PROPERTY II
(LAWS2205)
2008
Second Semester
UNIT OUTLINE
2
CONTENTS
Property II 2008
__________________________________________________________________________
Part One
About this unit, including materials to be acquired
and reference material
Part Two
Property Outline
Part Three
A calendar of lectures indicating the material to be covered
Part Four
General Information
Part Five
Sample discussion problems
All material reproduced herein has been copied in accordance with and pursuant to a statutory licence
administered by Copyright Agency Limited (CAL), granted to the University of Western Australia pursuant to Part
VB of the Copyright Act 1968 (Cth).
Copying of this material by students, except for fair dealing purposes under the Copyright Act, is prohibited. For
the purposes of this fair dealing exception, students should be aware that the rule allowing copying, for fair
dealing purposes, of 10% of the work, or one chapter/article, applies to the original work from which the excerpt
in this course material was taken, and not to the course material itself.
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PART ONE
About This Unit
Welcome to Second Semester Property Law
The Property law team for second semester Property Law is Penny Carruthers and
Natalie Skead. We hope that you find Property law in second semester to be an
interesting and enjoyable subject. If you have any queries please do not hesitate to
contact Penny or Natalie. The second semester Property unit deals with the Torrens
system of title to real property in Australia in general and in Western Australia in
particular. The first 6 weeks of classes will cover: the nature of the Torrens System;
the notion of indefeasibility of title; the exceptions to indefeasibility of title and the
nature and role of caveats in the Torrens System. The next 5 weeks of classes will
cover mortgages and leases. The last 2 weeks of classes will deal with easements.
Method of assessment
1. There will be two small compulsory assignments for Property 2 in 2008. Each
assignment is to be 3 pages in length and each assignment is worth 15% of the
marks in this unit. The material assessed in the assignments will not be covered
in class and students are required to cover this material on their own.
Assignment One.
The first assignment will be available in hard copy at the
Law General Office and on the Property 2 web page at 2.00pm on Friday 5
September 2008 and is to be submitted by noon, Monday 22 September 2008 at
the Law Office. This assignment will assess the law regarding the rights and
remedies of the mortgagee contained in Mortgages topics 3(a) – (f) (inclusive).
Assignment Two.
The second assignment will be available at 2pm on
Friday 10 October 2008 and will take the form of a weekend take home exam
which is to be submitted by noon on Monday 13 October 2008. This assignment
will require the preparation of an Opinion on a problem scenario regarding the
Commercial Tenancies (Retail Shops) Agreements Act 1985.
Penalties will be imposed for late submission of assignments and for
assignments which exceed the page limit.
2. An end of year 2 hour exam worth 70% covering the remaining semester material
(ie, not the material covered in the assignments).
Scaling
Results in this unit are subject to the Law Faculty’s scaling policy.
See:
http://www.law.uwa.edu.au/current/policies/assessment_rules_and_guidelines#scaling
Supplementary assessment
Supplementary assessment is not available in this unit except in the case of a
Bachelor’s pass degree student who has obtained a mark of 45 to 49 and is currently
enrolled in this unit and it is the only remaining unit that the student must pass in
order to complete the course.
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Course materials
1.
Reading Materials:
An edited collection of Reading Materials for second semester have been
prepared. These materials contain the important cases and some articles and
constitute the essential reading (together with the statutory material) for the
unit. These materials may be purchased at the start of 2 nd semester. Copies
of the materials are available on Reserve.
2.
Recommended Text:
Australian Real Property.
Bradbrook McCallum & Moore, 4th edition Lawbook Co 2007. (“ARP”)
An Introduction to Property Law in Australia
R Chambers, 2nd edition Thomson Lawbook Co 2008. (“Chambers”)
3.
Essential Statutory Material: (All West Australian)
The Transfer of Land Act (“TLA”)
The Property Law Act (“PLA”)
4.
Additional Sources and References:
Sackville and Neave’s Property Law – Cases and Materials 7th ed, by Neave,
Rossiter and Stove. LexisNexis Butterworths 2006.
The Torrens System in Australia by Whalan. The Law Book Co Ltd 1982.
The Law of Securities 5th ed by Sykes and Walker.
1993.
The Law Book Co Ltd
Land Law 5th ed by Butt, Lawbook Co. 2005
Land Law Butterworths Tutorial Series 2002
Learning Outcomes
On completion of this unit you should be able to:
1. Identify and explain the fundamental principles of Property Law in relation to:
(a) The Torrens System of land registration;
(b) The concept of indefeasibility of title and exceptions to indefeasibility;
(c) The nature and role of caveats and unregistered interests in the Torrens
System;
(d) Mortgages;
(e) Leases; and
(f) Easements
2. Demonstrate a critical and analytical approach to examining Property Law
principles and reading cases;
3. Apply fundamental Property Law principles, covered in 1 above, to solve
hypothetical legal problems;
4. Write clear, concise and persuasive legal arguments in answering hypothetical
legal problems;
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5. Demonstrate statutory interpretation skills;
6. Continue to develop effective oral communication and time management skills;
7. Recognise that ethical issues arise in various areas of Property Law.
Educational Principles
The University of Western Australia states, within its Strategic Plan, eleven
Educational Principles ( http://www.catl.uwa.edu.au/current_initiatives/obe/principles)
Drawing on these Educational Principles, this unit will encourage and facilitate you to
develop the ability and desire:

