
When native title expires, the crown gets a beneficial interest
Deane and Gaudron
o
Native title is extinguished by an unqualified crown grant of an
inconsistent estate

Mason, Brennan, McHugh
o
Mabo (No 2)
Terra nullius
Establishing native
title
Content of native title
How can native title
holders deal with
their rights
Title extinguished by inconsistent grant
Brennan J
No
Retained link with the land.
Traditional connection
Your rights are ascertained
by your traditional laws and
customs on the land
Depends on the traditional
laws and customs
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Deane and Gaudron JJ
No
Occupation and use of the
land
As under traditional law
and custom
Toohey J
No
Physical presence
Rights are personal rather
than proprietary. Native
title cannot be sold.
N/A
N/A
15
2 The meaning of Land
Real property deals with land, but the boundary of the land may be questioned.
How does land exist in 3d space: regarding airspace, depth, boundaries with
neighbors and things that grow on the land.
Traditionally, a person owns their land “Cuis est solum, eius est usque ad coelom”1 –
“upwards of the sun and downward to the center of the earth.”
This is, in practice, constrained: trespass requires the “interference of possession,”
and, as such, any trespass, which does not interfere, is, practically, outside of “land.”
2.1 The right to airspace
Where does “land” end vertically?
2.1.1


Who may bring proceedings?2
An owner of mineral rights
An owner in possession
o

NB: here, a lessee in possession may bring forth an action.
Where an owner’s reversionary interest may be affected
2.1.2 Permanent encroachments to airspace
The court is more likely to find trespass where the encroachment is permanent.
2.1.2.1 Kelson v Imperial Tobacco Co Limited
Here, a permanent encroachment constituted a trespass.
2.1.2.1.1 Facts
There was a sign protruding over the property
2.1.2.1.2 Held
This was trespass based on the judgment in Gifford v Dent.

Since there has been legislation excusing planes from trespass (Civil Aviation
Act 1949 s 40(1)).

Then aerial encroachment may be trespass, and, since it is close, and
permanent, this current situation was trespass.
2.1.2.2 Wandsworth District Board of Works v United Telephone Co Limited
Here, a wire swinging over neighbor’s land was trespass.
2.1.2.3 Lemmon v Webb
Branches and roots growing onto your property may be removed if they encroached
(subject to relevant legislation).
1
2
Commissioner for Railways v Valuer General.
Rodrigues v Ufton.
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2.1.3
Temporary Encroachments
2.1.3.1 Pickering v Rudd
This case held that a bullet flying over a parcel of land will not be trespass. This was
also authority for the assumption that no “aerial” encroachment will be trespass.
2.1.3.2 Davies v Bennison
That if the bullet fired over a house hit a cat, there would be trespass because of its
proximity to the structure on the land.
2.1.3.3 Bernstein of Leigh (Baron) v Skyviews & General Limited
This case is authority for the rule that you have an interest in the airspace until such
a height where trespass would no longer violate your enjoyment of the land.
2.1.3.3.1 Facts
 An airplane flew over Baron’s house
o
To take photography
2.1.3.3.2 Held
The court rejected the submission that the plaintiff’s interest in land continued to an
unlimited height: he only had rights where an infringement would violate his
“enjoyment of the land.”
2.1.3.4 Woollerton & Wilson Limited v Richard Costain Limited
This case regards swinging (“weathervaning”) cranes.
2.1.3.4.1 Facts
Builder encroached on land with a crane

15m above property
Builder admitted trespass

He did, however, try to buy the righto encroach with substantial moneys.
2.1.3.4.2 Held
There was trespass, though the injunction was postponed by the court’s discretion,
since there had never been precedent and since the defendant had tried to reimburse
the plaintiff.
2.1.3.4.3 Graham v K.D. Morris & Sons Limited (QLD)
Here, Woolerton was applied, but the injunction was to happen immediately since
the defendant “flagrant[ly] disregard[ed]” the plaintiff’s rights.
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2.1.3.5 LJP Investment Pty Limited v Howard Chia Investments Pty Limited
Clarifies owner’s enjoyment to “ordinary use.”
2.1.3.5.1 Facts
The defendant erected scaffolding 4.5m above the plaintiff’s property
2.1.3.5.2 Held
Not any “owner’s enjoyment” or “actual use of land”, but the “ordinary use and
enjoyment of the land and the structures upon it.”
2.1.3.6 Bendal Pty Limited v Mirvac Pty Limited
2.1.3.6.1 Facts
The defendant was building a skyscraper

Secured with a mesh screen
o

Which protruded onto the neighbors property
There was also a weathervaning crane
2.1.3.6.2 Held
The screen trespassed, the crane was not.

Screen
o
Continuing trespass
o
That the plaintiff was not currently at that height did not permit the
defendant to build scaffolding over the property
o

There were alternatives (albeit costly ones)
Crane
o
Little encroachment
o
Required for safety
o
Low risk, where compared to cranes lifting weight above a building
2.1.4 Enforcement
Trespasses may be corrected with:

Self-help (e.g. eviction)3

Damages (both normal, and, in cases where the defendant should be
punished, restitutionary damages)4

Seeking an injunction5
Traian v Ware.
LJP Investments v Howard Chia Investments.
5 Woollerton & Wilson Limited v Richard Costain Limited; Bendal Pty Limited v
Mirvac Pty Limited.
3
4
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2.2 Legislation regulating airspace and ground-level access
2.2.1 S88K of the Conveyancing Act
This creates an easement by statute.
2.2.2 Access of Neighboring Land Act
You may ask for access for repairs and other small-scale cases: for “reasonable use.”

Application in the Land and Environment Court where:
o
They have already asked
o
They have already offered reasonable recompense
2.2.3 Encroachment of Building Act 1922
Where there is a “substantial building … of permanent character” which is causing
the encroachment, it cannot easily be removed. E.g.:

A concrete drive6

A concrete-block wall7

A retaining wall8

Etc.9
This does not include:

A pool’s pump/pump house10

Paving-stones11
This encroachment need not be on purpose.12
Any involved party may bring the action.13
Ward v Griffiths.
Cuthbert v Hardie.
8 Boed Pty Limited v Seymour.
9 See Real Property p13.
10 Cuthbert v Hardie.
11 Cantamessa v Sanderson.
12 Ibid.
13 Encroachment of Building Act 1922 (NSW) s3(1)
6
7
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Remedies include:14

Payment of compensation
o
Land value if not on purpose or negligent
o
3 times land value in any other case

The removal of the encroachment

The required purchase/lease of land that encroaches

A grant of an easement15
o
An easement for the life of the encroachment16
The court decides which remedy based on land value, the extent of the
encroachment, the loss for both parties, etc.
2.2.4 Damage By Aircraft Act 1952 (NSW)
No trespass or nuisance for the ordinary flight above a property.17
Anything that falls off the aircraft may be trespass where there is damage.18
2.2.5 Damage By Aircraft Act 1999 (Cth)
Wherever it is federal (international, corporate, etc.) the same applies.
Where there is damage by extraordinary circumstances, the operator/owner is jointly
and severally liable.19
Ibid s3(2)
Re Marsh
16 Cantamessa v Sanderson
17 Damage By Aircraft Act 1952 (NSW) s (2)(1).
18 Ibid s (2)(2)
19 Damage By Aircraft Act 1999 (Cth) s 10(2)
14
15
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2.3 The owner’s rights to minerals
A mineral is something capable of being mined. At common law, you have a right to
minerals downwards, subject to permit. That is, where there is an absence of
limitation, you have rights.20
2.3.1 The royal minerals
The crown owns all that is “most excellent”21, including:

Gold,

Silver,

Copper laced with gold,

Unicorn.
2.3.2 Mining Act 1906 (NSW)
This act defines minerals.
2.3.3 Coal
This act states that the crown no longer reserves coal, by proclamation, in NSW.
However, to mine it requires a license.
2.3.4 Petroleum
All petroleum belongs to the commonwealth right in states, regardless of
reservation.22
2.3.5 Other
Commonwealth controls minerals on its land.23
The commonwealth controls minerals used in atomic energy.24
2.3.6

Summary
Commonwealth controls, for defense, “prescribed substances” (e.g. uranium)
o
It may also acquire land on just terms for mining

Commonwealth has title for minerals vested in the Constitution s85

State controls petroleum and helium, unless Commonwealth resumes the
land

Gold and silver are reserved by the crown

Other minerals may be reserved, dependent on grant
o
If not reserved, minerals are owned by surface owner
Wade v NSW Rutile Mining Co Pty Limited.
Woolley v Attorney General of Victoria; R v Wilson; English paramount
legislation.
22 Petroleum Act 1955 (NSW)
23 Commonwealth v New South Wales.
24 Atomic Energy Act 1953 (Cth)
20
21
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2.4 Boundaries with neighboring land

Tidal water boundaries are at the high-tide line.
o

Fences must be paid (for a “sufficient” fence) ½ and ½.
o


Non-tidal water is “ad medium filum.”
Based on the usual fence in the area.
Common law obligation of support25
o
Need to support neighboring land,
o
Except where massively altered
Overhanging (nuisance)26
2.5 Growing things
A crop is a chattel that belongs to the person who plants it (e.g as apposed to trees,
which are part of the land until severed)

Agricultural fractus industrials
o

May be harvested after sale
Natural fractus naturales
Natural things are part of the land, though they may be excluded or granted
separately.27
Conveyancing Act s117.
Trees (Disputes Between Neighbors) Act.
27 Eastern Construction Co Limited v National Trust Co Limited & Schmidt.
25
26
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3 Fixtures and Chattels:
If a thing is a fixture, it is transferred along with the land; if it is a chattel, it remains
distinct from the land – “Quicquid plantatur solo, solo cedit.”
What is defined, in a distinct property transaction, as a chattel or a fixture, may be
found in an included chattels section of a contract for land. The law of fixtures and
chattels is for items of property that are not allocated by an included chattels section,
or are disputed. This section may also appear in contracts for life estates, mortgage
defaults and tenancies (i.e. defining what is a tenant’s fixture).
3.1 Definitions
Term
Quicquid plantatur
solo, solo cedit
Chattel
Fixture
Tenant’s fixture
Definition
Whatever is affixed to the land becomes part of the land.
An item of personal (as apposed to “real”) property.
An item of personal property that has become a part of the
realty.
An item of personal property that has become a fixture, but
may be removed before the tenancy relationship ends.
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3.2 Tenant’s fixtures
Where a tenant brings an item of personal property onto the land, the item may be:

A fixture, which remains part of the land forever; or,28

A tenant’s fixture, which may be removed before the end of tenancy; or,29

It may continue to be chattel.
When may tenant’s fixtures be removed?

Only before the tenancy is finished, it becomes part of the land once the
relationship comes to an end.30
o
Where a tenancy has come to an end, and the tenant stays on as a
trespasser, the trespasser loses the right to remove tenant’s fixtures,
but may remove chattels.31
o
Since life tenancies are of uncertain duration, the estate of the life
tenant is given reasonable time to remove tenant’s fixtures.32
This area is often guided by the appropriate legislation (e.g. the Retail Lease Act and
the Tenants’ Lease Act).
E.g. a concrete floor installed as a base to a shed: Webb v Frank Bevis.
E.g. the shed mentioned above: Ibid.
30 Re Roberts; ex parte Brook.
31 NZ Government Property Limited v HM & S.
32 Re Roberts; ex parte Brook.
28
29
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3.3 Test for fixtures/chattels
There are two tests for defining fixtures: the first based on the degree and purpose
(/object) of annexation, the second based on “each case[s] […]facts and
circumstances.” The second test has superseded the first one as good law.
3.3.1 Degree of annexation and purpose of annexation:
This test allows the court to define where the annexation is temporary, and where it
is permanent.
The degree of annexation creates a presumption, which may be rebutted:

The “rule is, that articles not otherwise attached to the land than by their own
weight are not to be considered part of the land, unless the circumstances are
such as to [show] that they were intended to be part of the land [:] the onus of
[showing] that they were so intended [lies with] those who assert that they
have ceased to be chattels.” 33

The “intention” is shown via “the degree of annexation and the object of the
annexation.”34
Degree of annexation:

“If the thing has been securely fixed” so that

“It cannot be detached without substantial injury
o

“To the thing itself or to that to which it is attached
“This supplies strong […] evidence that a permanent fixing was intended.”35
Object of annexation (note: this is not a subjective test). Has the object been fixed for
the purpose of:

“The better enjoyment of the land”36; or,
o

Whereby it would be a fixture.
“Merely to steady the thing itself, for better use or enjoyment of the thing
fixed.”37
o
Whereby it would remain a chattel.
This may also be rephrased as the question: was the object affixed for the better
enjoyment of the realty or the object itself?
Lord Blackburn in Holland v Hodgson.
Ibid.
35 Jordan CJ in Australian Provincial Assurance Co Limited v Coroneo.
36 Ibid.
37 Ibid.
33
34
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3.3.1.1 Facts which have been considered:
For the degree of annexation38:

Would removal of the object cause damage to land?39
o
Or to the object?40

What is the mode/structure of annexation?41

Does the cost of removal exceed the value of the object [then it is a fixture]?42
For the purpose of annexation:

Was it for the better enjoyment of the land generally [fixture] or for the
buildings to which it was attached [chattel]?43

What is the nature of the property?44

Was the item to be in position temporarily, or permanently?45

What was the function served by the annexation? 46
o
E.g. a printing press may be firmly annexed to stabilize the press: this
would not make it a fixture.
Conti J in NAB v Blacker.
Hellawell v Eastwood; Adams v Medhurst & Sons Pty Limited; Spyer v Phillipson.
40 Litz v National Australia Bank Limited.
41 Leigh v Taylor; Teaff v Hewitt.
42 Metal Manufacturers Limited v FCT.
43 Hobson v Gorringe; Leigh v Taylor; Reid v Smith; Litz v National Australia Bank
Limited.
44 Metal Manufacturers Limited v FCT.
45 Australian Provincial Assurance Co Limited v Coroneo.
46 A-G (Cth) v RT Co Pty Ltd (no 2).
38
39
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3.3.2 Each case relies on its own facts and circumstances
The old test is superseded by a holistic approach:

“There is no single text […] the court ought to have regard to all the
circumstances of the case […] no particular factor has primacy.”47

“The chattel may be a fixture even though it is not affixed to the land.”48
The “facts and circumstances” approach, as proposed in Dunn v Ericsson and
cemented in NAB v Blacker, replaces the historic two-stage test.

Whilst “the purpose […] and the degree of annexation remain important
considerations […] the court should have regards to all facts and
circumstances.”49
Note, this approach may also rely on what is common practice for that type of object
in its circumstance.50
3.3.2.1 Is the “facts and circumstances” approach
There are authorities that say that it is purely objective, and those which suggest that
some subjectivity (i.e. what was the intended purpose of the annexation) may be
taken into account.51
Conti J in NAB v Blacker.
Priestly and McHugh JJA in McIntosh v Goulburn City Council.
49 Conti J in NAB v Blacker.
50 Ibid.
51 Ibid.
47
48
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3.4 Cases on Fixtures
3.4.1 NAB v Blacker – Read case (judgment for students)
This case, currently, is authority on the “facts and circumstances” approach.
3.4.1.1 Facts
 Blacker defaults on a mortgage from NAB on his farm

There is a large irrigation system present
o

Blacker believes it is chattel and offers to sell it to the bank
Blacker did not take the irrigation system, which is well annexed
o
But Blacker did take the valves, pumps, etc. (worth approximately
$30,000).
o
The pump could be moved in any direction by a tractor (pumps are
on skids)

First set of pumps sends water and is moveable, top set
(boosters) were fixed
o
Valves are interchangeable “L” shaped valves, then pipes and
sprinklers
3.4.1.2 Held
Conti J found that the pumps were chattels, since:

They bore the characteristics of chattels
o
Which shifted the burden of proof to the Bank, which did not satisfy
the burden

The looked like chattels, since:
o
They “for all intents and purposes” rested on their own weight

o
And weren’t heavy enough that permanence could be implied
It was common practice for farmland to be sold separately of plant
equipment
o
No damage would be done to the equipment or to the realty if they
were moved

o
They could be moved (by tractor) in any direction
o
The cost of moving the pumps was less then their worth
He found that the valves and sprinkler heads were chattels, since:
o
They were cheap and replaceable
o
They could be removed without difficulty
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3.4.1.3 Conti said
 [15] No single test … to determine … chattel or fixture.

[16] It is clear the court … regard all circumstances of the case.

[10] depends on “objective intention”,
o
[14] Degree of annexation:

Whether removal would cause damage

The mode and structure of the annexation

Whether removal would damage attached item of property

Whether the cost of renewal would exceed the value of the
attached property
o
[13] Purpose of annexation:

Whether the attachment was for the better enjoyment of the
item, or for the improvement of the realty

The nature of the property that has been affixed

Whether the item was in a position permanently or
temporarily

The function to be served by affixing the item
3.4.2 Dunn v Ericsson
This first proposed the “facts and circumstances” approach.
3.4.2.1 Facts
 Ericsson was the owner of a building
o
Lessee leased building (5 year lease, 5 year option)
o
Lessee leased a PABX (telephone exchange system) from Dunn (10
year lease, Dunn retained ownership of the PABX system)

Lessee did not renew lease of land, and vacated, leaving the PABX system
behind
o
It was installed into the building
o
It was nailed into the wall
o
Channels were cut for its use
3.4.2.2 Held
 The annexation was for the better use of the object, not for the improvement
of the realty;

The system could have been removed quickly and cheaply; and,

Regarding the “facts or circumstances”, the third party’s rights via the higher
contract on the PABX could not be compromised.
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3.4.3 Pulumberi v Palumberi
This case serves as a guide for many object-types.
3.4.3.1 Facts
Dispute between brothers over what the sale of a house included.
3.4.3.2 Held
Item
Venetian
blinds
Curtains
TV antenna
Carpets
Classification Reason
Chattel
“indirect and very slight form of annexation”
Outside
spotlight
with timer
Light fittings
Stove
Chattel
Portable
heater
Chattel
Chattel
Chattel
Fixture
Chattel
Fixture
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Conceded by purchaser
“merely for the better enjoyment of the TV set”
“[The carpets,] notwithstanding the slight degree of
annexation” “[were installed for the] improvement
and enjoyment of the premises”
Conceded by purchaser
Conceded by purchaser
“[The stove is] essential and integral to kitchen […]
necessary to ordinary use […] notwithstanding the
slight degree of annexation” “[was installed for the]
improvement and enjoyment of the premises”
Conceded by purchaser
30
3.4.4 Holland v Hodgson
Helps define level of annexation requirement.
3.4.4.1 Facts
The owner of a “worsted” mill had a mortgage on the property that included the
land, the engines and “all other fixtures whatever which … shall be set up and
affixed.”

There were 436 woolen looms installed
o
By nails into wooden plugs into the stone floor
o
This was in order to keep them in a proper position and steady
3.4.4.2 Held
The looms were classed as a fixture:

Since they were “affixed”

And since even the most basic mill requires these looms
o
i.e. common practice for them to be left
3.4.5 Hobson v Gorringe
This case held that rental agreements do not affect (in the classical test) the court’s
decision as to whether the object is a fixture.
3.4.5.1 Facts
 King owns a mill
o


Bolted into iron plates sunk into concrete

To prevent the engine from rocking/shifting
King mortgages his mill
o

Hires a gas engine from Hobson
Defaults on rental agreement and on mortgage
There is a dispute between the mortgagee and the lessor as to whether the
steam engine is a chattel or a fixture
3.4.5.2 Held
It was a fixture

Since it was annexed firmly to the soil
Note, the court said that the rental agreement did not affect its decision.
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3.4.6 National Dairies WA Limited v Commissioner of State Revenue
Decision regarding interconnected plant equipment standing “on its own weight.”
3.4.6.1 Facts
 National Dairies did not want to pay stamp duty on equipment
o

It would have to if it was found to be a fixture
The equipment was:
o
Mostly standing on its own weight
o
Mostly connected to the electricity, to gas and to water
o
Interconnected
3.4.6.2 Held
The items of equipment were considered fixtures:

Even though they were lightly affixed,

They were interconnected;

Installed for an indefinite period

And there was nothing to show that there was ever an intention of removing
the equipment once it was originally installed
3.4.7 Standard Portland Cement v Good
Regarding extraneous agreements that something is a chattel based on time.
3.4.7.1 Facts
 Rural property sold

o
100 tonne cement mill on land
o
standing on its own weight
Agreement for sale of land said the vendor may pick up the mill within the
first 12 months of the sale
o
He tried to pick it up after 12 months
o
Purchaser said it became a fixture
3.4.7.2 Held
The agreement showed that both parties had intended the mill to be a chattel

The breach of sale contract did not change the mill into a fixture

But it may have exposed the vendor to damages
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3.4.8 Reid v Smith
This case is used for “house-dwellings.”
3.4.8.1 Facts
 Houses resting on their own weight

On stilts driven into the ground

The vendor wanted to take the house away
3.4.8.2 Held
Was found to be a fixture – “part of the freehold”

“Any dwelling-house put on the land should be considered annexed to the
freehold”
3.4.9 D’Eyncourt v Gregory
This case is used for architecturally significant objects.
3.4.9.1 Facts
There were “architecturally significant” stones, statues, vases and seats, which rested
on their own weight.
3.4.9.2 Held
They were fixtures since they were part of the architectural design of the land.