to master the subject matter, concepts and techniques of Property 1 at
internationally-recognised levels and standards;

to acquire the skills required to learn, and to continue through life to learn,
from a variety of sources and experiences;

to adapt acquired knowledge to new situations;

to communicate in English clearly, concisely and logically;

to think and reason logically and creatively;

to undertake problem identification, analysis and solution;

to question accepted wisdom and be open to new ideas and possibilities;

to acquire mature judgement and responsibility in ethical, moral, social, and
practical, as well as academic matters;
Prerequisites
This unit assumes that students have already developed certain basic skills. It is
expected that students have an adequate command of:
1.
English and related communication skills – students are expected to have very
high English language skills and to be able to understand and follow the
principles of accepted expression and style;
2.
Library research skills – research is an important aspect of studying law and
students will be expected to utilise the facilities of the Law Library on a regular
basis.
If you are not well prepared in any of the above areas you should make every effort
to remedy the situation through undertaking additional reading and/or practice. Do
not hesitate to ask for advice from your tutor.
The University’s Student Learning, Research and Language Skills Service offers
assistance in a variety of areas, including writing skills, study skills, examination
preparation skills and stress management. The service is located on the second
floor of the Guild Village, south entrance/ exit and can be contacted by telephoning
6488 2423 or 6488 2258.
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Unit Specific Prerequisites
The specific units that must have been completed prior to enrolling in Property II
LAWS2205 are: Property I LAWS2204; Legal Process LAWS1130 and Contract I
LAWS1101. Contract II LAWS2102 is a co-requisite.
Contact details
Unit web site URL
Unit coordinator/lecturer
Name and room number:
Penny Carruthers, room 2.05
e-mail:
pcarruth@law.uwa.edu.au
phone:
6488 3436
fax :
6488 1045
Consultation hours :
11.00 – 1.00am Wednesday or by appointment.
Lecture groups :
Groups 1, 2 and 6. See http://www.timetable.uwa.edu.au/
Lecturer
Name and room number:
Natalie Skead, room 2.01
e-mail:
nskead@law.uwa.edu.au
phone:
6488 2962
fax :
6488 1045
Lecture groups :
Groups 3, 4 and 5. See http://www.timetable.uwa.edu.au/
Consultation hours
12.00 – 1.00 Wednesday or Thursday or by appointment
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PART TWO
Property Outline
Cases marked with an asterisk (*) are not contained in the Materials and are
optional reading.
THE TORRENS SYSTEM - THE
STATUTORY SCHEME OF TITLE TO
LAND BY REGISTRATION
ARP: Chapter 4.
Stutt, “Transitions to Torrens: The six-fold path to the ideal land administration
system?” (2008) 15 APLJ 115
Statutory Material: The Transfer of Land Act (WA)
1.
2.
THE UNREGULATED OLD SYSTEM OF CONVEYANCING
(a)
The chain of title
(b)
The defects in the system:
(i)
The difficulty of understanding the complex language of the old
conveyancing documents
(ii)
The need for people searching the chain to have special skills
(iii)
The need to investigate the chain of title and the complexity and
expense involved
(iv)
The ever-increasing number of documents contained in the
chain of title
(v)
The sheer volume of records that had to be stored
(vi)
The insecurity of title flowing from fraud, forgery or accidental
removal of documents from the chain
(vii)
The impossibility of discovering those interests in land that are
created without a written document
THE REGISTRATION OF DEEDS SYSTEM
(a)
The effect of registration
(b)
Registrable and unregistrable interests
(c)
Defects in the Deeds Registration System
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3.
4.
THE INTRODUCTION OF THE TORRENS SYSTEM
(a)
Historical origins
(b)
The Torrens System and Deeds Registration System Compared
(i)
Security and certainty of title
(ii)
Diminution of delay and expense
(iii)
Simplification of titles and dealings
(iv)
Accuracy
THE ESSENTIAL FEATURES OF THE TORRENS SYSTEM
(a) The base is a unit of land and not people
(b) The register
(c) Security of registered proprietor
(d) Guarantee by the State of compensation for loss
5.
BRINGING LAND UNDER THE TORRENS SYSTEM
Land alienated after the TLA came into operation comes automatically under
the Act. Land alienated before the Act came into operation may be brought
under the Act: see generally ss20-47 (inclusive) of the TLA.
6.
THE REGISTER AND ITS CONTENTS – AN OVERVIEW
Part III TLA Sections 48-81 inclusive
(a)
The Register
Sections 48 and 48A TLA
(b)
Duplicate Certificates of Title
Sections 48B, 57, 74A, 74B, 75 and 76 TLA
(c)
Purpose and Effect of Registration
Sections 52, 53, 58, 63 and 68 TLA
(d)
Unregistrable Interests
E.g. ss 55 and 91 TLA
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7.
INDEFEASIBILITY OF TITLE
(a)
The nature of indefeasibility
(i)
The core indefeasibility provisions
s68 (paramountcy), s134 (notice), s199 (ejectment), s202
(protection of purchasers)
(ii)
Ancillary indefeasibility provisions
ss58, 63, and 67
(b)
Deferred or immediate indefeasibility?
Gibbs v Messer [1891] AC 248
“Although a forged transfer or mortgage, which is void at common law, will, when duly
entered on the register, become the root of a valid title, in a bona fide purchaser by
force of the statute, there is no enactment which makes indefeasible the registered
right of the transferee or mortgagee under a null deed.”
* Clements v Ellis (1934) 51 CLR 217
Frazer v Walker [1967] AC 569
Breskvar v Wall (1971) 126 CLR 376
For a discussion of the recent cases regarding the deferred versus
immediate indefeasibility debate see:
Note, (1993) 67 ALJ 535
Note, (1993) 67 ALJ 691
Note, (1994) 68 ALJ 753
(c)
The Torrens System in action
Breskvar v Wall (1971) 126 CLR 376
(d)
Guarantee by the State of Compensation for Loss of Title
Sections 196, 201, 205, 206, 207, 196, 211 TLA
(e)
The extent to which indefeasibility attaches to registered
documents
(i)
“Curing” defective registered documents
Mercantile Credits Ltd v Shell Co of Australia (1976) 136 CLR 326
“The right of renewal is so intimately connected with the term granted to the lessee,
which it qualifies and defines, that it should be regarded as part of the estate or
interest which the lessee obtains under the lease, and on registration is entitled to the
same priority as the term itself” per Gibbs J.
*Travinto Nominees Pty Ltd v Vlattas (1973) 129 CLR 1.
*PT Ltd v Maradonna Pty Ltd (1992) 25 NSWLR 643
Registration validates those terms which “delimit or qualify the estate or interest or
are otherwise necessary to assure that estate or interest to the registered proprietors”
per Giles J, 679.
Perpetual Trustees Victoria Ltd v Tsai [2004] BC200405182
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(ii) Indefeasibility upon the transfer of an interest.
Consolidated Trust Co Ltd v Naylor [1936] BC3600017
Queensland Premier Mines Pty Ltd v French [2007] BC200709757
8.
EXPRESS EXCEPTIONS TO INDEFEASIBILITY, SECTION 68 – OTHER THAN
FRAUD
(a) Encumbrances notified on the Register
(b) Prior Certificates of Title
Registrar of Titles v Esperance Land Co [1899] WAR 118
(c) Wrong Description
Medical Benefits Fund of Australia v Fisher [1984] 1 Qd R 606
(d) Reservation in the grant
(e) Adverse Possession
TLA s222-223A
(f) Easements
(g) Unpaid rates
(h) Mining lease or license
(i) Unregistered lease or agreement for lease for less than five years
Leros Pty Ltd v Terrara Estates et al (1992) 106 ALR 595
“Options to renew unregistered Torrens title leases” 1992 66 ALJ 831
9.
EXPRESS EXCEPTIONS TO INDEFEASIBILITY – SECTION 68 – FRAUD
(a) What is fraud under s68?
Assets Co Ltd v Mere Roihi [1905] AC 176.
“… by fraud … is meant actual fraud, i.e., dishonesty of some sort, not what is called
constructive or equitable fraud… Further, … the fraud which must be proved in order to
invalidate the title of a registered purchaser for value,… must be brought home to the
person whose registered title is impeached or to his agents. Fraud by persons from
whom he claims does not affect him unless knowledge of it is brought home to him or his
agents. The mere fact that he might have found out fraud if he had been more vigilant,
and had made further enquiries which he omitted to make, does not of itself prove fraud
on his part. But if it be shown that his suspicions were aroused, and that he abstained
from making enquiries for fear of learning the truth, the case is very different, and fraud
may be properly ascribed to him … A person who presents for registration a document
which is forged or has been fraudulently or improperly obtained is not guilty of fraud if he
honestly believes it to be a genuine document which can be properly acted upon.” per the
Privy Council in Assets Case.
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Waimiha Sawmilling Co Ltd v Waione Timber Co Ltd [1926] AC 101
“If the designed object of a transfer be to cheat a man of a known existing right, that is
fraudulent, and so also fraud may be established by a deliberate and dishonest trick
causing an interest not to be registered and thus fraudulently keeping the register clear…
The act must be dishonest, and dishonesty must not be assumed solely by reason of
knowledge of an unregistered interest.” at 106-107.
Mills v Stockman (1967) 116 CLR 61
Pyramid Building Society (in liq) v Scorpion Hotels Pty Ltd (1998) 1 VR
188.
(b) Fraud and s134 – Notice of unregistered interest is not fraud
Loke Yew v Port Swettenham Rubber Co Ltd [1913] AC 491
Perpetual Trustees Australia Ltd v Allregal Enterprises Pty Ltd [2008]
WASC 134 BC200805419
(c) The time of the fraud
Bahr v Nicolay (No 2) (1988) 62 ALJR 268
(d) Fraud by the agent
Schultz v Corwill Properties Pty Ltd (1969) 90 WN (Pt 1) (NSW) 529
(i) Where R.P. has become registered through the fraud of the agent.
Respondeat Superior Applies
Where the agent acted within the scope of his or her actual or apparent authority then
the fraud of the agent becomes the principal’s fraud.
(ii) Where the agent has knowledge of a fraud.
Can the agent’s knowledge be imputed to the principal?
There is an irrebuttable presumption that the agent communicates to the principal all
information of which the agent has knowledge in the course of the transaction.
Exception: If the information sought to be imputed is knowledge of the agents own
fraud or information acquired by the agent whilst a party to a fraud then the principal
may rebut the presumption.
(e) Fraud against the Registrar
Beatty v Australian and New Zealand Banking Group [1995] 2 VR 301
Note, (1996) 70 ALJ 524
Russo v Bendigo Bank Ltd and Reichman [1999] 3VR 376
For a discussion of this case see,
*S Rodrick, “Forgeries, False Attestations and Impostors: Torrens System
Mortgages and the Fraud Exception to Indefeasibility”,(2002) 7 Deakin
Law Review 97.
Note, (2005) 79 ALJ 77
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10.
OTHER EXCEPTIONS TO INDEFEASIBILITY
(a)
Rights in personam
(i) Rights in Personam defined
“The Torrens statutes do not interfere with the personal obligation of a registered
proprietor, and thus contracts or agreements can still be enforced against [the
registered proprietor], as can trusts, whether express, implied or constructive.”
Whalan, p 333.
The principle of indefeasibility “in no way denies the right of a plaintiff to bring
against a registered proprietor a claim in personam, founded in law or in equity,
for such relief as a court acting in personam may grant.” The Privy Council,
Frazer v Walker, supra.
Essentially the rights in personam exception will apply when the registered
proprietor’s conscience is affected as a result of a legal or equitable cause of
action enforceable against him or her. Butt 753.
(ii) Examples of Rights in Personam
In the following situations the R.P. cannot rely on an indefeasible
title because of the rights in personam “exception”:

Where a purchaser has entered a specifically enforceable
contract for the sale of R.P.’s land;

Where a beneficiary has rights under a trust of land of which
R.P. is trustee, including express and constructive trusts: Bahr
v Nicolay (Supra);

Where R.P. has breached a trust or fiduciary duty.
Compare these with an example of a right in personam which is not
an exception to indefeasibility:
Pyramid Building Society (in liq) v Scorpion Hotels Pty Ltd (1998) 1
VR 188
Note the difficulties that can arise in making this distinction:
Mercantile Mutual Life Ins Co Ltd v Gosper (1991) 25 NSWLR 32
Note, (1992) 66 ALJ 596
(iii) The relative importance of notice to the in personam exception
*Tara Shire Council v Garner [2002] QCA BC200203548
*Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA
BC200703851
Griggs, L “In personam: Barnes v Addy and the High Court’s
deliberations in Farah Constructions Pty Ltd v Say-Dee Pty Ltd.”
(2008) 15 APLJ 268
See also for a general discussion of the in personam exception:
Carruthers, “Taming the unruly in personam exception: An examination of the
limits of the in personam exception to indefeasibility of title.” 2007 ALTA
Conference Papers, www.alta.edu.au
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(b)
Correcting the Register
s76 and s188(ii)
(c)
Overriding statutes
“Overriding statutes pose perhaps the greatest single threat to public confidence in
the Torrens system. So substantial are their inroads into indefeasibility of title that it
is imprudent, when acquiring interests in Torrens title land, to rely on the Register as
an accurate mirror of the registered proprietors title”. Butt, 759.
See for example s76 Taxation Administration Act 2003 (WA)
(d)
Volunteers
King v Smail [1958] VR 273
Bogdanovic v Koteff (1988) 12 NSWLR 472
Note, (1996) 70 ALJ 258
11.
REVISION CASE FOR EXCEPTIONS TO INDEFEASIBILITY
Conlan v Registrar of Titles (2001) 24 WAR 299
12.
EQUITABLE OR UNREGISTERED INTERESTS
(a)
Their place in the system
TLA s58
Barry v Heider (1914) 19 CLR 197
“The Torrens statutes do not touch the form of contracts. A proprietor may contract
as he pleases, and his obligation to fulfil the contract will depend on ordinary
principles and rules of law and equity. [Section 58] in denying effect to an instrument
until registration, does not touch whatever rights are behind it. Parties may have a
right to have such an instrument executed and registered; and that right, according to
accepted rules of equity, is an estate or interest in land.” Isaacs J in Barry v Heider.
(b)
Protection of unregistered interests – the caveat system
(i)
The Nature of a caveatable interest
TLA s137
*Kuper & Kuper v Keywest Construction (1990) WAR 419
(ii)
(iii)
The 3 Types of s 137 Caveats

absolute

“notice”

“subject to claim”
The Operation of the Caveat System
Sections 137, 138, 139 and 141 TLA
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(iv)
Removal of Caveat

Withdrawal
-

Application for removal of caveat
-

Section 138 TLA
Lapse of Caveat.