The object is placed there “in order to complete the architectural design.”
3.4.10 Leigh v Taylor
This is used for the “better enjoyment of the object” rather than the realty, argument.
3.4.10.1 Facts
There was an expensive tapestry:

Wood was nailed into the wall

Canvas was stretched over the wooden frame

The tapestry was stretched over the canvas
3.4.10.2 Held
This was a chattel, since the affixation was not for the “improvement of the realty”,
but, rather, to improve the “enjoyment of the thing.”
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3.4.11 Spyer v Phillipson
This case is a good example for Tenant’s Fixtures.
3.4.11.1 Facts
 A lessee, unauthorized, installing expensive antique wooden paneling.
o
Wooden bits in wall, paneling drilled into bits
3.4.11.2 Held
This was a tenant’s fixture, and could be removed:

The price of the paneling was greater than the cost of removal

It was put in for the purpose of decorating, with the (apparent) intent to
repurpose after the move
o
Since it was expensive
o
And installed in removable manner
3.4.12 Webb v Frank Bevis
This case is about a “temporary buildings”.
3.4.12.1 Facts
There was a temporary building:

Mounted with rope (that could easily be undone)
o

And by the weight of the structure
On a sunk cement base
3.4.12.2 Held
The structure was impermanent, and, thus, a chattel, whilst the foundations were a
chattel, since:

The structure could have been removed without losing its identity
o

Was built in such as way that it could be removed
And the concrete “could not be detached [without it] ceasing to exist as
concrete”

Short term relationship
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4 Waste
Waste is alteration or damage to land by an occupier. Waste is often in issue with a
landlord/tenant relationship or life tenant/remainderman.
4.1 Permissive waste
Where an occupier allows the land to fall into disrepair. A person is not usually held
liable.52 Liability to repair may be created in the contract creating the relationship.53
4.2 Voluntary waste
Voluntary waste is a positive act, where the occupier intentionally damages the land.
A lessee is usually liable, unless excused by the lease.54 Even if excused, a life tenant
is liable for waste that is held to be equitable waste.55
4.3 Equitable waste
Equitable waste is any waste that is “wanton destruction”: a Court of Equity does not
allow this type of waste.56 However, a life-tenant may still contract out of this
liability.57
4.4 Ameliorating waste
Ameliorating waste improves the land. However, the Court of Equity may still
intervene if the waste is of a “substantially injurious character.”
Powys v Blagrave.
Conveyancing Act 1919 (NSW) s80(1), 84(1)(b).
54 Imperial Acts Application Act 1969 (NSW) s 32.
55 Conveyancing Act 1919 (NSW) s 9.
56 Vane v Lord Barnard.
57 Conveyancing Act 1919 (NSW) s 9.
52
53
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Part 2 – Torrens Title
5 The Torrens Title System
Priorities under the Torrens Title System:

Registered v Registered58

Registered v Unregistered59

Unregistered v Registered60

Unregistered v Registered
o
Legal v Legal
o
Legal v Equitable
o
Equitable v Legal
o
Equitable v Equitable
The party in bold/underlined has priority, unless:

(for R v R, R v U and U v R) one of the exceptions to indefeasibility is
relevant; or,

(for U v U) unless the earlier party is guilty of postponing conduct, or the
later party had notice.
5.1 Essentials
Note: most land in NSW (>99%) is Torrens Title land (the rest is “old system”, see CR
below).
This is a statutory system, created with the Real Property Act 1862, which is now
replaced by the Real Property Act 1900.
5.1.1 Certificate of Title
Each property, under the Torrens Title system, has a certificate of title, which lists:

In the First Schedule
o
The Registered owner

NB: at a time of registration of sale, the vendor’s name is
erased from the First Schedule and replaced by the purchaser’s
name.

In the Second Schedule:
Whichever interest is registered first (which is not the same as which
dealing occurred first) has priority: Real Property Act s 36(9).
59 Real Property Act ss 41, 42.
60 Real Property Act ss 41, 42.
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o
Mortgagors

Borrowing, with the property as a security
o
Lessees
o
Easements

o
Swapped rights on land (e.g. rights of way, etc.)
Restrictive covenants
However, the CT may not be an exhaustive list of interests in the property, since
there may be unregistered interests.
5.1.2

Timeline for a transfer of land under the Torrens system
Exchange of contracts
o
The Statute of Fraud 1677 requires that transfers of Land be in writing.
o
The Conveyancing Act 1919 requires certain attachments to a contract
for the sale of land (e.g. floor-plan, etc.)
o
Two identical contracts are exchanged (the one executed by the
vendor is given to the purchaser, and vice versa)

Here, a deposit is usually (but not necessarily) paid

Here, the purchaser gets an unregisterable equitable interest in
the land.61

They may be able to ask for specific performance of the
contract from the Court of Equity

Settlement/Completion
o
This usually occurs 6 weeks after exchange
o
The vendor hands over a “transfer”, transferring property from
vendor to purchaser.
o
NB: sensible vendors don’t transfer until payment

Note, if transfer occurs, but payment isn’t completed, the
vendor has a “lien” (an equitable interest in the land with
respect to the unpaid purchase price)


Lodgment
o
This usually occurs on the same day as settlement
o
The settlement forms and the CT must match perfectly
Registration
o
61
Now takes approximately 1 working day, used 3-12 months
Tanwar Enterprises Pty Ltd v Cauchi.
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5.2 Indefeasibility
5.2.1 Title by registration s 41
Torrens Title system is a system of title by registration.62 This is contrasted with old
system title, whereby title was given, and then you could, if you wanted to, register
it.
According to Breskvar v Wall, Torrens Title Land has the following attributes:

Title is not historical or derivative

A registration by a “void instrument”, if properly registered, transfers title
o
i.e. in the old system, title gotten by forgery does not count, in
Torrens, if registered property, transfer of title is held to have
occurred, especially when on sold to third parties.
It is the State of NSW giving you title.63
5.2.2 Indefeasibility of title
Indefeasibility of title is set out in the Real Property Act, ss 41-43.

s 41  title by registration

s 42  title is indefeasible, except for the exceptions

s 43  you don’t need to track the history of the property (as in Old Title):
you may deal with the register directly.
Thus, rules of indefeasibility are:

A person registered in the first schedule is subject to whatever is registered in
the second schedule (s 41, 42); and,

Order of registration is central for persons claiming in the second schedule (s
36(9)); and,

Registered interests prevail over unregistered interests (s 43).
Note: indefeasibility is now immediate – whilst previous authority said it
indefeasibility was been deferred (i.e. the holder’s title is indefeasible against
everyone but the party to the contract where title was granted),64 the weight of
current authority states that it is immediate.65
Real Property Act 1900 s41; Breskvar v Wall (Qld).
Commonwealth v NSW, per Isaac.
64 E.g. Gibbs v Messer.
65 E.g. Mayer v Coe; Schultz v Corwill Pty Limited; Breskvar v Wall; etc.
62
63
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5.2.3 Unregistered interests
Unregistered interest may come out of the following (where interests are
unregisterable):

The interest of a purchaser arising from a contract for sale of land
o
On exchange of contracts, an unregisterable equitable interest in the
property is created

Mortgages created by the deposit of title deeds
o
Where there is no mortgage in writing, there may still be an equitable
mortgage where a financier lends money in consideration for the title
deed being deposited.66

An agreement to grant a mortgage
o
This is enforceable in a similar way to the right of a person who has
exchanged contracts but not yet transferred.67


Oral leases for three years or less
o
Normally there is a requirement for writing.68
o
This is forgiven if:

The term of the lease is not greater than 3 years

It is for market value rent

The lessee has an immediate right to possession
Written leases where the approved form is not used
o
Leases created by other forms (i.e. unregisterable under the Real
Property Act, but valid as per the Residential Tenancies Act) may still be
a valid unregistered interest.

5.2.4
Beneficiaries of interests held on trust by a trustee
o
These interests need not be in writing69
o
Trusts may not registered owners/interest-holders70
Cases illustrating indefeasibility
5.2.4.1 Mayer v Coe
Illustrates indefeasibility/fraud of a third party (i.e. the fraudulent party is not party
to the contract).
5.2.4.1.1 Facts
 Mayer is an owner

She left CT with solicitor.
Cooney v Burns.
Australia and New Zealand Banking Group v Burns.
68 Conveyancing Act s 23D.
69 Conveyancing Act s 23C.
70 Real Property Act s 82.
66
67
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o
Solicitor was dishonest
o
Represents to Coe that Mayer wanted a mortgage


Solicitor misappropriates moneys
Coe gets the mortgage registered in the second schedule
5.2.4.1.2 Held
Whilst under Old System title, the mortgage would have been void,71 under Torrens
Title, Coe had indefeasibility,72 and the mortgage was valid.
If Mayer had sued before Coe was registered, Coe would have no title.
The fraud was of a third party, and, thus, this did not constitute an exception to
indefeasibility.
5.2.4.2 Bursill Enterprises Limited v Berger Bros Trading Co Limited
This case is an example of indefeasibility and authority regarding weird registered
interests (here, a strange right of way).
5.2.4.2.1 Facts
There are 2 adjoining two adjoining properties, with a front on George

This was an early Torrens Title property

There was a registered easement (a Right of Way) for the benefit of the
neighbor
o
This granted the neighbor passage
o
The fine print of this easement also granted the neighbor exclusive
rights to any building more than 12ft above the easement.

The neighbors find out about the easement
o
The owner says it should be limited in scope to a normal easement
o
Since an easement could not ordinarily give rights such as those
expressed
5.2.4.2.2 Held
The High Court held that the easement, as well as the exclusive right to possession
above the easement was indefeasible, since they were registered.
5.2.4.3 Fels v Knowles (NZ)
Another example of indefeasibility, also: trusts.
5.2.4.3.1 Facts
A landlord holds the land on trust for beneficiaries (note, a trust cannot hold the title
to a property: Real Property Act s 82).
71
72
E.g. Re Cooper.
Via s 42 of the Real Property Act.
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
The trust agreement said that he could not sell, but could lease

He issues a long-lease
o

With an option to purchase
This lease was registered
The trust said that this lease went against the trust-deed (i.e. he had no power to
grant the option to purchase), and, thus, that the option was invalid
5.2.4.3.2 Held
The High Court held that the option was indefeasible, because it was registered. The
beneficiaries might have a cause of action against the trustee for breach of contract.
5.2.4.4 Koteff v Bogdanovic
This case is authority that indefeasibility extends to properties given as gifts.
5.2.4.4.1 Facts
A property in Anondale owned/occupied by Koteff Snr

He is getting old
o
Hires a chick to take care of him
o
Tells her she can get a life estate after he dies

Court holds this to be enforceable in equity against the his
estate

He dies
o

Leaves everything to his son
Son registers as recipient of gift
5.2.4.4.2 Held
Under old system, “you cannot hold greater title than the giver,” who had already
transferred the right.
However, under Torrens:

Son registered

Thus, his title was indefeasible as per s 42.
5.2.4.5 State Bank of NSW v Berowra Waters Holdings
This case is Authority that the registration of a discharge of mortgage is binding even
if made in error.
5.2.4.5.1 Facts
 SB holds BWH’s mortgage

o
A clerk calculates a wrong payout sum (less than actually required)
o
Sum is paid
Discharge of mortgage is registered
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5.2.4.5.2 Held
Mortgage was gone at registration of discharge, despite the mistake. The bank may
have a cause of action in debt, but the interest in land is dissolved.
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6 Torrens Title - Exceptions to indefeasibility
These exceptions apply where at least one party is registered. Sometimes, where
under the rules of indefeasibility the person would lose, they might win if an
exception is found.
6.1 Fraud (make flowchart)
Notice of itself is not fraud.73 Fraud requires the additional element of “dishonesty”
or “some moral turpitude.”74
6.1.1 Mayer v Coe
This case requires the fraud to be by one of the involved parties (/the parties on the
register), or for one of their benefits.
6.1.1.1 Facts
The solicitor defrauded Mayer, not Coe, who bought the property
6.1.1.2 Held
Since Coe was not involved in the fraud (nor anyone else on the register), this was
not sufficient for an exception to indefeasibility to be created.
6.1.2 Wicks v Bennett
This case is authority that notice of itself is not fraud.
6.1.2.1 Facts
 Landlord was subject to an unregistered lease
o
The short tenancy exception (Real Property Act 42(1)d) was not yet in
force


Landlord sold to the purchaser
o
Who settles
o
With actual notice of the lease
o
And registers
Purchaser then attempts to evict the tenant
6.1.2.2 Held
That the Purchaser had notice of the lease did not make him subject to it.
73
74
Wicks v Bennett; Leros v Terara.
Stuart v Kingston.
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6.1.3 Loke Yew v Port Swettenham Rubber Co
This case is a good example of fraud.
6.1.3.1 Facts
 Eusope owns land

o
Sold a parcel to Loke Yew
o
Who did not register
Eusope goes to sell the rest of the land to Rubber
o
Eusope tells Rubber about Loke Yew
o
Rubber persuades Eusope to transfer all of the land, saying that they
would recognize Loke Yew’s holding: that they would “take care of
it”

Eusope transfers whole parcel of land
o
Rubber tries to evict Loke Yew
6.1.3.2 Held
The Privy Council held that the company did act fraudulently: since they made an
assurance they never intended to keep. Thus, they were subject to Loke Yew’s
unregistered interest.
6.1.4 Breskvar v Wall
This case is authority for the imputability of fraud, where the fraudulent person is
acting as the agent of one of the parties registered.
6.1.4.1 Facts
 The Breskvars were registered owners of land
o
Borrowed money from Mr. Petrie

Instead of signing a mortgage, he convinced them to sign a
blank transfer as security

Mr. Petrie wrote his grandson, Mr. Wall, into the transfer, as the transferee
(recipient)
o

Mr. Wall then transferred the property to Alban Pty Limited.
Before registration, the Breskvars sued Mr. Wall
6.1.4.2 Held
The High Court held that the fraud of Mr. Wall’s grandfather, Mr. Petrie, was
imputed onto Mr. Wall, since he acted as Mr. Wall’s agent. Thus, there was fraud,
and the Breskvars were to be reinstated in the register.
Note, Breskvar failed against Auburn, since they were more innocent (Breskvar was
guilty of postponing conduct).
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6.1.5 Schultz v Corwill Pty Limited
Where the alleged agent is acting “on a frolic” of his or her own, there is no fraud.
6.1.5.1 Facts
 Mrs. Schultz has money to invest by way of first mortgage


Mr. Galea recommended that she advance the money to Corwill
o
Mr. Galea was her solicitor, and the solicitor for the company
o
He misappropriated the money
Mrs. Shultz dies
o
Mr. Galea persuades Mr. Shultz to sign a discharge of mortgage before
the mortgage was fully paid out
o
Mr. Galea registers this discharge, without the money being paid
6.1.5.2 Held
The High Court held that Mr. Galea was acting on “a frolic of his own” which did
not benefit the company/without the knowledge of the company. Thus, the fraud
was not imputed and the register determined rights.
6.1.6
Assets Co Limited v Mere Roihi (“The Assets Case”)  reconsidered by
Bahr v Nicolay
This case is authority that it is not fraud to not be aware of a legislative impediment
which would have disentitled the person now registered from becoming registered.
Thus, that there must be actual fraud/knowledge of a dishonest act.
6.1.6.1 Facts
 New Zealand law prohibited certain types of land sales

Maori sold to Assets in breach of this law
6.1.6.2 Held
There was no fraud since the Assets Co did not have an “actual appreciation
[/knowledge] of dishonesty,” i.e. they did not know that it was in breach, and thus
there was no intention.
6.1.7 Bahr v Nicolay
This case illustrates how acknowledgement of a prior agreement may make one
subject to it, if it is subsequently dishonestly repudiated. Also, it was held in the
minority judgment (though not in the majority judgment) that either fraud or
personal equity may be held where the intention to renege on a prior assurance was
formed after registration.
6.1.7.1 Facts
 The Bahrs owned some land, but were short on money
o
They sold to Nicolay (for $32,000) (who registered)
o
With the option to repurchase (for $45,000)
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

Nicolay on-sold the property to the Thompsons for ($42,000)
o
On the condition that they respect the Bahrs’ repurchase option
o
Thompson said they would respect this
o
And confirmed this to the Bahrs after purchase
The house price goes up
o
The Bahrs go to exercise their purchase option,
o
Thompson then changes his mind and said the option is no longer
valid
o
Said it was void, since they had a registered interest trumps an
unregistered interest
6.1.7.2 Held
The Supreme Court held that Thompson was registered and thus his title was
indefeasible. However, this was overturned in the High Court:
Mason and Dawson JJ (Minority)

Relied on Fraud
o
Whilst reaffirming that notice of an unregistered interest does not
bind one to an unregistered interest, since there was a requirement for
“moral turpitude”,

They held that some kinds of equitable fraud were still fraud:
o
Rejecting the decision in the Assets Case, that “Fraud means actual
fraud […] not what is called […] equitable fraud”

They said that fraud should not be limited to the time before registration
o
“Why should the exception not embrace fraudulent conduct arising
from the dishonest repudiation of a prior interest which the registered
proprietor has acknowledged”
o
“The repudiation is fraudulent because it has as its object the
destruction of the unregistered interest notwithstanding that the
preservation of the unregistered interest was the foundation […]
underlying the execution of the transfer”
Wilson, Brennan and Toohey JJ (Majority)

These judges refused to extend fraud to situations where intention to renege
on a prior assurance occurred after registration
o
Since the fraud alleged was fraudulent registration (which did not,
here, occur)

6.1.8
Thus, whilst they had an action in personal equity, fraud failed
Leros Pty Limited v Terara Pty Limited
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Like Wicks v Bennett, this states that knowledge in and of itself is not fraud.
6.1.8.1 Facts
 There is a commercial property subject to a 5 year lease (with a 7 year option)

o
In Western Australia, only a 5+ year lease is required to be registered
o
Thus, this lease was unregistered
Landlord (Vendor) put the property on the market
o


Vendor asks Purchaser to accept this 7 year extension
o
Purchaser says no
o
Vendor says no deal
o
Purchaser is not willing to negotiate
Vendor then offers property, without being subject to the lease
o

Tenant exercises 7 year option
Purchaser buys
Purchaser has knowledge (equal to actual notice) of lease but has not agreed
to be bound by it
6.1.8.2 Held
Knowledge, even actual notice, did not constitute fraud.
In obiter, the nature of Torrens Title, namely that it is a system of “title by
registration rather than registration of title,”75 and that it is more appropriate for
those with an equitable interest to create a caveat.
6.1.9
National Commercial Banking Corporation of Australia Limited v
Hedley
This is authority for a different type of fraud, namely, fraud on the Registrar
General.
6.1.9.1 Facts
 The Hedleys are husband and wife
o
Mr. Hedley goes to National to negotiate a mortgage


Bank officer approves the loan and requires that both parties sign
o

Secured by a property owned by both Mr. and Mrs. Hedley
Mr. Hedley signs as himself and as his wife
Officer reports that he witnessed both signatures (though he did not know
there was a forgery)
6.1.9.2 Held
 Usually, this would not be fraud, since the bank did not do this for personal
gain, and was, in fact, a victim of Mr. Hedley’s fraud
75
Breskvar v Wall.
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
However, since they said they witnessed the signature, they committed fraud
against the registrar general, and thus Mrs. Hedley’s portion would be
excused.
Note: one co-owner may force the sale of the property.76
6.1.10 Bank of South Australia Limited v Ferguson
This case is authority that the fraud must flow from one interest to another: a fraud
between the bank and his employee (i.e. within one interest) will not negate
indefeasibility.
6.1.10.1 Facts
 Ferguson applies to borrow money from Bank

o
Tells his financial position accurately
o
Officer says he cannot approve the loan
Another officer falsifies financial details in order to get the loan approved
o


Ferguson, at all times, knew the exact amount that he was to be lent
The bank lends him the money
o
He cannot repay
o
The bank wants to reposes
Ferguson’s lawyers discover the officer’s fraud (to the Bank) and alleges
fraud
6.1.10.2 Held
The fraud was between the Bank and the Officer, and Ferguson was not subject to the
fraud (at all times he was aware of how much money he was to receive). The
approval of the loan did not constitute financial advice that Ferguson could afford
the repayments.
“For fraud to be operative, it must operate on the mind of the person said to have
been defrauded.”
76
s 66F of The Conveyancing Act.
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6.2
The Personal Equity Exception
This exception to indefeasibility is in common law only, i.e. it is outside of the Real
Property Act.
It is also known as: “a right in personam,” “right in person,” “personal right,”
equitable right,” “equitable obligation,” and “personal equity.”
It has its roots in Frazer v Walker:

“[Indefeasibility does not deny] the right of a plaintiff to bring against a
register[ed] proprietor, a claim in personam, founded in law or in equity”
This may be summarized as follows: where there is an agreement to be subjected,
there is an unregistered, enforceable, equitable obligation to honor the title you have
agreed to be subjected to.
6.2.1 Barry v Heider
This court outlines the principles of the personal equity exception.
6.2.1.1 Facts
 Barry is registered

o
Borrows money from Schmidt
o
Who, dishonestly, makes Barry sign a transfer, rather than a mortgage
Barry gives Schmidt the CT (this is usual for mortgages)
o
If the action was brought here, a court could regularize the transaction
(i.e. make it a mortgage instead of a transfer)

Schmidt, then, mortgages the house in favor of Heider
o

Heider lodges the transfer and the mortgage
o

Who is unaware of the fraud in the original transfer
Before it is registered, Barry finds out, and challenges the mortgage
Barry claims that since he is still registered, and Heider is unregistered, his
title is indefeasible
6.2.1.2 Held
The high court held that a personal equity exception to indefeasibility will exist
where:

A registered person creates the unregistered interest; and/or,

A registered person engages in conduct that contributes to the creation of
the unregistered interest.
Although Barry did not create Heider, he armed Schmidt to create Heider by
executing the transfer.
6.2.2
Personal Equity in Bahr v Nicolay
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The majority in this case found that a personal equity was created.
6.2.2.1 Held
Since the intention to renege on the promise was only made after registration, fraud
was ruled out.
However, a registered person (Thompson) agreed with a second person (Nicolay) to
be subject to a third (Bahr).