-
Sections 137 and 138 TLA
-
Section 138B TLA
Endorsement of lapse of caveat on certificate of Title by
Registrar
-
(v)
s 137 and s 141A TLA
s 141 TLA
Liability for wrongful lodgement of caveat
TLA s140
*Kuper & Kuper v Keywest Construction (Supra)
Note, (2005) 79 ALJ 20
(c)
Priority Disputes Between Unregistered Interests
(i)
Introduction
Barry v Heider (supra)
(ii)
Relevant Factors in Resolving Priority Disputes:
(1)
The nature of the competing unregistered interests;
(2)
The lodgement of a caveat
Is failure to lodge a caveat postponing conduct?
Butler v Fairclough (1917) 23 CLR 78
Abigail v Lapin [1934] AC 491
T Castle, “Caveats and Priorities: the “mere failure to caveat”
(1994) 68 ALJ 143
Factors relevant in determining if failure to caveat is postponing
conduct:
 Is it reasonable to lodge a caveat in the circumstances;
 Is it common practice to lodge a caveat in the circumstances
J & H Just (Holdings) Pty Ltd v Bank of NSW (1971) 125 CLR
546
Capital Finance
BC200803224
Australia
Ltd
v
Struthers
[2008]
*IAC (Finance) Pty Ltd v Courtenay (1963) 110 CLR 550.
Note, (1999) 73 ALJ 538
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MORTGAGES
ARP: Chapter 9.
1.
INTRODUCTION: THE GENERAL LAW MORTGAGE
(a)
Purpose of securities in general
(b)
3 main forms of security interest
(c)
Form of the general law mortgage
(d)
Concepts of redemption and foreclosure
(e)
Formality requirements
PLA ss33(1), 34-36
2.
THE TORRENS SYSTEM MORTGAGE
(a)
Essential difference to general law mortgages
s106TLA
(b)
Formalities for legal mortgage under TLA
s58TLA
s33(1)PLA and s85 TLA
s105TLA
(c)
Equitable mortgages under TLA
s34(1)PLA
s4 Statute of Frauds
s36(d) PLA - Part Performance
s137TLA
Barry v Heider (1914) 19 CLR 197
3.
THE RIGHTS AND REMEDIES OF THE MORTGAGEE
Note: -The law covered under heading 3(a) – (f) (inclusive) forms part of the subject
matter of the Property 2 assignment. This material will not be covered in class and
students are required to cover this material on their own.
(a) The right to make demand for repayment, including the giving of
notices under the security document
(b)
The right to sue on the personal covenants:
*Simpson v Forrester (1973) 132 CLR 499
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(c)
The right to take possession and to make improvements and to
expend money
TLA ss111 and 116
(d)
The right to appoint a receiver - the nature of a receiver
(e)
Ss57, 58, 65 and 66 PLA
The right to foreclose - PLA ss53 and 55(2)
TLA s121 and 122
(f)
The right to exercise a power of sale
(i)
Registered Torrens Mortgages
ss106, 108 and 109 TLA
(ii)
Unregistered mortgage made under deed
s57(1)(a) PLA
(iii)
Equitable Mortgages
ss106, 108 TLA
*Walsh v Lonsdale
S57(1)(a) PLA
(iv)
Rules in relation to the exercise of the power of sale
(1)
Notice
s106 and 108 TLA
s59PLA (non TLA mortgages)
(2)
Nature of sale
(3)
Persons who may be purchasers
Farrar v Farrar Ltd (1888) 40 Ch D 395
S108 TLA and s57 PLA
(4)
Mortgagee’s standard of care in exercising power of sale
*Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971] 2 All
ER 633
*Tse Kwong Lam v Wong Chit Sen (1983) 1 WLR 1462