The agreement to acknowledge the option amounted to an agreement to be
subject to the Bahrs
Thus, when Thompson bought the property, they were purchasing on trust for
interests still held by Bahr. And, thus, the unregistered Bahr was able to rely on the
personal equity exception to indefeasibility.
This created a third type of personal equity exception:

Where a registered interest agrees with a second person to be subject to a
third (the unregistered interest).
6.2.3 Mercantile Mutual Life Insurance Co Limited v Gosper
This case is seen as controversial, but continues to be authority. It regards a
fiduciary duty where there is an existing legal relationship between parties.
6.2.3.1 Facts
 Gospar owns land and is registered in the first schedule


o
In the past, she borrowed money from Mercantile
o
This borrowing was recorded in the second schedule as a mortgage
Her husband, without her knowledge or permission
o
Goes to Mercantile
o
To double the loan
o
Although the house was still worth enough to secure the loan
Mercantile agreed to the increase in debt: on the condition that Mrs. Gospar
signed the variation

o
Mr. Gospar forged her signature
o
The variation was registered
Mr. Gospar dies
o
Mrs. Gospar did not know of the variation
6.2.3.2 Held
Justice Meagher, in dissent, said that this was a case of pure Mayer v Coe and that
upon registration of the variation, it became indefeasible. He stated that the fraud
was between the bank and the third party, and that, thus, fraud did not break
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indefeasibility (Mercantile was not aware of Mr. Gospar’s fraud).
Kirby, stated that Mercantile owed Mrs. Gospar a duty to inquire of her (rather than
of her husband), since it was her mortgage being extended.
The authoritative judgment comes from Marney:

Since there was a pre-existing relationship between Mercantile and Mrs.
Gospar (i.e. that of mortgagor and mortgagee)
o
Mercantile owed a fiduciary duty to Mrs. Gospar not to use the CT
(which was in their possession) without her express authority
o

This duty was breached, thus she has equity.
Thus, if there is no pre-existing relationship, the mortgagee, upon
registration, acquires immediate indefeasibility.
This has been challenged by Windeyer, who says that as a matter of conveyancing
practice, consent is rarely given, and, thus, that no fiduciary duty could have been
owed. This was given in obiter in an unreported case, and awaits higher
confirmation before becoming authority.
6.2.4 Grgic v ANZ Bank
This case challenged the authority of Gospar, but was differentiated factually and
held to be more similar to Mayer v Coe, since there was no pre-existing relationship
between the parties.
6.2.4.1 Facts
 Grgic was a registered owner
o
Wife and son went to ANZ to negotiate a mortgage (unbeknownst to
Grgic)


ANZ says “I would like to meet Grgic”
o
Wife/son brought an imposter
o
Who signed mortgage
Mortgage was registered
6.2.4.2 Held
Since there was no pre-existing relationship, registration created indefeasibility.
6.2.5 s 56C of the Real Property Act is Enacted
This section requires the bank to satisfy themselves of the true identity of people
signing mortgages: they must keep records. It is not yet in effect, but will affect the
above cases.
6.2.6 Storey v Advanced Bank
This case regards the company seal.
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6.2.6.1 Facts
 Storey negotiates a loan with Advanced Bank

o
In the name of a company
o
Storey is the director, but he requires board approval for loan
He doesn’t get board approval, but affixes company seal
6.2.6.2 Held
If, prima facie, the company seal is affixed, there is no requirement for the bank to
check with the board.
6.2.7 Snowlong Pty Limited v Choe
This case is an example of either fraud or personal equity.
6.2.7.1 Facts
 A landlord is subject to an unregistered 5 year lease

o
Purchaser agrees to buy subject to the lease
o
Purchaser registers
Purchaser seeks to kick out tenant, since his title falls outside of the short
tenancies rule
6.2.7.2 Held
The purchaser agreed to be subject to the lease: 77

If he formed the intent to break the agreement before registration, it is
fraudulent

77
If he formed the intent after, he is subject to a claim of personal equity
As in Bahr v Nicolay.
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6.3 Prior folios (s 42(1)(a) of the Real Property Act)
Where the Land Title Office makes a mistake, and there are two different CT’s for
the same piece of land, the older CT prevails.
If an error is made, you can recover damages.
6.4 Omitted/misdescribed easements (s41(1)(a1) of the Real
Property Act)
Where easements are omitted or misdescribed, there is an exception to
indefeasibility. Most easements are now registered, but, under Old System, they
could be registered or implied, thus they were not all written (although they were all
equally enforceable).
If an easement is created when the land is old-system, it is continuingly enforceable.
The elements for an easement are (as held in Re Ellenborough Park):

There is a dominant an a servient tenement;

The easement accommodates the dominat tenement;

The dominant and servient tenement must be owned by different persons;
and,

An easement must be capable of forming the subject of a grant
Further:

When the burdered land was Old System, the easement may still be protected
(James v Stevenson)

Even if an implied easement is registered and forgotten (or omitted by the
registrar-general), it is still considered omitted, and thus, enforceable (James v
Registrar General)

If an easement is created where the land is old title, and the land
subsequently becomes Torrens Title land, the easement is still protected
(Australian Hifi v GHL)

If land is Old System, and an easement is used for 20 years continuously, a
proscriptive easement is created.

Implied/proscriptive easements cannot be created under Torrens Title.
Thus:

An easement is omitted if the easement was created when the servient
tenement was Old System and was not subsequently registered: that is, even
an unregistered easement, in this case, will be held to be binding.

An easement is also omitted if it is registered, and subsequently omitted by
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the registrar general.
6.5 Misdescribed/omitted profit â prendre (s 42(1)(b) of the Real
Property Act)
A profit a prendre is the right to enter land and remove produce.
Where the land was Old System: where it was left off the title, it is considered
“omitted”, and is still enforceable.
Where the is Torrens, it is only omitted where all steps have been taken: including
completing and lodging appropriate documents.
6.6 Wrong Boundaries (s 42(1)(c) of the Real Property Act)
Where boundaries are misdescribed in the register, they may be rectified.
6.7 Short term tenancies (s 42(1)(d) of the Real Property Act)
(Maybe read more)
Note, an oral lease is enforceable when:

The period of the tenancy is three years or less; and,

The price is “the best rent reasonably obtainable”; and,

There is an immediate right to possession.
This exception is only available when a tenant can show:

The lease is oral and enforceable, or written

The registered person had notice of the tenant
o
This may be actual, constructive, or imputed notice
6.7.1 Actual notice
The purchaser literally knew that there was a short tenant.
6.7.2 Constructive Notice (Marsden v Campbell)
What a person should have know if a person carried out all the enquiries that a
reasonable person should have carried out.
Note: you have constructive notice of everything you would have learned had you
searched the register/ASIC files (Mills v Renwick; Conveyancing Act s164)
Knowledge that there is a wife may be constructive notice of her interest (joined) in
the property (Williams and Glyn’s Bank Limited v Boland)
6.7.2.1 Facts
 There was an owner with a mortgage
o

And a lease, in favor of the mortgagee
The owner sells
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o
He doesn’t know about the tenant
o
But sees animals grazing
6.7.2.2 Held
He had constructive notice: he should have asked, if you didn’t live in the house,
why was there grazing?
6.7.3 Imputed notice
Actual or constructive notice of the tenant by the agent is imputed onto the principal.
6.7.3.1 The Clyne cases
It was held, that although Clyne did not know the name/specifics of a rental
agreement, he knew that there was a tenant, and this created notice (Clyne v Lowe)
Clyne mortgages house to Building Society, which he defaults on purpose, so the
building society can sell it unencumbered: the building society had constructive
notice of the tenant (USB Co-operative Building Society (No 11) Limited v Clyne).
6.8 Overriding statutes
The subsequent statute prevails; the federal statute prevails over state statute.
6.9 Possessory title (Part 6A of the Real Property Act)
This is similar to the Old System concept of Adverse Possession.

If you have title, and are registered in the first schedule

And you allow a trespasser to live unchallenged for 12 years on the land

Then the trespasser has better title
Principles outlined in Mulcahy v Curramore

Posession must be open, not secret

Peaceful, not by force

Adverse, not consented

It does not have to be the same person for 12 years:
o
o
ABC

The person there on the 12th anniversary gets title

There needs to be no gap
Independent

I.e. B is adverse to A who is adverse to owner

A gets title
Signs of possession:

Fixing fences (Mulcahy)

Grazing animals (Hanarnett v Green)
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
Paying rates (Kirby v Cowderoy)
7 Torrens title - priorities between unregistered parties
The priorities go as follows, where equities are equal (there is no postponing conduct
and the latter party has no notice).

LvL

LvE

EvL

EvE
7.1 Characterizing unregistered interests
This area of law is developed outside of the Real Property Act, instead, it is defined by
the common law with regards to Old System land.
However, the classification of an interest as legal or equitable may be different
between Old System and Torrens cases.
Unregistered interests may be protected by caveats.
7.1.1 Legal v Legal
The earlier legal interest prevails, if the equities are equal (i.e. the latter party had no
notice (actual, constructive or imputed) of the earlier interest and the earlier party
did not engage in postponing conduct) by reason of nemo dat quod non habet (“a
person cannot convey an interest which he/she does not have”).
7.1.2 Equitable v Equitable
Where the equities are equal, the earlier equitable interest will prevail by reason of
qui prior est tempore potior est jure (“first in time”).
If the earlier party engaged in postponing conduct, the equities are no longer equal
(Heid v Reliance), and “the best equity” will prevail.
7.1.3 Legal v Equitable
“Where the equities are equal, the law prevails” (Pilcher v Rawlins).
Further, if a subsequent equitable interest is created, the legal interest prevails if it is
acquired for value, in good faith, and without notice of the earlier equitable
interest.

For value
o
Consideration in money or “money’s worth”. Must be greater than a
nominal sum, but can be less than the full value of the house (Bassett v
Nosworthy).
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
For good faith
o
Lack of notice will usually imply good faith.
o
However, it is separate, and may be found to be unsatisfied, even
when no notice is given

For notice
o
If notice is given before the consideration for the legal interest is paid,
notice is considered given (Pilcher v Rawlins)
7.2 Caveats (Part 7A of the RPA) (Todo: caveats by registrar
general)
A caveat is a protection of an unregistered interest, put, unvetted (s 74 Q), on the
register, until challenged. It prevents subsequent dealings (i.e. dealings lodged after
the lodgment of the caveat (Re Rush) being made on the property (s 74H RPA). Note,
it does not work retrospectively.
7.2.1 Unregisterable interests
Some interests are unregistered because they are unregisterable, e.g.:

A purchaser who has exchanged contracts has an equitable, unregisterable
interest (Tanbar).

A beneficiary under a trust may not be registered (s82 RPA)
o
Though trusts may be implied, without the need for writing (s23C
Conveyancing Act)


Unregisterable mortgages (Coonie v Burns)
o
A first mortgage created by deposit of deeds
o
A loan with the security of creating a mortgage
o
Where a mortgage is created, but not in an approved form
Some leases
o
E.g. Oral (s23D Conveyancing)

Requirement for not greater than 3 years

Best reasonably obtainable price

Owner (rather than lessee) has no immediate right to
posession

Etc.
7.2.2 Part 7A of the RPA
A caveat prevents the registration (and creation of indefeasibility) of subsequent
dealings on the land (s 74H RPA).
The caveat must specify (74F(5) RPA):

Name of caveator

Address
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
The name an address of registered proprietor

The prescribed particulars of the legal or equitable interest (Kerabee Park v
Daley)
o
The precise nature of the interest
o
The precise date
o
The precise quantum

A reference to the parcel’s folio

What part of the land the caveat applies to

Where the caveator may be served notices.
The strictness of the above is relaxed by s 74L (RPA) – “the court shall disregard any
failure … to strictly comply with the requirements of the act”.
But it must still be sufficient enough to inform the reader of the nature of the interest
claimed (Hanson Construction).
You can caveat your own property if you have two interests (Sinclair v Hope)
7.2.3 Removal of caveats
Note: it is a vendor’s responsibility to have a caveat removed before completing a
contract for sale of land (Godfrey v Kanangra).

A lapsing notice may remove a caveat. A lapsing notice is served under ss 74I
(person who wishes to make a dealing), J (registered proprietor or holder of
interest) of the RPA.
o
This requires that the caveator commence Supreme Court proceedings
within 21 days, or the caveat is null.
o

The caveator, here, pays for court costs.
74MA is used when the interested party cannot wait 21 days.
o
This allows a person “who claims interest” to remove a caveat by
bringing a court action.
o

This is expensive.
A court may extend a caveat if the caveator can satisfy the court it has a case
(Penny v Fountain).
o
This is lodged under s 74K, which allows a court to deal with caveats
created under 74F as “it seems fit”.
You can only caveat once, per order. You need the court’s permission to recaveat
where the caveat has lapsed (s 74O).
7.2.4 Damages
Damages may be claimed under s 74P where:

A person wrongfully/without reasonable cause lodge a caveat; or
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
Where a person procured the lapsing of such a caveat; or

Where a caveat is not withdrawn/is reapplied after an order to do so.
Damages may also be claimed where: (as per Beca Developments v Idameneo)

The caveator did not have a caveatable interest

The caveator did not have an honest belief based on reasonable grounds that
a caveatable interest existed (Hilparm)

The caveator lodged the caveat to deliberately infringe the interest of the
registered proprietor
Dissent in this case said the burden should be lowered to “lodged with no reasonable
cause, where no caveatable interest existed”.
7.3 Injunctions
S 74R of the RPA states that you can apply to the Supreme Court for an injunction to
prevent registration, in addition to, or in lieu of the recording caveat.
The judge is the duty officer in the court of equity.
The judge is available after hours (for when lodgment has occurred, but before
registration).
The judge will often ask, “Why didn’t you caveat earlier”.
A common remedy is a two-day freeze on proceedings.
7.4 The difference between unregistered interests: legal and
equitable interests.
An essential factor in determining priorities in unregistered interest is whether they
are classified as a legal or an equitable interest.
7.4.1 Unregistered legal interests
An unregistered interest is a legal interests iff:

It is an unregistered lease that satisfies s 23D of the Conveyancing Act

It is a transfer/mortgage which satisfies s 43A of the RPA
7.4.1.1 Unregistered legal interests – Leases under s 23D of the Conveyancing
Act
An unregistered lease is a legal interest if:

The lease itself does not exceed three years
o
Note, a 5 year lease, in writing, is binding on the person who made
the agreement, under equity (Chan v Creston)

The lease is for the best rent reasonably obtainable
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
The lease gives the lessee an immediate right to possession
o
i.e. lease period has already begun
A lease which satisfies the above criteria may be written, or oral (s 23D of the
Conveyancing Act provides an exception to the requirement under s23B, s54A of the
Conveyancing Act for writing).
7.4.1.2 Unregistered legal interests (Protection of next registerable interest)– s
43A
This is to protect purchasers or first mortgagees after settlement, before registration.
This person, who previously would only hold an equitable interest, by value of 43A,
is held to have a legal interest.
Where there is competition between an earlier unregistered equitable interest and the
interest of a purchaser or first mortgagee, s 43A enables the mortgagee/purchaser to
prevail (the latter legal interest will prevail over the earlier equitable).
The dealing in question must be a “dealing registerable”, the requirements of which
are as follows:

The dealing must be accompanied by the CT, or by a direction to the
Registrar General to use the CT (if the Registrar General is already in
possession of the CT): s36(6)

It must either be a transfer or a first mortgage: these are the only people who
have the CT

After settlement (receives CT) and before registration

The dealing must be stamped, otherwise it is not registerable: Stamps Duties
Act

The dealing must be in an approved form, without defect
o
If it is defective, the dealing is not a dealing registerable until the
Registrar General’s requisitions have been answered.

The dealing must not be void: (Mayer v Coe; Jonray v Partridge). A void
dealing, before registration, is worthless. Once registered, it is indefeasible

The person taking the dealing has no notice pre-settlement (IAC v Courtenay)

The dealing must be the next deal registerable (IAC v Courtenay)
o
E.g. the discharge of mortgage occurs before the transfer, etc.
7.4.1.2.1 IAC v Courtenay
This case is authority for the requirement that it is only a legal interest where it is the
next deal registerable.
7.4.1.2.1.1 Facts
 Ms Austin is regd owner of land
o
Suitable for subdivision
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
o
Sold to Courtenay
o
And lent him most of the money
Thus Ms Austin had the Mortgage (Lodged, 12 months later, had still not yet
been registered)

Courtenay sells back to Austin (not completed)
o
Austin’s solicitor a crook, contract of sale not completed
o
Austin thought she had bought it back, but really solicitor just
attempted to cancel the original sale
o
In reality, Austin was still subject, and Courteney had an equitable,
unregistered interest on the property

Austin sells to Denton S/D
o
Solicitor blabs about cancelling sale, and thus, that Courtenay’s
equitable interest may still exist
o

Mortgages

1  Hermes (U/R)

2  IAC (U/R)
Courtney now wants to keep house (equitable, but first in time)
7.4.1.2.1.2 Held
Hermes and IAC were not the next registerable, since the transfer would have to be
made before their mortgage could be registered.
Denton had notice of Courtenay’s interest (via their solicitors, constructive notice
was given), thus Courtenay’s interest prevailed. (NB: Austin’s repurchase was void
because Austin defaulted)
If Denton was to be protected by s 43A, it might be that the protection can roll down
the line to Hermes and IAC?
7.4.1.2.2 Jonray v Partridge (Approved in HC by Meriton v McLaurin)
This case is authority for the assertion that if 43A protection is given to a party, this
protection can roll down the line.
7.4.1.2.2.1 Facts
 Australian Express is registered proprietor of land
o

First mortgage held by Bamberger
Australian Express entered into a contract for sale with Moore, still subject to
Bamberger’s mortgage

Moore entered into a contract for sale to Jonray
o
After exchange, before settlement, Moore and Jonray argued about
whether Moore was required to discharge the mortgage
7.4.1.2.2.2 Held
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Jonray did not need to be the next registerable; as long as Bamberger was protected
under s 43A, this protection would be passed on to Jonray.
All a party needed to do (rather then be the direct next registerable party) was hand
over whatever documents were necessary (i.e. transfer, discharge, etc.), so that the
party could obtain registration  the vendor must give over the relevant documents
so that the purchaser may become registered.
7.4.1.3 Successive effect
With the handing down of a legal protection as per s 43A, the protection offered
extends any claimant claiming through the protected interest (i.e. anyone who relied
on the protected interest having priority, such as subsequent dealings) (Wilkes v
Spooner; Meriton v McLaurin).
This is regardless of whether the interest was purchased or given, protection is
offered as long as they did not participate in the original breach of trust
(Staplefored).
7.4.2 Unregistered equitable interests
Any unregistered lease that does not satisfy s23D of the Conveyancing Act is an
unregistered equitable interest.
A lease longer than 3 years should be registered (s53 RPA), any longer that is
unregistered is an equitable interest (Carberry v Gardiner), and enforceable in equity
(Leitz Leeholme Stud v Robinson).
A lease less than three years may be registered (Parkinson v Braham).
If an option to renew brings the lease to more than three years, this does not make
the lease one of greater than three years. This is an equitable interest, since it is not
protected by the short tenancies exception (s42(1)(d) RPA)
More include:

Purchaser who has exchanged contracts, but not settled (purchaser’s lien)

A second, or subsequent mortgage

An agreement to grant a mortgage

A person who hold a mortgage supported by the deposit of title

A beneficiary under trust

A person enjoying a restrictive covenant
7.5 Priorities between unregistered interests
Where equities are equal:

Legal v Legal
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
o
Earlier legal prevails
o
Nemo dat quod non habet
Legal v Equitable; Equitable v Legal
o
Legal prevails (Northern counties v Whipp)
o
If legal is subsequent, it will only prevail where it was purchased
(Wilkes v Spooner):
o



In good faith

Without notice

For value
Where the equities are equal, the law prevails
Equitable v Equitable
o
Earlier equitable prevails
o
Qui prior est tempore potior est jure
Mere equity v Equity
o
Later equitable prevails
For two equitable interests, the court is flexible in determining the better equitable
interest (Heid v Reliance):

Where the late of two equitable interest has notice of the first, the first will be
the better equity

Where the earlier postpones, it will be the worse equity
7.5.1
Types of equitable interests: equitable interests, personal equities and
“mere” equities
The earlier equitable interest will not prevail where the earlier equity is a “mere”
equity  where the interest requires the assistance of a court of equity to remove an
impediment to the interest, e.g.:

The right to have a document rectified

The right to have a transaction set aside because it was procured by the fraud
of another
In Latec, the equitable right of a mortgagor (Terrigal) to set aside the transaction
procured by fraud (Latec) was held to be a mere equity: the equity created by Latec
(MLC) was greater, since MLC’s interest was paid for with value, and without notice.
A mere equity has no registerable interest: it is closer to a cause of action in equity
(i.e. for an injunction or specific performance, etc.)
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7.6 Notice
If the later party has notice of the earlier party, the earlier party will prevail (most
relevant to earlier legal, later equitable)
8 Torrens title – unregistered interests: postponing Conduct
Postponing conduct would mean that “the better equity” prevails: that is “the
conduct of the holder of an earlier interest will determine whether […] the earlier
interest should be postponed at a later interest.”
The idea of postponing conduct is based on conveyancing practice:


At V sells to P, they exchange contracts then settle/complete
o
At settlement/completion, V hands over title deeds/CT
o
If CT is transferred at another time, there may be postponing conduct
With a mortgage
o
Title deeds/CT transferred from Mortgagor to Mortgagee at settlement
o
Retained by the mortgagee until the mortgage is discharged
8.1 Different where a beneficiary is involved
A beneficiary’s equitable interest is not postponed to a later equitable interest created
by the trustee in breach of the trust (Shropshire v R): this is unless the trustee fails to
obtain title deeds, where this failure creates the later equity (Walker v Linom; Lloyds
v Bullock). Further, where the beneficiary (as opposed to the trustee) acts in a
postponing manner, he will still be postponed (Shropshire v R).
8.2 Types of postponing conduct
There are 6 types of postponing conduct, the last of which is with regard to caveats.
Whilst the first five were created with regards to Old System land, the concepts are
equally applicable to Torrens land because of the Real Property Act’s silence on the
topic.
The types of postponing conduct are as follows:

The failure of a purchaser or first mortgagee, at settlement, to take possession
of the title deeds;

The failure of a purchaser or first mortgagee to retain possession of the title
deeds by an act of gross negligence;

The premature release by a purchaser of first mortgagee of the possession of
the title deeds, prior to the purchaser selling or the first mortgage being
discharged;

The inclusion of a receipt clause stating that the proceeds of sale have been
received when that is not the case.
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
The execution of a dealing which does not truly reflect the transaction, such
as the execution of a transfer by a registered proprietor who has a mortgage
but not sold a property;

The failure of the holder of an unregistered interest to lodge a caveat, where
that person was not in a position to take possession of the title deeds.
8.3 Failure to take possession of Title Deeds
This is either the failure of the purchaser, at settlement, or the mortgagee, at
settlement (or commencement of mortgage) to take possession of the title deeds.
8.3.1 Walker v Linom
An example/authority for failure to take possession of deeds
8.3.1.1 Facts
 Husband establishes a family trust
o


Husband transfers properties to trust
o
Gives deeds to properties
o
Except for one
Even though the trust owned the land
o

Trustee is the solicitor, holding on trust for daughter and wife
The husband transferred the land to X, and gave him the deeds
Both X and the solicitor/trust believed they owned the property
8.3.1.2 Held
 In common law, X had no rights
o

But he did have a right in equity
Since solicitor did not take possession of deeds, this failure allowed Husband
to convey the property
o
And X did not have notice of Solicitor’s interest

Thus Solicitor’s interest were postponed against X’s

Also the Solicitor’s postponing action was not defrauding the trustees
(Shropshire Union Railways v R), or acting outside of the trust (Cave)
o
The trustee was just being slack, thus the beneficiaries are postponed
as well.
8.4 Failure to retain possession of title deeds by an act of gross
negligence
If there is gross negligence which causes the title deeds to be misplaced, this will
amount to postponing conduct (Northern Counties of England Fire Insurance Co v
Whipp)
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What amounts to gross negligence?

Gross negligence is only a real property concept, this is not the same as
negligence in torts

E.g. leaving the CT on an accessible desk unnattended
8.4.1 Northern Counties of England Fire Insurance Co v Whipp
This case is authority for this type of postponing conduct as well as for the
requirement for gross negligence.
8.4.1.1 Facts
 Employee of insurance company borrows money off the company

o
Signs a mortgage as security
o
CT transferred to Insurance Company
CT’s were stored in a safe
o
Employee steels them from the safe
o
Without any authority from the bank
o
And sells the property to a third party, who had no notice of the
Bank’s interest

Did the bank commit postponing conduct by losing the CT’s?
8.4.1.2 Held
There was no gross negligence: the employee stole, and was acting outside of their
authority as an employee.
If he acted within the scope of his employment, the result would have been different
8.5 The premature release of the title deeds by a vendor on sale
or by a first mortgagee on discharge of mortgage; and the
inclusion of a receipt clause which wrongly states that the
proceeds of sales have been received.
When should a vendor hand over title? When should a mortgagee hand back title?

When all money has been paid

Handing over is conduct that implies full payment
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8.5.1 Heid v Reliance Finance Corporation Pty Limited
This case outlines the rule of postponing conduct by early surrender of documents
and discusses the legal basis for this rule
8.5.1.1 Facts
 Heid was the owner of an estate
o
Connell (a company) was to buy ($165 0000)
o
He put down a $15 000 deposit, paid to the vendor
o
Heid would lend $50 000 as a mortgage, receive final $100 000 at
completion

Connell was controlled by McKay: this company had dealings with Heid a
few times in the ppast

McKay introduces Gibby to Heid as an employee and as a solicitor
o

Gibby was not a solicitor
Heid was persuaded to use Gibby for legal work, to save money
o
Heid executed through Gibby a transfer in favor of Connell

With the fine print “I acknowledge that I have received the full
purchase price”

o
Handed over the executed transfer and the CT
o
Before settlement and money transfer (because he was going overseas)
When he was overseas, Connell entered into 5 different mortgages
o
Reliance had the first mortgage, but Connell was not yet registered, so
Reliance could not get s 43A protection (they were not the next
dealing registerable; the next deal went to Connell, who knew that
Heid had not yet been paid, and could thus not seek protection)

When Reliance lent money to Connel, Reliance assumed that Heid had been
paid fully as per the transfer.

When Heid came back from overseas, the $100 000 he was meant to receive at
settlement was not paid.
o
He also found out about the other mortgages
8.5.1.2 Held
Trial judge found that Heid had not engaged in postponing conduct, since he
handed it to Gibby, who was meant to be acting as his solicitor, and this was normal
practice.
The NSW Court of Appeal said that, since Gibby was working as an employee of
Connell, he was given the documents prematurely, and, as such, there was
postponing conduct.
The High Court found that there was postponing conduct.

Mason and Dean JJ
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o
Heid knew that Gibby was the employee of the companies
o
Thus, this was postponing conduct because of early release of
CT/Receipt clause
o
Theory on postponing conduct:

Where equities are equal, earlier prevails

However, here, conduct of earlier led the later to acquire the
interest

The giving of instrument of transfer, acknowledgment
of payment, CT

The first equity “armed” the third party “with the power of
going into the world under false colours” (Dixon v
Muckleston); that is “was the deception a natural
consequence” of the first equity’s action?

The other judges spoke of this postponing conduct as creating an estoppel;
which may be looked at favorably in the future.
8.5.2 Lloyds Bank v Bullock
Here, the documents handed over were handed over “in escrow”  from the
company to be used if a situation is satisfied.
8.5.2.1 Facts
NB: this is an Old System case


H owns a house
o
Mortgage conveys property to Building Society
o
Subject to reconveyance if fully paid (equity of redemption)
H dies
o

Solicitor is dishonest
o


Left house to Son, in trust of whole family, including Bullock
Solicitor for H, Son and Building Society
Solicitor says to Son that he will buy the property off him
o
Draws up
o
Son conveys to solicitor house

With a receipt clause

With no receipt of $
Solicitor goes to Building Society
o
Drafts the reconveyance in Solicitor’s favor, to be activated when paid
in full
o

Has deed and reconveyance
Solicitor goes to Lloyds Bank
o
Says he owns it in full, and has paid everyone off (shows receipt)
o
He is lent money
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
Build Society, Son, and Lloyds Bank are all owed money

Who has the better equity?
o
Building Society has a first mortgage by deed (legal)
o
Bullock is a beneficiary of the estate under redemption (equity)
o
Lloyds though that they were getting a first mortgage, did not not that
Building Society had not yet been paid out (equity)
8.5.2.2 Held
 Building society has a legal unregistered interest
o
Not guilty of postponing conduct, because the document was “in
escrow”

Bullock knew Solicitor worked for the Building Society, and handed over the
receipt, thus guilty of postponing conduct

Thus, Building Society (s 43A legal, no postponing)  Lloyds (equitable) 
Bullock (equity, postponing)
8.6 Execution of a dealing which does not truly reflect the
transaction, such as the execution of a transfer by a
registered proprietor, who has mortgaged but not sold a
property (Holding out)
8.6.1
Breskvar v Wall
8.6.1.1 Facts
 Breskvar was the proprietor

Borrowed money from Mr. Petrie
o
Convinced them to sign a blank transfer as security for the loan
o
Write in his son, Wall, into the spot

Onsold to Alban

Before Alban registration, Breskvars sued
8.6.1.2 Held
 The fraud of the grandfather was imputed on the grandson

So Breskvar and Alban had priority over Wall.

What of the Breskvar (equitable) and Alban (equitable) dispute?

o
The Breskvars were earlier, so would have won
o
But, they were postponed because they held out that they had sold
o
And, Alban, not unreasonable, assumed this was the true position

Paid bona fide value

Without notice
“The appellants armed the second respondent with the means of placing
himself on the register”  executed transfer and CT, authorized Petrie to use
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if nevessary
8.7 The failure of the holder of an unregistered interest to create
a caveat, where that person was not in a position to take
possession of the title deeds
This is only in Torrens, since Caveats are a creation of the Real Property Act.
Note, a caveat does not improve priority; failing to caveat, though, can be
postponing.
8.7.1 Butler v Faiclough
A second mortgagee (second mortgagees do not have access to the CT) must caveat,
or they will be guilty of postponing conduct.
8.7.1.1 Facts
 Good was the registered owner (in Victoria, so no s 43A protection)

o
Good was thus in Schedule 1
o
Mortgagee 1 was in Schedule 2
Good entered into a second mortgage with Butler (unregistered)
o

Took 7 days to register
Two days after enacting mortgage
o
Good sells to Fairclough
o
Good said the sale was only subject to Mortgagee 1
8.7.1.2 Held
 Butler v Fairclough (E v E)

Therefore, unless postponing conduct occurred, Butler would succeed

High Court held that Butler should have caveated
o
Without this caveat, it would have been impossible for Fairclough to
know about Butler’s interest
o
Therefore Butler was postponed
o
Note, it did not matter that Fairclough did not even search the register
8.7.2 Lappen v Abigail
Dixon said created, here, a requirement to caveat for protection of unregistered
interests
8.7.3 J&H Bank v Bank of NSW
No-one else may register where you have the CT; a second or subsequent mortgagee
must caveat or be postponed
8.7.3.1 Facts
 Josephson owned a property

Borrows from Bank
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
o
They have deeds
o
Did not register a caveat
Josephson borrows money from J&H, tells J&H that the deeds were with
Bank for safekeeping

They lend money to Josephson
o
Contact Bank, say they are now the first mortgagee, please give hand
over the deeds
o
Bank refuses
8.7.3.2 Held
 Bank (Earlier Equity) v J&H (Later Equity)

But did bank fail to caveat, which would be postponement, as in Butler?

This case was differentiated

o
Here, Bank was the first mortgagee
o
They had the CT
o
No-one else may register where you have the CT
Thus, since J&H knew that Bank had the CT, there was constructive notice of
the Bank’s first mortgage
Thus, a second or subsequent mortgage must caveat or be postponed (Butler, J&H,
Person to Person Financial v Sharari)
8.8 The requirement for a purchaser to caveat
A purchaser should caveat (Black v Garnock, obiter), and it is now standard practice
in conveyancing to caveat after purchase (i.e. after exchange), for fear of Garnock.
Failure to caveat may constitute “one of the factors to be considered” when weighing
up equities (Heid v Reliance).
8.9 The requirement for a beneficiary under a trust to caveat
Case law has not yet extended Butler to require that beneficiaries to caveat or be
postponed:

S 82 of RPA allows beneficiaries to require RG to record a caveat to protect
their interest, under s 74F, they may caveat themselves.

S 43, you deal with the person on the register (trust is unregistered), leaving
the beneficiaries otherwise exposed

Garnock, as well, hints that it is imprudent not to caveat
Thus, if the beneficiary does not take possession of the CT, or register a caveat, this
will most likely amount to postponing conduct.
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Part 3 – Old System Title
9 Old System Title
NOTE: Clogs and personal covenants
Note, priorities under old-system title are similar to U v U in Torrens Title – i.e. if the
equities are equal (there is no notice or postponing conduct)

LvL
o

LvE
o

Deed delivered earlier has priority (qui prior est tempore potior est jure)
qui prior est tempore potior est jure
EvL
o
Later legal prevails, as long as the interest is bona fide, with no notice
and for value.

EvE
o
Earlier equitable interest prevails (qui prior est tempore potior est jure)
Except failure to caveat does not exist under old-system title. Notice of earlier
interests discoverable by a title search earlier than 30 years ago (the root title search)
do not affect a purchaser unless they do such a search (Conveyancing Act s 53(3)).
9.1 Chain of title
Traditionally, old system title required, for certainty, the tracing of the transfer of
title until the crown grant. England required 60 years, and good title before it (e.g. a
conveyance or a first mortgage). In NSW, it is 30 years (Conveyancing (Amendment)
Act NSW (1930)).
Older interests that are outstanding cause a “defect in title”, unless the interest is
barred by a stature of limitations, which, if discovered after completion, make the
purchaser subject to the defective interest.
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9.2 Interests in old-system title land
9.2.1 Legal interests
In old-system land, legal interests are created by deed, which come into effect where
delivered. The earlier deed delivered (rather than drafted, or come in to effect or
anything) earlier has priority. Some legal interest include:

A purchaser who has exchanged contracts, but has not settled;

A first mortgagee by deed who has the deed (Lloyds Bank v Bullock);

Other deeds (e.g. a deed of easement or a deed of lease) are legal interests,
less than the legal estate; and,
o
Other leases (i.e. without a deed of lease) which comply with s 23D of
the Conveyancing Act; a lease which:

Is for 3 years or less;

Is for the best rent reasonably obtainable rent; and

The lessee has an immediate right to possession.
9.2.1.1 Who has the legal estate?
 The vendor pre settlement;

The purchaser post settlement (after the executed deed of conveyance is
delivered); or,

The first mortgagee before the completion of payments.
o
M1 holds the deed subject to the owner’s right to reconveyance.
o
When it is paid out, the property is reconveyed, and the legal estate
foes back to the borrower.
9.2.2 Equitable interests
An equitable interest in old system title land is held by:

A purchaser who has exchanged contracts, but not settled;

M2, M3 … Mn;

A person who holds a mortgage secured by the deposition of title deeds
(Cooney v Burns);

A person who benefits from an agreement to grant a mortgage (ANZ v
Widen);

A person who benefits from an agreement to lease;

A beneficiary under a trust;

A person enjoying the benefit of a restrictive covenant;

A lease that is in writing that does not satisfy s 23D of the Conveyancing Act
(Chan v Creston); or,
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
A mortgagor who is exercising his equity of redemption:
o
Right that the mortgagor, when debt is fully paid off, has for the
reconveyance of the property.

The “debt” includes the principle + interest + reasonable legal
costs/fees.

The time in which the mortgagor can exercise their right to pay
in full is the contractual loan (/common law) period + the
equitable period (Kregliner v New Patagonia Meat & Cold Storage
Co).

This equitable timeframe expires:
o
When the mortgagee forecloses; or,
o
When the mortgagee exercises their right to
mortgagee sale (see
o
Any attempt at preventing reconveyance is a “clog on the equity of
redemption” and is, in the most part, held to be invalid by equity: that
is, the right to reconveyance will remain (Kregliner v New Patagonia
Meat & Cold Storage Co).
9.3 Deeds
A deed must be (according to s38(1) of the Conveyancing Act):

Signed;

Sealed; and,

Delivered;
With at least one witness who is not a party to the deed. Note, the above may all be
in writing: e.g. “signed, sealed and delivered”.
A deed does not come into effect until it is delivered (delivery defined as “any act or
words showing that the party executing the deed regards it as ‘presently binding’, …
any act [that shows] ‘an intention to be bound’”).
Delivery may be actual or constructive, unconditional or conditional (“in escrow”).
Until the condition is met, the deed remains in escrow. A deed delivered, even
conditionally, cannot be withdrawn.
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9.4 Registration of deeds and s 184G of the Conveyancing Act
9.4.1


The register
Deeds are registered under the Conveyancing Act Pt 23, Div 1 ss184A-184J.
The registrar general maintains this register (The General Register of Deeds)
(s 184C) (which is separate to the Torrens Title register s 184B(1)).

Registered in order of “distinctive reference” allocated (s184E).

Any instrument may be registered (s 184D).

o
An instrument is a deed, will or act of parliament (s 7(1)).
o
Only instruments dealing with land affect priorities to land.
You are not required to register instruments.
9.4.2 S 184G of the Conveyancing Act
S 184G of the Conveyancing Act confers priority to the first registered party iff (i.e. all
four are not satisfied, this section does not apply):
1. The person first registered has taken an effective instrument;
a. It must be in writing,
b. It must not be void (e.g. not procured by fraud, or forged (Re Cooper:
son conveyed property owned by dad, who did not sign, and then
registered the deed of conveyance; held – the instrument was not
valid because the instrument was procured by fraud)).
c. Note, where the vendor, with knowledge, fraudulently conveys the
property to two or more people, both instruments are valid, and
whoever is first registered is valid.
2. The person first registered is competing with another interest created by
instrument;
a. E.g. it is ineffective against oral agreements, including:
i. Oral leases under s 23D of the Conveyancing Act;
ii. Equitable mortgages by deposit of deed (oral mortgages); and,
iii. Beneficiaries under trust (s 23C)
3. The person first registered has paid valuable consideration; and,
a. The deed is not protected if it is given by gift, or where the
consideration is nominal;
b. The consideration must be substantial (Bullen v Becket).
4. The person first registered was bona fide.
a. An instrument is not bona fide if the person taking it had, actual,
constructive or imputed knowledge of an earlier interest over which
priority is sought by registration (Marsden v Campbell).
i. Note, it is only invalid if notice occurred before the interest
was taken.
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b. The requirement for “bona fides” is illustrated by the following cases:
9.4.2.1 Schoals v Blunt
 Facts

o
Purchaser exchanged contracts
o
Got notice of someone else
o
Settled
o
And registered the conveyance they took at settlement
Held
o
Not bona fide, since before settlement, purchaser had notice
9.4.2.2 Burrows v Crimp
 Facts

o
Purchaser exchanges
o
Settles
o
Gets notice
o
Registers conveyance they took at settlement
Held
o
The purchaser was bona fide, it does not matter that they got notice
before registration, it has to be before the interest was taken
9.4.2.3 Moonking Gee v Tahos
 Facts
o
Purchaser exchanged contracts,
o
Acquired notice of an inconsistent interest,
o
Registered their original contract for sale of land acquired at
exchange, since to settle would make them subject to the rule as
applied in Schoals v Blunt.

Held
o
The registered exchange was protected under s 184G, since he was
registering an interest that was created before the acquiring of notice.
o
Note, if there were settlement, it would extinguish the exchange, thus
disallowing its registration.
9.4.2.4 Equitable interests and s 184G – Darbyshire v Darbyshire
This case held: if an equitable interest gains priority through registration, they may
acquire the legal estate. This was affirmed in Moonking Gee v Tahos.
9.4.3
Summary of how to answer an old system title priority question, in light
of s 184G
1. Is anyone registered? If yes, who registered first?
a. If yes, do they get priority under s 184G (i.e. do they satisfy all 4
requirements)?
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b. If so, s 184G overrides rules of priority, and earlier registered prevails
2. If no, go to priorities.
9.5 Converting old system land to Torrens Title land
You can convert old system land to Torrens land in three ways:
1. A primary application (not examined);
2. A qualified folio of the register; and,
3. A limited folio of the register.
9.5.1
A primary application (not examined)
A primary application (not examined) must be accompanied by evidence of title, as registrar General
requires (RPA s 14(4)), without sufficient evidence, it may be rejected (s 23(2)).

If the land is caveated by someone with a competing interest, it may prevent the land from
becoming Torrens land (s17(3)(b)).
o
Caveat lapses after 3 months unless the caveator gets a court order or begins court
proceedings (s 74C(1)).

A court may extend the caveat if it “has or may have substance” or dismiss
the application (s 74D).
o
If the primary applicant serves notice on the caveator, it lapses after 21 days unless a
court order is procured or court proceedings begin (s 74C(3), (4), (5)).
o
If a caveat lapses, no subsequent caveat lodged by the caveator is valid unless the
primary applicant consents or the Supreme Court gives leave (s 74R).
9.5.2 Qualified title
There is a two-stage conversion process (RPA s28A-28R):
1. Initially, the land is only protected by Torrens principles against interests
created after the land came to be under qualified title. Previous interests
continue to be enforceable.
2. After the period of qualified title, indefeasibility is conferred and Torrens
protection/principles become absolute with regards to the parcel of land
Under this process, the land goes from being old system, to being qualified, to being
Torrens Title land.
When land is qualified land, it is still subject to subsisting interests (s 28P(1)(d)). This
is for the duration of the caution period (s 28J).

If you have an old system interest, you have the time of notice to lodge your
interest
This time lapses (the “lapsing of cautions”) between 6-12 years on, where (s 28M):

If: within the first 6 years, there is a dealing, for value, without fraud, then: on
the 6th anniversary of the land becoming qualified title land, the caution
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lapses.

If: no triggering deal occurs for 12 years, then, qualification lapses at year 12.

If: dealing happens between year 6 and year 12, then qualification lapses on
day of dealing.

Adverse possession has different rules (12 years after adverse possession
began, may apply for removal of caution (s 28ME).

The registrar general may cancel the caution if he is satisfied that all
estates/interests are free from any subsisting interest (s 28MC).
o
To prevent this, an old system interest-holder may caveat (ss
74A(2)(a), 74H(2), (5)(k)).
9.5.3 Limited title
This is a tool used for when boundaries are unclear.
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10 Mortgages
10.1 Mortgages under Old System Title
A first mortgage, y deed, takes the form of a conveyance of the legal estate to the
mortgagee, subject to the mortgagor’s equity of redemption
An equitable mortgage can also exist, it must:

Be in writing (s 23C of the Conveyancing Act); or

Be supported by sufficient part performance (s 23E).
It may be a second or subsequent mortgage, or an agreement to grant a mortgage
(ANZ v Widin). Further, it may be an attempted legal mortgage that failed by not
having the formalities (Swiss Bank v Lloyd Bank), or a mortgage by deposit of deeds
(Cooney v Burns).
10.1.1 Equity of redemption
The equity of redemption is the Mortgagor’s right to have to property reconvened
after paying off the mortgage (see §9.2.2 - Equitable interests, above).
The equity of redemption expires when the common law period + equitable period
(time until foreclosure) expires.
Note, if you miss a payment, this is a breach of contract, and the bank can demand
the immediate repayment of the whole debt (i.e. the common law period can change
with breach).
Any provision that blocks the equity of redemption upon payment is void as a clog
on equity (Santley v Wilde; Noakes v Rice; Samuel v Jarrah Timber). This is even if the
clog is in a separate document (Toohey v Gunther). It is only permissible where the
two documents are truly independent (Kregliner: after mortgage, purchase of meat
agreement still to be adhered to, not a clog).
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10.1.2 Foreclosure
Foreclosure transfers title to the mortgagee, ending the equity of redemption. This
exchanges the debt for the land: as such, it is only utilized when the debt exceeds the
value of the property.
For the bank to foreclose, the following 8 steps must be satisfied (RPA ss 61, 61;
Conveyancing Act s99A, 100):
1. The mortgagor must have defaulted (the common law right to redeem is
expired);
a. Where there is no default, the bank cannot touch you.
b. At this point, the bank may take possession.
2. A valid, statutory notice of default, requiring the default to be remedied
within a month, must be given;
a. Torrens (RPA s 57(2)(b)).
b. Old system or unregistered (Conveyancing Act s 111).
3. There must be non-compliance with the notice;
a. At this point, mortgagee sale can occur.
4. There must be a properly conducted auction (Conveyancing Act s 99A) (RPA
s 61);
5. The highest bid must be less than the mortgage debt (Conveyancing Act s
99A; RPA s 61);
6. The Supreme court makes a “decree nisi” where the mortgage debt is
calculated and the mortgagor is given a specific time-frame (usually 6
months) to repay (RPA s 62);
7. The mortgagor must fail to repay;
8. The court must order the foreclosure in absolute (RPA s 62(3)).
10.1.3 Early discharge of mortgage
Under common law and equity, there is no right to repay principle early.
S93 of the Conveyancing Act allows the early repayment of a mortgage, regardless of
conditions. However, it also requires paying off the interest for the balance of the
loan period, unless otherwise specified, this is not unconscionable (Knightsbridge).
Most mortgages have clauses that permit early repayment with 1-3 months notice or
payment of inters in lieu, as allowed for in Steindlberger v Mistroni.
S 93(1) requiring payment of interest in full does not operate where the bank requires
early repayment (Wanner v Caruana; approved in Odea v All States Leasing).
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
Wanner
o
o
Facts

6 year mortgage with fixed interest

Required to pay back early

Bank demanded 6 years of interest
Held

Interest accrued up until that point was allowed, any
subsequent was unconscionable

Odea
o
o
Facts

Lease

Payments not made
Courts applied Wanner
Thus, a mortgagor may be tempted to require a bank to demand full repayment:
though the bank may preserve rights by suing for each month’s payment as a
personal covenant.
10.1.4 Penalty clauses
 A mortgagee may demand a premium over amount loaned (Potter v Edwards).

He cannot raise interest retrospectively because of default (Strode v Parker),
but may raise interest going forward David (Securities v CBA).
o

A discounted rate may be offered for on-time repayment.
If a discount is offered and money demanded back immediately, the
discounted rate must be charged, and no future interest (only interest accrued
until that point) may be charged (Wanner v Caruana; Odea v All States Leasing).
10.2 Remedies available to a mortgagee
10.2.1 Foreclosure
See §0 -
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Foreclosure, above.
10.2.2 The right to sue on a personal covenant
A mortgagee may sue the mortgagor for any default under the mortgage contract.
Only the original mortgagor, or his personal representative if he dies, will be liable
this way.
If there is a mortgagee sale, and the sale does not cover the debt, the mortgagor may
attempt to recover this difference by suing on personal covenant (s 100
Conveyancing Act).
10.2.3 The right to possession
When the borrower defaults, the mortgagee may take possession (s 60 RPA).
10.2.4 The right to appoint a receiver to collect rents
In both old system and Torrens land, the receiver (appointed under ss 115A and
109(1)(c) of the Conveyancing Act) must act in good faith and not sacrifice the
interests of the mortgagor.
He must manage the property, receive income in the name of the mortgagee or
mortgagor, and exercise delegated powers of the mortgagee.
10.2.5 The right to lease
Under old system, the mortgagee can grant a lease, even when the property is not in
possession. Under Torrens, the mortgagee must be in possession.
10.2.6 The right to improve the mortgaged property
The mortgagee must account for rent/profit, including those that he would have
received had he not been neglectfully out of possession (Fyfe v Smith).
He may improve the property to make it saleable, and may be reimbursed for this
(Matzner v Clyde).
It must not change the character, enhance the value of the property and be justifiable
at the time (Southwell v Roberts).
10.2.7 Mortgagee Sale
Mortgagee sale is preferred to foreclosure since it is simpler, any surplus may be
sued for under personal covenants.
10.2.7.1 Requirements
1. A default (either failure to make a repayment, or breaking a term of the
mortgage);
2. Serving a statutory notice (RPA s 57(2)(b); Conveyancing act s 111); the notice
must:
a. Call for the default to be rectified;
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b. Be in writing, signed by mortgagee or agent; and,
c. Describe the default in particular: if it is a non-payment, the amount
missed should be described, though inaccuracy does not invalidate it
(Clarke v Japan Machine Tools; Network Finance v Lane)
3. Non-compliance with this notice for <30 days.
A mortgagee cannot sell to himself, though he may, under an obligation to enter into
an independent bargain, sell to a related entity (Farrar v Farrars Limited).
10.2.7.2 Timing of sale
After the requirements are fulfilled, the mortgagee can sell whenever he wants
(Belton v Bass, Ratcliffe and Gretton Limited). Though the mortgagor may require sale
when M1 will get all of his money back (Palk v Mortgage Services).
10.2.7.3 Payment of proceeds
The order of payment of proceeds is as follows (RPA s 58; Conveyancing act s 112C):
1. Realtor/lawyer for mortgagee;
2. M1’s debt;
3. Subsequent mortgagees’ debts; and finally,
4. If any money left, the mortgagor receives, if there is a deficit, the mortgagees
may sue under personal covenants.
10.2.7.4 The mortgagee cannot sell to himself
The sale must be a true sale (i.e. not to oneself), but the mortgagee can sell to a
company where the mortgagee is a shareholder, as long as the sale is “a truly
independent bargain”, shown by achieving the best possible price (Farrah v Farrah’s
limited).
10.2.7.4.1 ANZ v Bangadili Pastoral Co
Facts:

Talga owned a property
o

Had two mortgages
Hall tried to buy, and paid
o
Money did not go to property
o
Talga could not give title

Halco Products acquired first mortgage to protect their interest

Talga defaulted
o
Halco gave notice
o
Halco initiated a mortgagee sale

Little advertising

Auction not at a desirable time
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
Bangadili (owned by Hall) purchased the land for less than what a
prospective purchaser was willing to pay
Held:

Not for best price, therefore invalid sale because to a related party and not at
“arms length”

The closer the relation, the greater the burden
10.2.7.5 The obligation on the mortgagee when selling (redo)
Note, s 111A of the Conveyancing Act would make this clear, and has been passed
through both houses of parliament. It, however, is yet to be proclaimed, and is thus
not yet valid law.
The two schools of thought on the obligation are:
1. The mortgagee must take reasonable care to obtain the best possible price; or
the less strenuous test,
2. The mortgagee must act bona fide (in good faith, not in bad faith) and not
recklessly.
The following cases illustrate the differing views:
10.2.7.5.1 Reasonable Care
10.2.7.5.1.1
Facts:

There was a block of land
o

Cuckmere Brick v Mutual Finance Limited
With planning approval for 100 flats or 35 houses
Mortgagee advertised extensively, but did not advertise the council approval
Held:

The mortgagee owed a duty to the mortgagor to take reasonable care to get
the best price,

Thus, the mortgagee was in breach
This case was followed by Standard Chartered Bank v Walker; American Express v
Hurley; Bishop v Bonham.
State Bank of NSW v Chia said this rule is irrelevant to NSW.
10.2.7.5.2 Good Faith
10.2.7.5.2.1
Kennedy v De Trafford; Warner v Jacob
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Followed in NSW by:
o
Burk v Beneficial
o
State Bank v Chia
o
Gomez v State Bank
10.2.7.5.2.2
Facts

Mortgagee sale
o

Pendlebury v Colonial Life Assurance
Insufficient advertising
Caused:
o
Auction with little competition
o
Land worth 2000 sold for 720
o
An emplouee of the mortgagee colluded with the purchaser
Held

Griffiths (Good Faith)
o
Applied Kennedy v De Trafford

“The mortgagee must not recklessly or willfully sacrifice the
interests of the mortgagor”
o
Obiter, where there is a misstatement in description, M1 will be liable
to mortgagor for difference in price

Isaacs agreed

Barton said good faith included reasonability
10.2.7.5.2.3
Obiter:

Jacobs J
o

ANZ v Bangadili Pastoral Co (mixed)
Good faith to get best price, not good faith in selling at all
Aicken J
o
As Menzies in Forsyth v Blundell

Analogous to that case

By setting a price of acceptable loss, there was a clear leaving
of standards
o
As Barton in Pendlebury v Colonial Mutual
o
That good faith requires reasonable effort to get best price
10.2.7.5.2.4
Facts

Forsyth v Blundell (mixed)
Mortgagor (Mr./Ms. Blundell) sued Shell and Mr. Forsyth for a bad sale
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o
Property sold for 120 000
o
Property sold petroleum products
o
List price was 150 000, based on a higher valuation (other valuations
were less than 100 000)


XL was a prospective purchaser
o
Independent petrol seller
o
Mortgagor had negotiated with XL
o
Offered 150 000
Shell offered M1 120 000
o
M1 accepted
Held

M1 acted with calculated indifference, recklessly sacrificing the mortgagor’s
interest

Walsh; Mason
o

Different authorities, not necessary to decide
Menzies
o
Reasonable precautions are part of bona fides
10.2.7.5.2.5 State Bank v Chia
The Cuckmere test is irrelevant to NSW, that is, “reasonable care to get a good price”
is irrelevant.
10.2.7.5.2.6
Facts
Gomez v State Bank

Brief advertising, failure to present property1 for sale

The M failed to present p2 for lease at market rate before sale

Marketing on third property too small considering development potential
Held

Cuckmere is irrelevant

Menzies’ statement in Forsyth that the two tests can coexist might be true
10.2.7.5.3 Conclusion
HC has not yet decided which is correct:

Has decided arms length where the companies are related (Bangadili)

Not decided where totally unrelated, though s111A would clear it up
o
Most judges are favoring less onerous good faith test
o
As long as the mortgagee exercises the power in good faith and does
not recklessly or willfully sacrifice the mortgagor’s interest, there is no
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reason to interfere with the power of sale, even if the property is sold
cheaply
10.2.7.6 When the mortgagee is a controller
He must sell after “taking all reasonable care to sell the property for not less than its
market value … or the best price that is reasonably obtainable” (s 420A of the
Corporations Act).
10.2.7.7 Remedies
Before a mortgagee sale, the only way to stop it is to come up with the full amount of
money owed (Ingliss v Commonwealth Trading Bank – if amount is disputed, the amount
claimed by the mortgagee must be paid). Sometimes a smaller amount may be paid in
pending a trial on whether the mortgagee has breached his duty (Harvey v
McWatters; etc.).
You can stop it if the validity of the mortgage or the breach is in issue (Allfox).
After sale (exchange) but before completion (a 6 week time period) you can go to the
equity division and apply for an injunction pending a hearing on whether the sale
was improper. An urgent hearing is heard within the time before completion (Allfox
v Bank of Melbourne).
An injunction will prevent sale, and a purchaser cannot demand specific
performance if the mortgagee knew of a higher seller, or some equal wrong (Forsyth
v Blundell).
Where there is fraud, a sale may be set aside (Latec Investments – A wholly owned
subsidiary of a bank bought a property for half price; after 5 years, mortgagor challenged –
held – sale was improper, but purchaser had already created a third interest, thus, the sale
could not be put aside – you should challenge before settlement).
10.2.7.7.1 Protection for purchaser
S 112 of the Conveyancing act allows protection against mortgagees’ adverse claims.
This does not prevent mortgagor from brining an action to have the sale set aside
where there was reckless disregard for the mortgagor’s interests or fraud.
Under Torrens, once registered, the purchaser is indefeasible, unless an exception
applies. Before registration, if the purchaser knew the sale was improper, the
mortgagor still has the right to bring an action (Luckass Investments v Markaroff).
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10.3 Tacking
In old system, the earlier legal or equitable mortgage prevails unless there is
postponing conduct. In Torrens, a registered first mortgage will have priority over a
second, or any unregistered mortgage unless there is an exception to indefeasibility.
10.3.1.1 Tabula naufragio – old system only
If M3 acquires M1, and didn’t have notice of M2 at the time of the original loan, it
may tack onto M1, and have priority over M2.

Taylor v Russel
o
Facts


Mortgagor creates M1

Then M2

Then M3 (at the time, M3 did not know about M2)
M3 buys M1, and tacks their mortgage onto it in order to get
priority over M1
o
Held

Tabula naufragio applied, it could be tacked
10.3.1.2 Tacking further advances
Where M1 makes further advances, even after the creation of M2.

M1 can only add further advances if M1 had no notice (actual, constructive,
or imputed). If this is satisfied you had priority.
o
If there was notice, you didn’t have priority, even if the original loan
stipulated that there were to be further advances (Hopkinson v Rolt;
West v Williams).

Where the loan allows subsequent advances, or where the loan says the first
mortgage secures this and further loans, and there is no actual knowledge of
M2, M1’s subsequent advances will be tacked (Re O’Byrne’s Estate – where M1
was obliged to lend more money).

Where the loan does not provide for further advances or security over further
advances, then M1 will only prevail where there is no notice (actual,
constructive or imputed) of M2 (Credland v Potter).

Torrens (Matzner v Clyde per Holland J):
o
Facts


A property in Kogarah

Developer buys

Knocks down house to start building
Borrows from M1


Building costs more and more, borrows from M2
When ½ built (and worthless), Mortgagor goes into liquidation
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
Since it is half built, M1 wouldn’t even get back their initial
advance, thus, M1 decided to pour more $ into project to finish
development, to be able to sell with enough money to pay off
debt

After they finished their development

Had knowledge/notice

M2 said further advance was subject to second
mortgage
o
Held

There was authority that if M1 reasonably improved property,
cost could be tacked (Southwall v Roberts)

It was held that old system cases were applicable; and
indefeasibility did not count


M1 had notice, and, thus, should be subject to M2
But for the Matzner Exception:

It is against conscience for M2 to prevail over M1’s
further advance since without M1’s expenditure, M2
could not have gotten a cent.

Central Mortgage Registry v Doneware; Westpac v Adelaide Bank
o
Under Torrens, only actual notice of a further advance will cause M1
to be subject to M2
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11 Co-ownership
11.1 Types of Co-ownership
Co-ownership exists where there is either “Joint Tenancy” or “Tenancy in Common.”
In either circumstance, each owner enjoys a right to possession.
11.1.1 Characteristics of Joint Tenancy
Joint tenancy grants aliquot (potential) shares in the property.
There exists in co ownership a right of survivorship – jus accrescendi:

If one joint tenant dies, his share in the property is divided equally amongst
surviving shareholders.

Where it is unclear which party dies first (e.g. where both parties die in a car
crash) it is presumed that the older predeceases the younger (Hickman v
Peacey; Conveyancing Act s 35)
o
Where a person disappears, he is said to have died 7 years after
disappearance. If the other party dies before the 7 year period is
complete, they are said to have predeceased the disappeared party
(Halbert v Mynar)
Further, for a joint tenancy to be valid, the “four unities” must be intact:

Unity of title
o
All joint tenants must derive their share of the property from same
instrument

Unity of interest
o
Each joint tenant must hold shares of equal proportion to each other
tenant (i.e. 2 tenants: 50% shares, 3 tenants: 33.33% shares, 4 tenants:
25% shares, … n tenants, (100/n)% shares)

Unity of possession
o

Each tenant has a right to possession of all of the property
Unity of time of vesting
o
Each tenant must have acquired their share at the same time
11.1.2 Characteristics of Tenancy in Common
Where there is tenancy in common, there is no right of survivorship: where a tenant
dies, his share is passed on in the tenant’s will. It will only pass to the other tenant if
the will specifies such.
Shares are undivided, unity of possession exists, and the shares are alienable.
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11.2 Creation of co-ownership
Interests in land may be created at law and in equity; interests may be held
separately, e.g. law can hold a relationship to be joint tenants at law but hold as
tenants in common in equity.
Some equitable maxims applied to creation:

Equity follows the law

Equity treats as done that which out to be done

Equity will not assist a volunteer

One who seeks equity must do equity
Relationship between equity and the law:

Equity is engrafted onto the law, not carved out of the law

Equity engrafts limits to the rights and interest of the legal owner
11.2.1 Creation of co-ownership at law
There is a presumption of joint tenancy at law, unless:

The four unities are not present

There are, in the document creating the relationship, words of severance

There is expressed, in the facts and circumstances of the case, an intention
contrary to joint tenancy
11.2.2 Treatment by equity
Equity follows the law (i.e. affirms the result of the analysis at law) unless:

There is an unequal contribution to purchase price

There is an unequal contribution to advance money on a mortgage

There are unequal partnership assets
11.2.3 Statutory intervention (Conveyancing Act s 26)
s 26(1) of the Conveyancing Act now enacts a presumption in favor of tenancy in
common, unless there are clear words to the contrary (s26(2) Conveyancing Act i.e.
where the contract states that the relationship is joint tenancy, and the four unities
are present).
s 26(1) applies to equity, too (Delehunt v Carmody: the registered owner was found, at
equity, to be holding the property on trust for him and his wife – When he died, s
26(1) was applied to determine that the relationship was one of tenancy in common
in equity, thus, the deceased’s person’s will was valid)
Note: if a transfer is registered under Torrens, if the document is unclear, there is a
presumption in favor of joint tenancy (s 100 RPA). However, the Registrar General’s
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office does not register instruments that are unclear, so this section is somewhat
moot. Further, since a transfer is preceded by a contract for sale, to which s 26
Conveyancing Act applies, it is very unlikely that s 100 RPA will apply.
11.2.4 Summary of creation:
1. Work out legal interest – joint tenancy or tenancy in common
a. Apply s 26(1), 26(2) of the Conveyancing Act
b. If s 26(2) applies, ensure the four unities are present
2. If they are tenants in common at law, then equity follows the law
3. If they are joint tenants at law, then equity follows the law unless:
a. There is an unequal contribution to purchase price
b. There is an unequal contribution to advance money on a mortgage
c. There are unequal partnership assets
11.3 Severance (joint tenancy  tenancy in common)
An act of severance ends joint tenancy, turning it into tenancy in common by
destroying one of the four unities (bar possession, which will not automatically
result in severance).
Severance occurs where there is:

A unilateral act, including;
o
A joint tenant transferring his interest

As long as there is an enforceable contract with valuable
consideration, severance will have occurred at equity

If the transfer is registered, there will be severance at law
(Wright v Gibbons)
o
A joint tenant mortgaging his interest
o
A joint tenant leasing his interest

A merger takes place;

There is a court order;

There is an unlawful killing; or,

Bankruptcy occurs.
11.3.1 A Transfer
11.3.1.1 Wright v Gibbons
Facts:

A, B and C are joint tenants,

A and B simultaneously transfer to each other, attempting to create a
relationship of tenancy in common between A, B and C
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Held:

The judge held that, if there was one transfer, followed by another
immediately, severance would have been found to have occur

And this severance would have been valid no matter how small the timeframe

Thus, the simultaneous transfers still caused severance
11.3.1.2 Corin v Patton
This case states that a joint tenant can sever a joint tenancy unilaterally:

In equity where there is an enforceable contract for valuable consideration
between a single tenant and a third party; or,

At law where a transfer from one of the joint tenants is executed and
registered.
Facts:

A wife executed a transfer to her brother, who held the property on trust for
the wife.
Held:

An executed transfer did not sever the joint tenancy at law, since it was not
registered

There was no severance at equity, since the brother had no interest in equity
(no valuable consideration, held on trust)

English authority (e.g. Burgess v Rawnsley) that states that joint tenancy is
severed by conduct is not valid in Australia.

Equity will not complete an incomplete gift
She could have severed the relationship by contracting with valuable consideration
to give 1/50th of the land to her brother, or, if without valuable consideration,
registering a transfer as such.
11.3.2 A sale, prior to the receipt of the proceeds of sale
Until the proceeds of the sale are received and distributed, joint tenancy is not
severed by an agreement for sale. Therefore, after sale, if there is a death, the
surviving joint tenant is entitled to the full sale sum (Re Allingham).
11.3.3 A mortgage
An old system mortgage severs joint tenancy, since it is a conveyance (Re Pollard’s
Estate).
A Torrens title mortgage by one joint tenant does not sever joint tenancy. Thus, such
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a mortgage has no interest in the land if the mortgagor predeceases the other joint
tenant (Lyons v Lyons).
11.3.4 A lease
A lease does not sever joint tenancy, except for the term of the lease (Frieze v Unger).
11.3.5 Mutual agreement
A transfer from all tenants to themselves as tenants in common is valid (Williams v
Hensman; Conveyancing Act s 99; RPA s 99).
11.3.6 A merger
If a tenant acquires a further interest in land (e.g. a joint remainderman acquiring a
life estate), unity of interest ceases to exist, and there is severance.
11.3.7 A court order
A joint tenant may apply unilaterally to the Registrar General to sever a joint tenancy
by registration of a transfer to himself, under s 97 of the RPA.

Sub-s (1) allows that registration of a transfer to oneself causes severance

Sub-ss (2)-(4) re: information required/which may be asked for

Sub-s (5) requires the Registrar General to give notice to the other joint
tenants

Sub-s (6) are exceptions to sub-s (5)
Note, the requirement for notice makes it inappropriate where one tenant does not
the other one to know. In such a circumstance, it is best to sever in equity by
transferring for valuable consideration a small portion of the property (thus severing
unity of interest.
11.3.8 Unlawful killing
In common law, the position is a s follows: unlawful killing does not cause severance
at law, but will require the surviving guilty party to hold their interest on trust for
the deceased party in equity (Rasmanis v Jurewitsch).
The Forfeiture Act stops someone who unlawfully kills from benefiting from his or
her crime, unless justice requires the rule to be modified (under s (5)).

Sub-s (1) allows anyone to apply for modification of the rule

Sub-s (2) allows the supreme court to modify the rule if justice requires it

Sub-s (3) says the court may regard:
o
(a) The offender’s conduct
o
(b) The deceased’s conduct
o
(c) The effect of the application of the rule on the offender or others
o
(d) Whatever else the court believes relevant
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11.3.8.1 Leneghan-Britton v Taylor
This case applied s (5) of the Forfeiture Act, allowing a party guilty of an unlawful
killing to benefit from the death.
Facts:

A sold her house to care for B

A was depressed

B wrote A into the will

A killed B, hid the crime scene with husband and subsequently (1/2 a year
later) admitted guilt
Held:


The court held that, since:
o
A had diminished responsibility
o
A sold her house to care for B, and didn’t have the proceeds left
o
A had already served time
It would be unjust for B’s will not to be honored: A received the house.
11.4 Ending co-ownership
A relationship of co-ownership may be brought to an end by the following:

An agreement to sell between parties
o
Co-ownership is only severed after the proceeds of the agreed sale are
received and distributed (Re Allingham)

One acquires the shares of the others, or all shares are transferred to the same
person

The operation of the right of survivorship

Resumption
o

A government resuming the property, compensation is usually paid
A court order for sale or partition under s 66G of the Conveyancing Act, and
Part 4 of the Environmental Planning and Assessment Act.
o
This entitles a co-owner to obtain an order from the court for the sale
or partition of the property

A partition splits the property into sections, where each coowner becomes the sole owner of a specific section

At common law or equity, there is no right to refuse an
application for partition
o
This section also allows for the creation of a statutory trust for sale or
partition, appointing trustees and vesting the property in them

Under such a trust for sale, the land must be sold, and the
proceeds held in trust for the co-owners
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o
For division of proceeds, rights inter se must be looked to, as they
affect how much compensation goes to each co-owner
o
As well as other rights, such as how one is compensated for
improvements to land
11.5 Rights of co-owners inter se
Rights between co-owners are very limited until the relationship comes to an end.
Before this time, that is, inter se, the following rights are enforceable:

Any enforceable contract or contract term between the owners

The entitlement against other owners to be compensated for local
government rates paid (s 560 Local Government Act)
Ouster? Agreement  contract term? Unlawful use of force to remove someone
from the property. No occupation rent unless ouster.
There is no right to compensation for improvements, or occupation rent, until the
relationship comes to an end, where the Supreme Court, equity division, takes
accounts (Luke v Luke; Leigh v Dickeson; Forgeard v Shanahan).
11.6 Taking accounts: after co-ownership ends
The cost of improvements of the property (which one party may claim against the
other) is set off occupation rent to account for a net account.
11.6.1 Compensation for improvements when co-ownership comes to an end
Compensation for improvements is split amongst the co-owners. The value
compensated for is calculates as follows (Brickwood v Young):

If the value added by the improvements are greater than the cost of the
improvements, the full cost of improvements is split amongst co-owners

If the value added by the improvements are lesser than the cost of the
improvements, the value added limits the cost of improvements
o
Thus, maintenance that does not add value is not compensated for
(Ryan v Dries) – economic costs? Not ok.
11.6.2 Mortgage payments
Ryan v Dries modified the law with regards to mortgage payments, cementing their
position as “improvements” to land.


Mr. Ryan and Ms Dries were tenants in common
o
Ryan owned 6/7, Dries owned 1/7
o
Purchase price was $200 000
o
Ryan and Dries were equally responsible for a $120 000 bank loan
The court held that Dries was entitled to 43% of the property (her input
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amount + half of the mortgage amount she was responsible for)

Mr. Ryan paid off the loan (after interest, $195 000)
o
Without “set offs” (e.g. occupation rent), Ryan was to be compensated
for $97 500, the amount of mortgage repayments Dries was meant to
pay
o
However, there were set offs (Dries only lived there 10% of the time,
and then, after a point, she didn’t live there at all)
o
This set off part of the mortgage payment allowance granted in equity
11.6.3 Occupation rent
However, this net cost of improvements is offset against a “rent” for an occupier if he
is the sole occupier to the other owners.
This “rent” is only an offset, and cannot be independently charged.
11.7 Entitlements (occupation, rent and profits)
11.7.1 Entitlement to occupy
Each co-owner is entitled to possession; if they choose not to occupy, they cannot sue
for compensation unless the contract expressly stated so (Forgeard v Shanahan).
If a co-owner is expressly excluded, there is a right to sue (Creswell v Hedges; Forgeard
v Shanahan), this express exclusion may be behavior that is objectionable enough to
amount to exclusion (Dennis v McDonald).
11.7.2 Entitlement to collect rent
Money collected by a co-owner was impressed with a trust to hold the rent on trust
for all co-owners in their proportionate shares (Hutchins v Hutchins).
A co-owner collecting is an agent for the group of co-owners (Ryan v Dries, relying on
Strelly v Winson (1685)).
11.7.3 Obligation to pay profits
The obligation to divide profits is dependant on:

Whether the business was conducted on behalf of the co-ownership, or
whether it was personal business?
o

A question of fact
Whether the profits were from the common property per se or from the
services of the co-owner conducting business?
o
See Squire v Rogers
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11.7.3.1 Squire v Rogers
Facts:


There was a property in Darwin
o
One co-owner lived on property
o
The other lived in the US
After Cyclone Tracey, the Darwin co-owner substantially improved the
facility to provide accommodation to victims

This generated considerable income

It was ordered that accounts be taken
o
The active owner wanted the costs of improvement to be
compensated
o
The passive owner wanted a share or the profits
Held:

Re: cost of improvements
o
“He is entitled to an allowance for his expenditure on such
improvements to the extent to which they result in the present
enhancement of the value” – Deane J at 346.

Re: profits to be shared
o
If they were from the owner’s services, the owner can keep them
o
If they were from the land, they are to be shared iff the costs are also
distributed, as was the case here
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12 Easements
Negative easements is closed  look at the four types
An easement is a right annexed to land to utilize the land of another in a particular
manner or to prevent another using his/her land in a particular manner.
12.1 Characteristics of an easement
An easement is:

An incorporeal hereditament

A non-exclusive right

A right in rem, rather than a right in personam
o
It is attached to both the dominant and servient tenements (either in
the register or via deed)

A right either in law or in equity
o
An equitable easement may come about because of an imperfect
grant; and,
o
Where specific performance would be ordered to complete it in equity
(ER Ives Investment Limited v High).
o
An equitable easement would be defeated by a bona fide purchaser of
the legal estate who takes the estate for value and without notice of
the easement.
The requirements for an easement are as follows (Re Ellenborough Park – there were
parcels of land adjoining a park, given access rights if they made proportionate payments
form maintenance – it was held that this was an easement subject to an obligation to make
payments):

There must be a dominant and servient tenement (though this is arguably
modified by CA s 88A);
o
If the servient tenement grants a right to a non-property holder, there
is no easement, but, rather, a license (Ackroyd v Smith).

The easement must accommodate the dominant tenement;
o
There must be a nexus between the easement and the land benefited
(Bailey v Stephens).
o
A right is not an easement if it grants the dominant tenement
exclusive use of the subject land (Bursill Enterprises Pty Limited v Berger
Bros Trading Co Pty Limited), which is closer to a transfer of proprietary
rights.
o
The dominant and servient tenements do not need to adjoin, but they
have to sufficiently close that a real benefit accrues to the dominant
tenement (Todrick v Western National Omnibus Co Limited).
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o
The easement must grant the dominant tenement an advantage it
would not otherwise have (Bailey v Stephens).
o
It is not enough that the benefit would go to the owner, the land itself
must benefit (Hill v Tupper).
o
If there is an obligation attached to the easement (as in Re Ellenborough
Park), successors to the property are bound to perform this obligation
(Frater v Finlay). If this does not happen, the grantee has a remedy
(Frater v Finlay).

In Old System Title land, the dominant and servient tenements must not be
owned and occupied by the same person (Metropolitan Railway Co v Fowler);
and,
o
Even if validly created, the easement is extinguished once the
dominant and servient tenements are united in common ownership
and occupancy (Coke upon Littleton; Buckley v Coles).
o
If there is not unity of occupation (i.e. there is unity of ownership, but
the property is leased), the easement remains enforceable (Maurice
Totlz Pty Limited v Macy’s Emporium Pty Limited).
o
This requirement has no application where the servient tenement is
under Old System Title, or if the easement is created via an s 88B
instrument (RPA s 47(7); CA v 88(3)(c)).

The easement must be capable of forming the subject of a grant; as such, it
must be:
o
A right within the general rights creatable as easements;

For examples of things that have been held to be rights capable
of being created as easements, see s 12.1.1, below.

The following were rejected as rights capable of being placed
in easements:

The right to put a boat on a lake (Hill v Tupper – the
owner, rather then the dominant tenement, benefited)

The right to an unspoiled view (William Aldred’s Case)

The right to protection of a building against the
weather (Phipps v Pears)
o
Definite;
o
Made by a capable grantor (Mulliner v Midland Rwy Co);
o
Made with a capable grantee (Re Salvin’s Indenture).
An easement may be created for any duration (e.g. for the duration of a fee simple,
for the life of a person, for a term of years, etc.).
An easement may be positive or negative:
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
A positive easement gives the owner of the dominant tenement right to do
something upon the land of the servient tenement (e.g. using a right of way);

A negative tenement requires the owner of the servient tenement to be
restrained from using his/her land in a particular way (e.g. not to build in the
way of light to a window, where an easement for light has been granted).
12.1.1 Examples of easements (more on pp 247-249 TB)
 Rights of way (Drewell v Towler)

All rights required to enable the grantee to get water from the grantor (Re
Simeon)

Right to water from a spring, and the right to go onto neighboring land to
collect it (Race v Ward)

Right to get water from a pump (Polden v Bastard)

Right to discharge rainwater (gutters) (Harvey v Walters)

Right to commit private nuisance by:

o
Creating noise (Elliotson v Feetham)
o
Polluting water (Baxendale v McMurray)
o
Polluting air with smoke/scents (Crump v Lambert)
Right to use area alongside a wharf for loading/unloading vessels (Thomas W
Ward Limited v Alexander Bruce (Grays) Limited)

Right of support of buildings:
o
From land (Dalton v Angus)
o
From other buildings (Lemaitre v Davis)
12.1.2 Easements compared to:
Easements are different from:

Licenses
o
A license is a revocable right enforceable by contract.
o
Except where coupled with a grant, it is a right in personam where an
easement is a right in rem.

Leases
o
A lease is a temporary property right that changes right to possession,
easements change property rights, but possession is usually
maintained.

Natural rights
o
Natural rights (e.g. right to support of land in its natural state) are
enjoyed by the owner of land regardless of the existence of a grant.
o
Easements may increase these rights (e.g. right of support of a
building), but the natural rights do not require an easement.

Public rights on land
o
Anyone has a right to public roads, easements (usually) modify rights
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on private land.

Restrictive covenants
o
Restrictive covenants are negative in nature, restricting the use of
land. The covenantor is not bound to do anything positive. Equity
treats them as quasi easements. They are an equitable interest in land.

Profits â prendre
o
Profits â prendre are a right to take something off land (Duke of
Sutherland v Heathcote).
o
They can be extinguished when the subject matter becomes obsolete
12.2 Creation of Easements
Easements can be created by:

Express grant

Statute

Implied grant or reservation

Prescription
12.2.1 Express grant
If the instrument (created 1931 or later) expressly creates an easement, it must
comply with CA s 88(1) (a) land benefited (b) land burdened (c) the person who’s
consent is required to modify the easement. Clearly indicate per Papadopolis (as
long as it is pointed to in terms of the instrument, needs not be exact).
Under Old System Title:

An easement must be created by deed to be effective (CA s 23B)
Torrens Title Land:

An easement must be in approved form

And registered, in order to be effective (RPA s 46)

The details are to be recorded in the folio for both the dominant and servient
tenements (RPA s 47(1))
Where only the dominant tenement is under Torrens Title:

The statement on the CT is not conclusive (Cowlishaw v Ponsford)

The servient tenement is only bound if there is a deed as well.
An equitable easement may be created where there is a document that is specifically
enforceable (there is valuable consideration and writing complying with s 54A).
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12.2.2 Express reservation
An express reservation occurs whereby, in a conveyance, an owner reserves an
easement for the benefit of the land retained by the owner (St Edmundsbury and
Ipswich Diocesan Board of Finance v Clark (No 2)).

Old System Title
o

A separate re-grant need not be conveyed (CA s 45A)
Torrens Title Land
o
The reservation is made in the memorandum of transfer by which the
land is transferred.
o
It must comply with CA s 88(1).
12.2.3 Statutory creation of easements
Statutory easements may be created under the following:

Public Works Act s 4A
o

An easement may be resumed by the crown over private land
Crown Lands Consolidation Act s 279
o
Every purchaser of crown land shall be entitled to road access, and
has an easement to the neared road through/over any crown land

Conveyancing Act s 88B
o
Easements can be creation by registration or recording (under CA s
196) of a plan setting out the details of easements created for the
benefit of:


Any public roads

Easements in gross under CA s 88A

Easements belonging to/burdening land in the plan
Conveyancing Act s 88K
12.2.3.1 Conveyancing Act s 88B
All easements created under s 88B must be recorded in the property’s folio (CA s
88B(3A)).
If Registrar General fails to record this, it may still be valid:

Because it fits with the ratio of James v Registrar General, or under s 42(1)(a1)
(as the next registerable dealing);

If it is created by statute, and is thus enforceable because of Pratten v
Warringah Shire Council; or

If it is implied by a marking in the folio which properly depicts the easement
(Dabbs v Seaman).
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12.2.3.2 Conveyancing Act s 88K
This section provides
1. An easement may be imposed if it is reasonably necessary for the effective
use or development of other land that will have the benefit of the easement.
2. It may be made if:
a. The use of the dominant tenement will not be inconsistent with the
public interest, and
b. The land is evidenced in the General Register of Deeds, or the RPA
Register, and the owner may be adequately compensated for any loss
or disadvantage arising from the easement, and
c. All reasonable attempts have been made to negotiate an easement
before.
3. The easement must be properly recorded/with specificity.
4. The applicant will pay compensation appropriate.
5. The costs are payable by the applicant, unless the court orders otherwise.
6. The easement may be:
a. Released by the benefiting owner, or
b. Modified by deed between the parties (OST) or by a dealing in an
approved for (TT).
7. This takes effect when:
a. Registered (TT)
b. When the deed is registered in the General Register of Deeds (OST)
8. An easement created in this section has the effect as if it is a deed.
9. The court, under CA s 89, may modify easements made under this section.
12.2.3.2.1 Reasonably Necessary for the Effective Use of the Dominant Land
Reasonably necessary is determined objectively (Re Seaforth Land Sales).
Reasonably necessary does not require absolute necessity, something less will suffice
(117 York Street Pty Limited v Proprietors Strata Plan 16123).
It must be reasonably necessary for the dominant land, not the particular proprietor
(Hanny v Lewis).
The court is not to make an order under s 88K lightly, since it compulsorily takes a
proprietary right (Durack v De Winton), and only if the servient tenement can be
compensated (O’Mara v Gascoigne).
There are two views as to the meaning of “reasonably necessary”:

The first is that the court should not judge the reasonableness and that 88K is
available to whatever development of the dominant land is allowed by law
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(Tregoyd Gardens v Jervis).

The second is that the easement is reasonably necessary for a use or
development that is reasonable compared with possible alternative
uses/developments (117 York Street v Proprietors Strata Plan).
Durack v De Winton – per Einstein J (summary of position):

Reasonably necessary is not absolutely necessary (117 York St)

The use must be reasonable compared with possible alternatives (117 York St)

The easement is reasonably necessary if the development with the easement
is at least substantially preferably preferable to use without the easement (117
York St, Hodgson J)

Necessary is used, meaning it is more than merely desirable or preferable, it
is a higher burden (Kindervater)

This is an objective test, in light of the circumstances, at the time of the
ordered, rather than at the time proceedings were commenced (Coles Myer v
Dymocks)

It should be approached with caution, because it takes away proprietary
rights compulsorily (Nelson v Kalahara; re Worthston)
Khattar v Wiese – per Bretton J (summary of position):

As above, add that the easement may be necessary for all, or at least one or
more proposed uses which are reasonable when compare to the alternatives
(117 York St)

Thus, there are two questions:
o
Whether the proposed development is a reasonable one in comparison
with alternatives
o
Whether that development with the easement is substantially
preferable to the use without the easement

The burner on the servient property is relevant: where the burden is greater,
the burden
Owner’s Strata Plan no 13625 v Ryan – Rein AJ

An example (Re Permanent Trustee Australia), a rear lane being the only means
of access was a valid 88K easement.

The next past user was a relevant factor? Pp 259, 260
12.2.3.2.2 Not inconsistent with the public interest
CA s 88K(2) requires the use of land to be consistent with the public interest: e.g.
easement to allow for internal parking in a crowded area was consistent (Owner’s
Strata Plan no 13625 v Ryan).
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12.2.3.2.3 The owner of the servient land can be adequately compensated for
any loss
The owner must (and it must be possible for) be adequately compensated for loss
(CA s 88K(2); O’Mara v Gascoigne).
Compensation is determined with reference to loss incurred by the servient owner,
not the benefit of the dominant owner (Goodwin v Yee). E.g. 117 York St,
compensation was $23000, the benefit to the dominant was between $260000 and
$430000.
Compensation is to be adequate, rather then generous or miserly (Mitchell v Boutagy).
Compensation is awarded for any loss or other disadvantage caused (as expressed in
March v Stramare) by the imposition of the easement (Mitchell v Boutagy):

Value of the easement (Tregoyd Gardens v Jervis)

The disturbance caused by building activities (Tregoyd)

The disturbance caused by future access for maintenance (Tregoyd)

Loss of rent, even if the property is not tenanted, as long as there is a
disruption to occupation (Goodwin)

The loss of peace and quiet (Wengarin v Byron Shire Council)

The loss of business profit (Katakouzinos v Roufir Pty Ltd)

The cost of having to temporarily vacate the premisis (Goodwin v Yee)

The cost of damage to the servient land (Katakouzinos)

Diminished market value, including “hope value” of potential uses that have
been limited (Wengarin)

Tertiary costs, such as moving expenses, will only be awarded if there is
proof that the costs will be incurred (Mitchell v Boutagy)

The cost of defending the application, if reasonable (117 York St)
o
Note, exorbitant demands for compensation demonstrate
unwillingness to negotiate, and may be punished in costs (Coles v
Dymocks)

Loss of bargaining power is not compensated for (Goodwin; 117 York st)
The onus of proof in a compensation case is the plaintiff (dominant tenement) (117
York St).
12.2.3.2.4 All reasonable efforts
The applicant under this section must have made “all reasonable efforts” to negotiate
for an easement (CA s 88K(2)(c)). This is where, objectively, negotiations have
proved fruitless and it is unlikely that further negotiation will produce a consensus
(Coles v Dymocks – a large gap in ideas of quantum of compensation satisfied the court that
further negotiations were to be fruitless; Tregoyd).
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12.2.3.2.5 The discretion of the courts
Above the requirements in the section, the court also has discretion, e.g. the court, in
Owners Strata Plan v Ryan stated that the history of usage of a piece of land lead the
court to decide that their discretion should be exercised by granting an easement.
12.2.3.2.6 Ancillary rights
Under s 88K, the court may grant ancillary rights necessary for the enjoyment of the
easement (117 York st).
12.2.3.2.7 Costs – probably not
The costs are payable by the applicant subject to any order of the court to the
contrary (s 88K(5)).
This discretion has been exercised, and the costs, or part thereof (Owners Strata Plan v
Ryan) allocated to the defendants where:

The defendant's conduct is unreasonable, unreasonably bringing up legal
costs (117 York St)

Where the arguments maintained at the hearing by the defendant are
unreasonable (Goodwin)

Unreasonableness includes:
o
Making false allegations of fraud, knowing them to be false (Fountain;
Thors v Weekes)
o
Commencing proceedings for ulterior motives (Ragata Developments v
Westpac)
o
Making allegations which ought never to have been made
o
Causing the undue prolongation of a case by groundless contentions
(Ragata)
o
Imprudent refusal to compromise (Messiter v Hutchinson)
This is so that defendant’s would not go into a case thinking there is nothing they
could do that would not be on the applicant’s tab (Goodwin; Owner’s Strata Plan v
Ryan).
The following were taken into account in Ryan:

The facts were spurious and manufactured for the purpose of the case;

The plaintiffs offered a settlement amount of a similar quantum, which the
defendant’s refused;

The history of use of the land; and,

The misuse of valuations.
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12.2.4 An implied grant or reservation under Old System Title land
An easement by implication usually occurs when land under common ownership is
severed, for example a right of way for a subdivision created as an “island”
surrounded by property (Corporation of London v Riggs).
An easement by implication:

Is a legal interest;

Cannot be defeated by a subsequent purchaser of the servient tenement;

Is not created by instrument.
Easements by implication are not created “for all purposes”, but, rather, for the
limited purpose of allowing enjoyment of the land as it is at the time (e.g. if the land
is agricultural, the easement could not be relied upon if the land is turned into an
industrial estate).
In Wheeldon v Burrows: (there is no easement here?)
Facts:

A workshop and adjacent land belong to the same owner

Both are offered for sale at auction

o
The land was sold, but the workshop was not
o
Subsequently, the workshop was sold to another person
o
The workshop was on-sold to another
The workshop had windows facing the land
Held:

Since there was no reservation of right of access to light in the sale, no right
passed to the purchaser,

Thus, the land could be built up to block the windows

This might have been different where they were sold at the same time
12.2.4.1 Creation of an easement where the vendor retains the “quasidominant” tenement
Where the vendor retains the benefiting land, an easement will not be implied in
favor of the vendor because they could have reserved the rights (Wheeldon v
Burrows). Note, easements of necessity, common intention, or s 88K can still occur
here.
12.2.4.2 Easements of necessity
Where otherwise the grantor would be landlocked (with no means of access), an
easement of necessity may be implied (Gibson v M’George).
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For example:

An easement of necessity for a chimney was implied, even where, at the time
of the grant, the necessity was not realized (Wong v Beaumont)
The party entitled to the right of way may choose the land to be affected (Bolton v
Bolton); it must be reasonable (Pearson v Spencer) and cannot be changed once
selected (Deacon v Southeastern Railway).
How does this interact with s 88k? common law when absolute, 88K, the standard is
lower (reasonably v absolutely necessary)
12.2.4.3 Easements of common intention
Easements that are necessary to implement a common intention will be implied in
favor of a grantor (Perth Corporation v Halle).
12.2.4.4 Creation of an easement by implication where the vendor retains the
“quasi-servient” tenement
Where the grantee acquires the dominant tenement, easements are more readily
implied: definitely where there is necessity or common intention.
An easement will be implied where (Wheeldon v Burrows):

The use is continuous and apparent
o
Continuous implies permanent, rather than temporary rights, it does
not require absolute continuity (Suffield v Brown)
o
Apparent implies that it is directed at something which is
discoverable on inspection (e.g. a drain (Pyer v Carter), a road (Brown v
Alabaster), windows with light (Phillips v Low), more e.g. see p 272)

It is necessary to the reasonable enjoyment of the land
o

The requirement is reasonableness, not necessity (Wheeldon v Burrows)
It is (and was at the time of the grant) used by the grantor for the benefit of
the part of the land granted
12.2.4.5 Where the dominant and servient tenements are sold at the same
time
Where they are sold simultaneously, they gain any easement that they would have
gained if the vendor kept the other parcel (Swansborough v Coventry).
The date is the date of the contract, not the conveyances (White v Taylor (No 2)).
12.2.4.6 Implied easements under Torrens Title
A holder of estate in fee simple under Torrens title enjoys indefeasibility (RPA s 42)
against any interest that is not on the register (bar the exceptions to indefeasibility),
except where there is “omission or misdescription […] of any easement created in or
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existing upon the land (RPA s 42(1)(a1)).
RPA s 42(1)(a1) protects:

Easements which existed at the time when the land is brought under the
RPA, but which were not recorded in the register (James v Stevenson)

Easements created under the RPA, which were omitted or misdescribed in
the Register (James v Registrar-General)
An easement by implication created over a servient tenement when it was OST is still
enforceable when it is converted to TT (Australian Hi-Fi v Gehl).
An easement cannot be implied on to a TT property (Australian Hi-Fi).
The exception to this is Dabbs v Seaman where a transfer referred to an easement (20
foot lane), echoed in the CT, which was not express. This easement was found to be
valid.
12.2.5 Easements by prescription
Easements by prescription used to require proof of enjoyment from time immemorial
(1189), but are now created through the fiction of a “lost modern grant” – juries are
required to presume, if there have been 20 years of uninterrupted enjoyment of a
right, that an easement was granted expressly, but lost (Dalton v Angus).
This has been applied in Australia (Delohery v Permanent Trustee), and requires that
the servient owner:

Had a knowledge of the acts which created the easement (Lloyds Bank v
Dalton).

A power to stop or sue in regards to these acts and a failure to exercise such a
power (Dalton v Angus).

Note, if there was a license to do the act, the action to create the easement will
be defeated (Gardner v Hodgson) (the act must not be by force, secrecy, license
or permission).
12.2.5.1 Easements by prescription under Torrens Title
When the easement is made when the servient tenement is OST, it remains valid if
converted to TT because of s 42(1)(a1) (Australian Hi Fi v Gehl). An easement by
prescription cannot be made when the servient tenement is already under TT.
12.2.6 Easements in Gross
An easement can be created without a dominant tenement under CA s 88A(1). The
crown can create an easement in favor of the crown (a). Also, by registration of a
plan of subdivision (s 88B(3)(b)).
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12.3 Ancillary rights to an easement
With the grant of an easement comes a grant of all rights reasonably necessary for its
enjoyment (Jones v Pritchard). In Torrens Title, as long as the easement is recorded or
otherwise valid, ancillary rights exist (i.e. even if they are not explicitly recorded in
the register (Hemmes Hermitage v Abdurahman).
For example (more on pp 275, 276):

Easement for the passage of power lines includes an ancillary right to place
electricity poles (Ventral Electricity v Jennaway)

A right of way includes an ancillary right that the way be kept clear of danger
(Prospect County v Cross)

An easement of support includes an ancillary right to have access to carry out
repairs (Jones v Pritchard)

A right of footway includes a right to build stairs where it is slippery (Hanny
v Lewis)
12.4 Obligation on the owners of the dominant and servient
tenement; deviations of a right of way coming from
obstruction
Where the grant does not specify, the owner of the servient tenement:

Does not need to actively do anything to keep the right of way in repair, the
dominant tenement’s owner has this obligation (Newcomen v Coulsen)

If the easement allows for uninterrupted use, there is an obligation to make it
suitable for such use (Jones v Pritchard)
If the owner of a servient tenement obstructs a right of way, is it is not easily
removable, the owner of the dominant tenement may deviate around the obstruction
(Selby v Nettlefold), reasonably (Selby v Nettlefold). If this amounts to substantial
interference with the dominant tenement-holder’s rights, damages/an injunction may
be sought (Saint v Jenner).
12.5 Changing an easement
The ability to change an easement depends on its type:

Easement by implication
o
It is not possible to change the use of an easement by implication
(Corporation of London v Riggs – Easement by necessity for an agricultural
property could not be changed to allow for increased use of the easement for
building/industrial land)

Prescriptive easement
o
A right of way by prescription cannot be changed or extended
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(Wimbledon v Dixon – an agricultural right of way could not be extended
when the land became heavy residential; RPC v Rogers – a right of way to
agricultural land was not extended where the land became a caravan park)
o
A mere intensification of use of the land is not regarded as a change of
use, provided that there is no increase in the burden on the servient
tenement (British Railways v Glass)

E.g. a house to a hotel (Lloyds Bank v Dalton), a camping
ground that became more heavily used (British Railways v
Glass) (see age 277, 278 for more examples)
o
The right of use of an easement by prescription is limited to that
which was necessary for the purposes of the dominant tenement at
the time of creation (British Railways v Glass)

Express Easement
o
An express easement is not limited by original use, and will be given
the full meaning of the berth of its grant by the court.
o
An easement “for all purposes” will not be limited by original context:
the use may change and the right of way will continue to be valid
(White v Grand Hotel – a residency became a hotel, the easement was held to
still be valid)

This is limited: if the use is so excessive so that an ordinary
man would not adopt this on his own land, an injunction may
be sought to limit the use (British Railways v Glass)
o
This doctrine is much of a “facts and circumstances” one
Cases illustrating this doctrine:

Todrick v Western National
o
o
Facts

Easement was used for agriculture

Dominant tenement was bought by a bus company

Who built a ramp to carry heavy vehicles up the right of way

The vehicles had minimal clearance (2 cm)
Held

The new use was excessive because of the ramp, and the lack
of clearance

White v Grand Hotel, Eastbourne Limited
o
Facts

A right of way was granted

A new owner purchased the dominant tenement, who turned
it into a garage attached to a hotel

And used the right of way to allow an entrance to hotel
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visitors, and built a larger gate to accommodate
o
Held

It is a right of way claimed under a grant: unless there is some
limitation in the grant, full effect must be given to the grant

The right of way was valid, but building the new gate on the
land of the servient tenement was excessive

Jelbert v Davis
o
Facts

There was a right of way, used for agricultural purposes

The right of way was as follows: “right of way at all times and
for all purposes … in common with all other persons having
the like right”

o
Turned the land into a camping ground for 200 camp-grounds
Held

The court held that the amount it would be used was limited
by “in common with all other persons having the like right”

Since the excessive use would limit their usage, it was to be
limited

Bulstrode v Lambert
o
Facts

The vendor reserved an easement for his tenants and others
authorized to pass over the yard
o

Someone else bought the dominant tenement

Wanted to bring vans to unload furniture
Held

The object of this reservation was to give the plaintiff an
alternative means of getting to his business … e.g. for moving
furniture for sale

Thus, the vans were fine, and could be unloaded if they
couldn’t get to the garage

This did cause hardship, thus the vehicles could only stay as
necessary for unloading, no longer

VT Engineering v Richard Barland & Co
o
Facts

A landlord granted a tenant a right of way at all times and for
all purposes

The tenant used them to transport structural steel onto trucks

The landlord wanted to build over the easement, building a
tunnel to allow for it
o
Held
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
The tunnel would restrain the use of the easement (it was only
3m high)

And thus, it was restrained: the right of way should remain
free from obstruction as is reasonable in all the circumstances
CA s 89 regarding modification? I have notes only on extinguishment. S 89 is modify
OR extinguish.
12.6 Extinguishing an easement
Easements can be extinguished by:

Express release;

Implied release;

By operation of law; or,

By court order
12.6.1 Express release
Express releases:

Under OST, a release must be by deed (CA s 23B(1)).

Under TT, a release requires a registered transfer (RPA s 47(6)).

Under equity, an easement is released by writing for value (CA s 23C(1)(c)).
12.6.2 Abandonment under Torrens Title:
 If the easement has not been used for 20 years (RPA s 49(2)), the Registrar
General may cancel the recording of the easement in the register (RPA s
39(1)).

Before cancelling, the Registrar-General must consider submissions made by
an interested party during a notice period (RPA s 49(4)).

The Registrar General may also cancel the easement if the easement has no
practical purpose because separate properties have been consolidated into
one property (RPA s 49(5)).
12.6.3 Implied Release within 20 years (i.e. before abandonment)
An easement may be released within 20 years if there is evidence that the dominant
tenement intended to release the right (non-use is not sufficient to prove such
intention (Ward v Ward), unless it is for a sufficiently long period (Tweweeke v 36
Wolseley Rd), or combined with surrounding circumstances indicating intention
(Swan v Sinclair)).
Cases illustrating this doctrine:

Treweeke v 36 Wolseley Rd Pty Limited
o
Facts
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
The dominant tenement was granted a right of way to water
access

The owner of the servient tenement built a pool and other
obstructions on the path without complaint made against him

The owner of the dominant tenement had used a different way
to the water, which was easier

The other way closed

The owner of the dominant tenement wanted access to the
easement again, but the other party said it was impliedly
released, and wanted release via CA s 89(1) (See below)
o
Held: Walsh J in dissent

In looking to abandonment, the following must be considered:

The length of time the right of way hadn’t been used

The effect of obstacles at the time of the grant

The effect of further obstacles created

The failure of the respondent (the servient tenement?)
to take action to make the right of way available for use

o
The effect of availability of another path
Held:

In its entirety, the inference of abandonment should not be
made

The Strata Plan case
o
That the purchaser bought a TT property with an easement on the
register, recently, made implication of abandonment impossible
12.6.4 Operation of Law
What about RPA s 49(5)?
Where common ownership and occupancy of the dominant and servient tenements
exists, there can be no more easement (Coke Upon Littleton):

Except where the easement was created by the recording of a plan under CA
s 196 (CA s 88B(3)(c)(iii))

Unless the land is TT, and the easement is registered (RPA s 47(7))
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12.6.5 Order of the court (CA s 89(1))
The section goes:

(1) Where there is an easement or profit a prendre, the court may on
application modify or extinguish it, if satisfied that:
o
(a) The reason for the creation of the easement or profit a prendre is
obsolete, and would impede the reasonable servient tenement unless
removed,
o
(b) The owner of the dominant tenement (who is sound) agrees, or by
their actions/omissions imply abandonment of the easement in whole
or part
o
(b1)(i) that the authority benefiting from the obligation agrees, or may
reasonable be seen to have waived benefit; or (ii) that the obligation is
unreasonably onerous or expensive compared with its benefit
o
(c) the proposed modification/extinguishment will not substantially
injure the dominant tenement

(2) I don’t understand?

Requirement to have tried to get an easement  that is 88K
Cases illustrating an application of CA s 89(1)

Pieper v Edwards
o
CA s 89(1)(b) could be applied where a previous owner agrees to
surrender the easement, even if this was not recorded on the register

Manly Properties Pty Limited v Castrisos
o
The court should not unduly restrict CA s 89
12.7 Remedies
Remedies can come in the form of abatement, injunction, or damages; specific
remedies are available to specific types of easement.
12.7.1 Abatement (self-help)
You can remove an obstacle to a right of way, but the courts don’t like this (Lagan
Navigation v Lumbeg). No notice is required, but a breach of peace may occur if care
is not taken (Perry v Fitzhowe). Must not be excessive force, must not injure 3rd parties.
12.7.2 Injunction
This is the most common remedy: an injunction against continuing interference with
the easement (Andale v Goetjens). This won’t be granted if the interference is small or
temporary (FCA Fincance v Moreton Sugar Mill).
12.7.3 Damages
You can get damages where there has been substantial interference with the
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enjoyment of the easement (Saint v Jenner).
12.7.4 Remedies specific to rights of support
There is a natural right to support of land in its natural state (Backhouse v Bonomi),
additional support requires an easement (Dalton v Angus).
If removal of support would have damaged the land as is, and damages the
buildings too, this is actionable without an easement (Redland Bricks v Morris).
12.7.5 Nuisance
Where servient tenement is blocking right of way, requiring damage (not necessarily
physical).
If dominant tenement uses easement too much: but more likely to use declaration.
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13 Restrictive Covenants
13.1 Introduction
Covenant
A term of a contract that relates to the
land (there is some proprietary interest
(i.e. an interest in land) that is in the
clause: it is connected to land, not
person)
The burdened party (the party restricted
by the covenant)
The grantee, benefited party
Covenantor
Covenantee
The questions in covenants are as follows:

When does a covenant run with the land – when will privity be overridden?

Can the covenantee’s heirs claim benefit?

Can the covenantor’s heir be burdened?
13.1.1 A restrictive covenant
A positive covenant will not be enforced by equity. Thus, for the covenant to be a
proprietary interest, it must be a restrictive covenant (Re Nisbet and Potts’ Contract).
Further, a covenant must be restrictive in substance (as apposed to merely in words).

A positive covenant requires the covenantor to do something, most
commonly, to expend money (Haywood v Brunswick Permanent Benefit Building
Society). E.g.:
o
A covenant not the let the premises fall into disrepair (negative in
form, positive in substance)

A restrictive covenant prevents the covenantor from doing something. E.g.:
o
Don’t carry on a certain type of business
o
Don’t build a house worth less than a certain amount (Collins v Castle)
A covenant that has positive and negative provisions will be enforceable to the
extent that it is restrictive (Shepherd Homes Limited v Sandham; Tulk v Moxhay).
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13.2 Requirements for a binding covenant under OST
1. The covenant must be restrictive in substance (Tulk v Moxhay)
2. The purchaser must have taken with notice of the covenant (Tulk v Moxhay;
Wilkes v Spooner for someone claiming through such a purchaser)
3. The covenant must “touch and concern” the land benefited (Rogers v
Housegood; Tulk)
a. The interest must be annexed to land
b. The interest must not be personal (i.e. it must be for the benefit of the
land, not the specific owner)
4. If the land has been subdivided, the covenant is only binding on the
subdivisions (rather than to the block of land as a whole, which is the
assumption) if there are words to the effect of “benefit of the land and every
part of it that may lawfully be subdivided” (Tulk; Ellison v O’Neil)
5. CA ss 70 and 70A may not be rebutted
a. CA s 70 implies that the benefit of the covenant is binding on the
successors of the covenantee
b. CA s 70A implies that the burden of the covenant is binding on the
successors of the covenantor
6. The covenantee must own the land benefited at the time of creation (Kerridge
v Foley – land sold lot by lot, land sold subsequent could not get a covenant from
land already sold since the vendor no longer owned the land), unless there is a valid
scheme of development (Elliston v Reacher)
a. There must be a reciprocity of covenants (each must be burdened by
the others)
b. Others are suggestions (Re Application of Poltava Pty Ltd)
i. Common vendor (may be two or more vendors acting in
concert (Re Dolphin’s Conveyance))
ii. Plan must have been laid out (size may be changed according
to the requirements of each purchaser (Baxter v Four Oaks)
7. There must be compliance with CA s 88(1).
a. Must be created by an instrument (after 1930)
b. Benefiting and burdened party must be stated (sub-sub-ss (a), (b))
c. The person able to release or change the easement (sub-sub-ss (c), (d))
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13.2.1 Enforcement
At law:

Burden does not run with the covenantor (Austerberry v Corporation of
Oldham)

Thus, will only be enforceable against original covenantor
At equity:

If the above 7 are satisfied, there may be a claim in equity against the
equitable proprietary interest created (Tulk)
13.2.2 Building Schemes
A valid buiding scheme (Elliston v Reacher):

Removes the assumption that a covenant is not meant to benefit subdivisions

And allows a covenant to be enforceable irrespective of the sale dates of each
lot
For a building scheme to be valid (Elliston):

There must be a common vendor

The vendor must lay out a plan before selling

The restrictions are consistent only with some scheme of development of the
land

The common vendor intended the restrictions to benefit all of the lots sold
o
Purchasers bought on the basis that they would benefit from this
retriction
Thus, extrinsic evidence is required to prove a building scheme.
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13.3 Restrictive covenants on TT land
Similar to OST (except for additional requirements for proving a building scheme
and the application of CA s 88B instruments), a covenant requires the following to be
valid:
1. The covenant must be restrictive/negative in substance (Tulk v Moxhay)
2. The Purchaser must have taken with notice of the covenant (Tulk v Moxhay)
a. Note, in TT, if the interest is on the register, notice is implied (CA s
88(3))
3. The covenant should be recorded on the register in accordance with CA s
88(3)
4. The covenant must “touch and concern” the land benefited (Rogers v
Hosegood; Tulk v Moxhay)
5. There is a presumption that a covenant does not apply to a subdivision. If it
is to apply to a subdivision, this needs to be expressly stated (Tulk v Moxhay;
Ellison v O’Neill)
6. CA ss 70 and 70A may not be rebutted
a. CA s 70 implies that the benefit of the covenant is binding on the
successors of the covenantee
b. CA s 70A implies that the burden of the covenant is binding on the
successors of the covenantor
7. The covenantee must own the land benefited at the time the covenant is
created (Kerridge v Foley)
7A. UNLESS you satisfy the elements of a building scheme (Elliston v Reacher)
8. There must be compliance with the formal requirements of CA s 88(1) (Re
Louis)
a. Must be created by an instrument (after 1930)
b. Benefiting and burdened party must be stated (sub-sub-ss (a), (b))
c. The person able to release or change the easement (sub-sub-ss (c), (d))
8A UNLESS there is a CA s 88B instrument (after June 1964) registered
containing a covenant
a. Registered under CA s 196
b. Complies with the requirements of CA s 88(1)
13.3.1 A s 88B instrument
This instrument is a method of subdivision (CA s 196), which if it complies with CA
s88, is enforceable whether or not the other requirements of easements have been
satisfied (e.g. they can both be owned by the same party). It needs to be valid under
CA s 88, therefore, must touch concern, describe benefited etc. The covenant is to be
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recorded under each burdened CT, the covenant. Ommited is still enforceable.
13.4 Remedies/defences
An injunction may be sought for breach, alongside damages.
Unless the following defences apply:

The plaintiff’s inactivity has justified a reasonable belief that the plaintiff no
longer intends to enforce the covenant (Chatsworth v Fewell)

The character of the neighborhood has so completely changed that the
covenant is valueless (Nwakobi v Nzekwu)
13.5 Extinguishing a covenant
Extinguishment may be done by:

Express release

Implied release

A CA s 89 court order

A Environmental Planning an Assessment Act s 28(2) order
13.5.1 Express release
 Express release under OST must be by deed (CA s 23B(1))

Express release under TT must be by registered deed
Where a third party is given right to change/release covenant (under the CA s 88(1)
instrument) , the owners retain little control (Elliston v Reacher).
13.5.2 Implied release
An implied release may occur when:

There has been usage (for a long time) wholly inconsistent with the use of the
covenant (Hepworth v Pickles)

The owner of the benefited land has shown continued disregard for breaches,
making the owner of the burdened land reasonably believe that the covenant
has been waived (Chatsworth Estates v Fewell)

The neighborhood has changed in such a way that there is no longer any
value left in the covenant (Application of Fox)
13.5.3 CA s89(1)
 (1) Where there is covenant, the court may on application modify or
extinguish it, if satisfied that:
o
(a) The reason for the creation is obsolete, and would impede the
reasonable servient tenement unless removed,
o
(b) The owner of the land benifiting (who is sound) agrees, or by their
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actions/omissions imply abandonment of the easement in whole or
part
o
(b1)(i) that the authority benefiting from the obligation agrees, or may
reasonable be seen to have waived benefit; or (ii) that the obligation is
unreasonably onerous or expensive compared with its benefit
o
(c) the proposed modification/extinguishment will not substantially
injure the benefiting party
13.5.4 Environmental Planning an Assessment Act s 28(2)
Local councils, not interpersonal contracts, are meant to control land use and
development.
An environmental planning instrument may say a restrictive covenant does not
apply (Ludwig v Coshott). It will only override this covenant to the extent required
for development (Doe v Cogente).
For more, see pp 321-333.
For RG’s discretion to remove covenants, se pp 333-334.
13.6 Etc.
Touch and concern

Benefit land owned by ee

Touch and concern if reasonably regarded as capable of being affected by the
performance of the covenant (Hosegood)

Land as a whole, not each part (Ellison)

Benefited land is too large, covenant may not touch and concern (Re-Ballards,
Rogers, Ellison)
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14 Leases
14.1 Introductory issues
Lessor
Lessee
Lease
Assignment
Demise
Person who grants the lease: the landlord
The person who takes the interest: the
tenant
A proprietary interest in land
Transferring your interest to a third
party
A lease
14.1.1 Leases in comparison to other interests
Bare licenses

Bare licenses are a privilege granted to do something which would otherwise
be unlawful

They are a personal interest (not an interest in land)

They cannot be transferred to a third party
Contract license

It requires consideration (e.g. hiring a hotel room)

Cannot be assigned or bind third parties

It is revocable or breach of terms or with reasonable notice
Profit a prendre

Is a property interest, which can be defeated by indefeasibility
Leases

A property right (proprietary right; incorporeal hereditament)

Capable of assignment (either landlord or lessee can assign interest)

Can bind third parties

It is better than contract because it gives better protection with better
remedies

It grants exclusive possession (if this is not granted, it is not a lease)
14.1.2 Lease regimes
There is the general law of leasing, which informs the other areas and applies to nonretail commercial leases. This is supplemented by:

Common law

Equity

Conveyancing act
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
RPA

Retail (retail leases act)

Residential (Residential tenancies act)

Crown land (Crown lands act)
14.2 Essential characteristics of a lease
1. A right of exclusive possession of the premises
2. For a definite period
3. In the appropriate form
14.2.1 A right of exclusive possession
The substance, rather than the form, of the lease, determines whether a right to
exclusive possession is satisfied.
It is a facts and circumstances test:

In the words of the agreement, what rights are conferred?

Is intention relevant?
o
Before, it was
o
Radaich said the intention to create a lease was irrelevant
o
Intention is just one of many factors in determining whether
possession was exclusive
Intention may be relevant where the primary relationship is not tenant/landlord (e.g.
son/father).
14.2.1.1 Radaich v Smitch (central for license v lease)
Facts:

Document described them as license

License deemed to be a lease (court says this is not relevant, the words
describing are not important)
o
It is a lock-up shop (keys looked after by the tenant)

Part of a larger building

License
o
For sole and exclusive right … for milk-bar
o
Right to passage and toilet
o
No poultry etc.
o
Requiring to open/close at certain times
o
Gas/electricity/water provided
o
Stock can be kept on premises
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Held:

The issue was: how far was the right exclusive? To what extent has it been
infringed?

McKiernan
o


Substance that is central
Taylor
o
Either a grant in interest of land, or not
o
Exclusive possession is the determining factor
It was held to be a license (central: possession has to be handed back)
14.2.2 Certain duration
From the instrument creating the lease must be able to ascertain the starting date and
maximum duration of the lease. If you can’t, the instrument is uncertain.
e.g.



Lace v Chandler
o
There was a lease “until the end of the war”
o
Which was rendered uncertain
Penut crop
o
Time can be deduced, but only in the rough
o
A specific time is necessary
21 years or until A leaves
o
Certain, ish
o
It would be read down to mean 21, or, if A leaves earlier, that date
14.2.3 Formalities (Torrens)
 See TT notes

A lease of 3 years or more must be registered, and in approved form (RPA s
53)

Leases of less than 3 years may be registered and are an exception to
indefeasibility (RPA s 42(1)(d))

The benefit of indefeasibility (RPA s 42)

Torrens unregistered interests
o
o
Legal

CA s 23D(2)

Oral/deed/writing

No lump sum payment

Right to immediate possession
Equitable

Enforceable agreement to lease

Writing under CA s 54A
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
Consideration (equity will not assist a volunteer)

Or, complies with CA s 23C(1) + consideration

Or equitable estoppel (Walton stores)
14.2.4 Formalities (OST)
 Under CA s 23B(1) deeds
o
Exception in CA s 23B(2)

Unless it is a CA s 23D(2) (legal, unregistered, in OST, just legal)

Or equity, as in Torrens
14.3 Types of leases

Fixed term
o
E.g. 99 year lease

o

Breach of term can kaput the lease
If it is not of certain time, it is void ab initio
Periodic (express/implied)
o
E.g. lease fortnight to fortnight (sometimes by agreement, sometimes
because a lease has expired and rent has continued to be paid)
o
It arises by reference to a time term which you pay rent (a periodic
“n” week tenancy will arise)
o
o

Certain term?

Term fixed, option to renew

Therefore an ongoing series of leases
Generally, the rent period is the notice period
Tenancy at sufferance
o
This is when you “hold over” – where the fixed term comes to an end
but the tenant doesn’t lease
o
This isn’t really a lease (you cannot assign or transfer) but it is called a
lease
o
Compensation may be payable for use and occupation (but this is not
rent since there is no lease)
o

If you pay and he accepts, it may become a periodic tenancy
Tenancy at will
o
This is not a tenancy at all
o
This is really a bare license
o
It basically means “you can use my house until I tell you to go away”
o
No money changing hands periodically
o
Can be determined (ended) at the whim of the other party
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14.4 Covenants
NOTE: different law rules leasehold covenants and restrictive covenants
Obligations in lease:
1. Express clauses
2. Clauses implied by common law (and inherent in T/LL relationship) (e.g.
non-derogation and quiet enjoyment)
3. Clauses implied by statute
4. Clauses which are a necessary implication
An oral/express lease is a contract, but may become an estate: thus, you may use
contractual or real property remedies.
14.4.1 Covenant of repair (either on LL or tenant)
This is a big deal in leasing; who has the duty to repair?
When on a tenant:

“to keep and deliver up the premises in a satisfactory state of repair”

limitation as to fair wear and tear (this is allowed, and not covered by the
covenant

Problems with this duty:
o
It looks to the future (prospective)
o
To put into repair, rather than to repair (so if you leased crappy, you’ll
have to bring it up to scratch)

Note: you are not liable for inherent defects, which is not the same thing as
something worn over time and requiring repair, but, rather, it must have
been faulty from the start

You are not required to repair to the extent that you give the LL something he
didn’t have (but this is quite a long way)

For natural disasters, the contract is considered frustrated
When on LL

LL must have notice of the defect to be required to repair the item
14.4.2 Quiet enjoyment (on LL)
Note: this is not the same as the everyday meaning of quiet (i.e. it does not relate to
noise).
It means: the LL cannot interfere with the tenant’s right to possession (e.g.
intimidation, harassment, etc.)
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This is not an absolute covenant; you just have to minimize the impact.
14.4.2.1 Martin’s camera corner
Facts

LL upstairs

Tenant downstairs

Water leaks from LL’s house to tenant’s
Held

This was a breach of the covenant of quiet enjoyment
14.4.2.2 Other examples
 LL needs to repair outside of the building, puts up scaffolding and hurts
business
14.4.2.3 Southwark Case
Facts

British council flats

Flimsy, and old

When tenants move in, whenever anyone flushed, everyone wakes up
because of the thin walls
Held


There are two possible causes of action:
o
Nuisance
o
Breach of covenant of quite enjoyment
Neither were valid here, since the use of the toilet was normal and they
would have discovered this had they looked (Caveat Lessee)
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14.4.3 Non-derogation from grant (on LL)
This may be similar to the covenant of quiet enjoyment, and is often a parallel cause
of action (well, the breach is).
This act protects the lease by providing an action against any act that prejudices the
successful fulfillment of the purpose of the lease, although the interference must
have been substantial.
14.4.3.1 The Nordon Case
Facts

LL leased the third floor of a building
o
To PANDA (computer shop)
o
The LL consented to the assignment of the fourth floor lease to a
brothel (which was still criminal at the time)


PANDA’s customers complained of:
o
Unsavoury smells, whips, moaning
o
Vomit in the lobby
Was there a breach of the covenant of non-derogation from grant?
Law

If premises has been rendered unfit or materially unfit for the purpose for
which they are granted, there has been a breach of the implied common law
covenant of non-derogation from grant (Gordon v Lidcombe Developments
Pty Ltd)

There must be more than intereference, but it doesn’t have to amount to
impossibility of use
Application

Here, the stigma of the illegal business was what rendered the property
materially unfit

However, the covenants of quiet enjoyment and non-derogation are between
the tenant and the LL, here, other tenants, rather than the LL, breached (like
in Southwark)

Here, LL consented, thus, the covenant was breached
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14.4.4 LL’s liability for breach of covenant where the action is by a third party
(e.g. other tenants)
This area of law is not yet certain, and the law will not automatically impute a
tenant’s actions onto the LL.
However, if LL consented, authorized, adopted or allowed the offending activities,
there may be breach of covenant.
This must be more than mere notice, there has to be consent, or higher.
14.4.5 Furnished apartments (on LL)
If LL leases an apartment as a furnished apartment, the furnishings must be fit for
their purpose (but there is a higher standard in the Residential Tenancies Act).
14.4.6 Tenant’s obligations implied by the common law
The tenant must:

Use the land in a tenant-like manner (common law and CA)
o
It must be kept in tenantable repair (this is a lower burden than the
covenant to repair)
o

Be a good tenant (e.g. clean after parties, change light-bulbs, etc.)
Yield up possession at the end of the lease
o
If there is a sub-lease, the sub-tenant must be gone before the end of
the head-lease

Not commit waste (the tenant must preserve the reversion)
o
The LL retains an estate in fee simple in reversion for the period of the
lease
o
The tenant has an obligation not to commit waste:

Voluntary waste may be excluded expressly or impliedly

Equitable waste may only be excluded expressly
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14.4.6.1 BP Oil
Facts

BP had a refinery on land owned by the ports of Auckland

There was a spill
o
Oil seeped into the ground
o
And was only partially cleaned
Port of Auckland alleged breach of covenant of repair, and waste (there was a
permanent change of the character of the land)
Held:

BP had a wide duty to repair, which was not the same as the duty not to
commit waste

So it was OK to sue on both: express repair clause did not remove obligation
not to commit waste

Was there waste? Here, no, since it was barred by the tort statute of
limitations
14.4.7 Statutory covenants (CA ss 84, 85)
 Lessee covenant to repair (CA s 84(1)(b))
o
Keep the property in tenantable repair having regard to the age and
character of the house (Proudfoot)

Lessee requirement to pay rent at the time specified (CA s 84(1)(a))

LL may enter the property to inspect/repair with two days’ notice (CA s
85(1)(a), (b))

The LL may re-enter the property if rent has been forfeit for a month (CA s
85(1)(d))
o
Two months of breach of covenant (CA s 85(1)(d))
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14.4.8 Other obligations
Contract law may imply a term for the business efficacy of the lease, or a duty of
good faith (Renard Constructions; Alcatel – whereby a lessor pressured a council to
make orders against a lessee, this was not a breach of good faith, but the implication
is there).
Tort law may make a LL liable for injury on their property:

Is LL or tenant liable for negligence to a person on your property?

Is there a duty of care for the LL?
o

Yes (Northern Sand Blasting; Jones v Bartlett)
What is its scope?
o
Circua v Williams

Facts

Respondent brought proceedings against the LL of a
residential property (apartments, respondent on the
ground floor)


Building built in the 1950’s
o
And it complied with 1950’s building standards
o
Not 2000’s standards
The stairs leading from the entrance had no landing
and no handrails, there was a tree at the bottom of the
stairs


Respondent trips, hits the stump
Is LL liable?

Duty? (yes, see above)

Scope? (Jones v Bartlett)
o
Comes down to the facts: is LL responsible for
the defect? Must the defect be inherent?

Law:

Majority (Mason, Brownie JJ)
o
Lessor (LL) owes a duty of care to incoming
tenants
o
Involves a duty to repair which does not go
beyond addressing defects of which he is aware
or ought to be aware of

Beasley J
o
LL under obligation to ensure the premises is
reasonably safe for the proposes which they are
leased

This is assessed at the day of letting
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
Application

Defect came down to the visibility of the defect and the
relevance of building standards

Majority
o
It was in compliance with 1950’s standards, just
because standards upgrade, there is no
obligation to upgrade
o
You could take into account history (had their
been previous complaints or injuries)
o
The stairs weren’t unsafe, since the defect was
visible and obvious (the lessee should have
taken care)

Beasley
o
The building standards are irrelevant
o
The question was: were the stairs reasonably
safe at the time of letting?
o
The design was contrary to good practice for
20+ years
o
History irrelevant
o
There is no duty to upgrade to current
standards, but there is a duty to renovate where
the defect is visibly unsafe

Summary of law:

The LL does not need to hire a professional to assess
the safety of a property

The LL does not need to upgrade to the newest
building standards

But, if the LL sees something dangerous, he should fix
it
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14.5 Assignment and subleasing
Assignment is the transfer of a whole interest in land (you step out of the picture).
Sub-leasing creates another lease out of your lease. This does not dispose of you
lease, but carves out a lesser estate. At common law, the sub-lease must end at lease
one day before the lease ends.
14.5.1 Assignment of a leasehold covenant
Both the estate in fee simple in reversion, and the leasehold estate are alienable (they
may both be assigned).

A lease may prohibit assignment (where there is such a prohibition, it will be
strictly construed: if it prohibits subleasing, it will not be found to prohibit
assignment)

A lease may be subject to a qualified covenant against assignment
o
Where the tenant may only assign with consent
o
Consent cannot be unreasonably withheld (CA ss 133B(1), 132)

It will be found to be unreasonable where the proposed
assignment would cause the lessor financial detriment

Un-consensual assignment will still transfer an interest to the
assignee, but the lessor has the option to give notice and
terminate the lease
o
The test is: would a reasonable person anticipate an adverse effect on
the property or future lease ability if the assignment is allowed

Residential tenancies are not allowed to be assigned
14.5.2 Privity of Estate and Contract
Privity of contract survives assignment (Ahern v LA Wilkinson)

Privity of contract is not passed on (a good assignment will, however,
indemnify the first lessee against actions by the second and subsequent
lessees)
o
E.g. The original LL may sue the old lessor for rent in arrears (195
Crown st v Hoare), unless a new lease is granted by the LL (195
Crown)
But privity of estate may change (it survives disposal by assignment), if the covenant
is held to “touch and concern” the land, then the covenant passes
Touch and concern:

Similar test to covenants (Rogers v Hosegood)
At common law, covenants did not run with the reversion (tenants interests could be
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assigned, but not LL’s interest. However:

CA ss 117 (benefit) and 118 (burden) allows the assignment of the reversion

RPA ss 51, 52 – it is possible to assign part of the reversion
14.5.3 Past breaches
You have to differentiate between continuing (continues until remedied, e.g. repairs)
and complete breaches (breach is complete at the time, e.g. failure to pay rent).

If complete breach, sue the bastard who did it

If it is continuing, sue where it started, until a point, and then the other guy
for continuing it
14.6 Terminating/ending a lease (breach and consequences)
A lease has dual character as a proprietary and contractual agreement: so, the
question, in contract, is what will create a repudiation/fundamental breach so as to
end the contract? What will end the privity of title?
Leases may end by forfeiture by re-entry, through contractual repudiation or
frustration (e.g. natural disasters).
Leases may also end by forfeiture, surrender subject to terms of the lease (TT need a
memo and registration, OST you need a deed, etc.)
14.6.1 Forfeiture by re-entry
Forfeiting the lease giving the LL a right to the remedy of re-entry.
This may occur where:

There is an express clause “on breach, LL has a right of re-entry”
o
Express clause may give notice period (but not reduce the notice
period to zero)
o
CA s 85(1)(d) specifies a notice period


o

Rent

1 month in arrears

serve notice under CA s 129 (maybe not ss (8)?)
non-rent

2 months in breach

serve notice under CA s 129
Notice cannot be contracted out of (CA s 129(10))
Or if there is an implied statutory right under CA s 85(1)(d)
How to re-enter:

Least appropriate
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
o
Actually physically re-entering the property
o
If the tenant is still there, this may give rise to civil/criminal action
Appropriate
o
Apply for a court order for re-entry
o
It will be granted as long as

There was breach

For an appropriate length of time

With adequate notice served (CA s 129)
There is an equitable jurisdiction to refuse forfeiture (the most common cause is
failure to satisfy the above-listed requirements.
If there is a situation of subleasing:

CA s 130 applies

The right to re-enter kills the sublease

But CA s 130 gives the court power to continue the sublease, but remove the
intermediary (the lease is now between the LL and the subtenant, now
tenant)
If you end the lease by re-entry, you are limited in damages to rent in arrears or
whatever damage is caused by the non-rent covenant’s breach.
14.6.2 Contractual remedies (repudiation and fundamental breach)
This would give rise to loss of bargain damages (not only will you be able to end
lease and claim rent owed, you would be able to claim rent lost as a result of the
breach – not until the end of the term, but until you re-let, whilst trying your best)
Fundamental breach

This would only occur when there is a breach of a term which goes to the
heart of the contract

In a lease, there is no such term (rent is not an essential term)

Almost impossible
Repudiation

An event which precludes the ability to abide the contract, or to abide by it
effectively

Since rent is not an essential term, it alone will not be a repudiation

Must be more than a mere breach (unless the contract is worded otherwise),
must include other elements (like damage done or disregard for other clauses
(e.g. parking and subletting))
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14.6.2.1 Chevville Builders
Facts

There is a 3 year lease
o
Incorporated a guarantee by third party for performance by lessee
(tenant)
o
Lessee was often in arrears in rent

o
Eventually LL got sick of it


Got behind, caught up, got behind …
Attempted to terminate
Argued that failure to pay rent on a regular basis was a fundamental breach
or repudiation
o
On these facts, there is no doubt that the LL would be allowed reentry
o
But the property was difficult to let, so he went for contractual
remedies (to claim loss of bargain damages)
Held:

Gibbs CJ
o
Failure to pay was a breach, but there was no intention not to perform
the contract (they always cought up on payments), so there was no
repudiation)
o
Was there a fundamental breach?

Non-payment of rent does not make further commercial
performance impossible

o
No, there was no fundamental breach
You could, in writing, stipulate in an agreement that rent is an
essential term and that failure to pay would lead to consequences

Now a lot of leases include such a clause, but the courts
construe these terms very strictly
o
Failure to pay is not unimportant, it is just not enough on its own
14.6.2.2 Progressive
Facts

Re-entry, here, was possible. The question was about damages (the LL
wanted loss of bargain damages for the 6 months the land wasn’t leased)

The rent was unpaid for 5 months

Other covenants were breached
o
Covenant of repair

Roof

Electrical fittings
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o


Fire doors

Staircases
Breach of some agreement related to parking
Tenant argued he hadn’t paid rent because LL was in breach of lease
agreements
o
LL was meant to do certain work on the property
o
Tenant argued this was a condition precedent
o
Thus the lease did not come into operation
Held

Court disagreed with the appellant: the work the LL was meant to do was not
a condition precedent, and did not excuse tenant’s breach

Court agreed that the breach of rent covenant was not enough for fundament
breach
o
Further, that a breach of repair covenant was not enough
o
Further, even if done together, alongside parking breach, this still
wouldn’t have been enough

But:
o
Since the appellant didn’t just “not repair” – but carelessly (rather
than deliberately) damaged the property (roof, wiring, fittings, pipes)
o

And they sub-leased when they shouldn’t have
Although a mere breach is not enough, the sum of the breaches here showed
an intention not to perform or not to perform according to the terms of the
contract, which is enough to satisfy repudiation
14.7 Waiver
Where there is a breach, it may be “waived”: where you indicate that you do not
intend to do anything as a consequence of the breach.
It may be express or implied (implied by doing something that unequivocally
recognizes the continued existence of the lease – e.g. rent missed, “its fine, pay me
next week”).
If there is a waiver, the person waiving loses the right to forfeit, terminate or claim
for breach.
The person waiving must know of the breach or the waiver is ineffective.
14.8 Remedies
14.8.1 Damages
Forfeiture by re-entry
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
Easiest

Allowable where there is an express or implied statutory right (CA s 85(1)(d))

Damages are rent in arrears or the damage because of breach of other
covenant apparent at the time of re-entry
Contractualisation

Repudiation (or fundamental breach)

Damages are for loss of bargain

You must mitigate by re-letting as soon as you can
Note CA s 133A: the amount of remedies cannot exceed the reversion’s value
14.8.2 Other
Any party may apply for injunction or specific performance to stop breach of
covenants.
One party’s breach does not excuse the other party from breaching
-- have to give notice for a rental clause … or not
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