Pendlebury v Colonial Mutual Life Assurance Society Ltd
(1912) 13 CLR 676
Forsyth v Blundell (1973) 129 CLR 477
The Australian and New Zealand and Bank Group Ltd v
Bangadilly Pastoral Co Pty Ltd (1978) 139 CLR 195
Cachalot Nominees Pty Ltd v Nominees Pty Ltd (1984)
WAR 380
Note, (2003) 77 ALJ 12
Skead, “A mortgagor’s remedies against a mortgagee for
the improper exercise of the power of sale: You can’t
always get what you want.” (2008) 15 APLJ 130.
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4.
DOCTRINES PROTECTING THE MORTGAGOR
(a)
The concept of “clogging” the equity
(i)
Total extinguishment of the right to redeem
Samuel v Jarrah Timber Co [1904] AC 323
Reeve v Lisle (1902) AC 461
See Note, (2004) 78 ALJ 366
(ii)
Postponing the right to redeem
Fairclough v Swan Brewery [1912] AC 565
Morgan v Jeffreys [1910] 1 Ch 620
Knightsbridge Estates Trust Ltd v Byrne [1939] Ch 441
(iii)
Collateral covenants affecting the property
Noakes v Rice [1902] AC 24
Biggs v Hoddinott (1898) 2 Ch 307
Kreglinger v New Patagonia Meat & Cold Storage Co Ltd [1914]
AC 25
Santley v Wilde [1899] 2 Ch 474
Toohey v Gunther [1928] 41 CLR 181
Wiley (as Administrator of Macquarie Medical Holdings Pty ltd) v
Endeavour Health Care Services Pty Ltd BC 200306705
*L Wilmott and B Duncan, “Clogging the Equity of Redemption:
An Outmoded Concept?” (2002) vol 2 no 1 QUTLJJ 35
(iv)
Miscellaneous clogs
(1)
Covenants in the nature of penalties
(a)
Covenant to repay on default a greater
amount that that advanced
(b)
Covenants to pay higher interest on default
*J Belmore Pty Ltd v AGC (General Finance) Ltd
[1976] 1 NSWLR 507
(c)
Covenant to pay whole of principal and
interest on default
*O’Dea v All States Leasing System (WA) [1983]
152 CLR 359
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(2)
(b)
Undue Influence and Unconscionable Dealing
Statutory protection for the mortgagor
Trade Practices Act 1974 (Cth) Section 52
Fair Trading Act (WA) 1987
Consumer Credit (Western Australia) Act 1996
5.
PRIORITIES
(a)
General law land
(b)
Torrens System land
TLA s53
(c)
The concept of “tacking”
(i)
tabula in naufragio
(1)
Under general law
(2)
Under Torrens System
s53 TLA
Matzner v Clyde [1975] 1 NSWLR 293
(ii)
tacking of further advances
(1)
Under general law
Hopkinson v Rolt (1861) 9 HLC 514
West v Williams (1899) 1 Ch 132 (CA)
(2)
Under Torrens System
Matzner v Clyde [1975] 1 NSWLR 293
Central Mortgage Registry of Australia Ltd v Donemore
Pty Ltd [1984] 2 NSWLR 128
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LEASES
ARP: Chapter 14.
1.
TERMINOLOGY
2.
SOURCES OF THE LAW GOVERNING LEASES IN WESTERN AUSTRALIA
Common Law
Property Law Act
Transfer of Land Act
Residential Tenancies Act 1987 (WA)
The Commercial Tenancy (Retail Shops) Agreement Act 1985 (WA)
Town Planning and Developments Act 1928 (WA) (See ss20 and 20B)
Retirement Villages Act 1992 (WA)
3.
THE ESSENTIAL CHARACTERISTICS OF A LEASE
(a)
The demise
(b)
Exclusive possession
Radaich v Smith (1959) 101 CLR 209
(c)
Certainty of the term
*Lace v Chantler [1944] KB 386
(i) Commencement of the term
(ii)
Duration - four types of lease:

Fixed term.
*Lace v Chantler (Supra)
(d)

Periodic - PLA ss71 and 72

At will

At sufferance
Rent (usual but not essential)
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4.
THE FORMALITIES
COMPLY
(a)
OF
LEASES
AND THE
EFFECT
OF
FAILURE
TO
General Law
(i)
Fixed Term Lease
ss33(1), 33(2)(d) and 35(2) PLA
(ii)
Implied Periodic Lease
ss71 and 72 PLA
(b)
Torrens System
(ii)
Lease exceeding 3 years in approved form
S91 TLA
(ii)
Unregistered or unregistrable leases exceeding 3 years
(iii)
Leases less than 3 years
ss33(1), 33(2)(d) and 35(2) PLA
(c)
Equitable leases
*Walsh v Lonsdale
Abjornson v Urban Newspapers Pty Ltd (1989) WAR 19.
*Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387. (An
example of an equitable lease created by estoppel)
5.
THE OBLIGATIONS AND RIGHTS OF LANDLORDS AND TENANTS
(a)
Covenants Implied at Common Law Against the Landlord:
(i)
Quiet enjoyment.
Malzy v Eichholz [1916] 2 KB 308
Lavender v Betts [1942] 2 All ER 72
JC Berndt Pty Ltd v Walsh [1969] SASR 34
(ii)
Not to derogate from the grant.
Aldin v Latimer Clarke Muirhead & Co [1894] 2 Ch 437
*Lendlease Development Pty Ltd v Zemlicka (1985) 3 NSWLR
207
Spathis v Hanave Investment Co Pty Ltd BC 200202287
(iii)
Fitness for human habitation.
Cruse v Mount [1933] Ch D 278
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(b)
Covenants Implied Against the Tenant
(i)
At common law - Warren v Keen [1954] 1 QB 15 “to use in a
tenant-like manner”; Henderson v Squire (1969) LR 4 EX 170 to deliver up possession; Powley v Walker [1793] 101 ER 208 to cultivate a farm.
(ii)
By statute - Transfer of Land Act ss92 to 95, 131
Payment of rent TLA s92(i)
To keep premises in repair TLA s92(ii)
(c)
Express Covenants
(i)
TLA s94 and the 12th schedule
(ii)
Express covenants are also subject to statutory provisions which
affect them
(iii)
The Usual Terms
*Hampshire v Wickens (1978) 7 CLD 555
(d)
Landlord’s Powers
(i)
To enter and inspect
TLA s93(i)
(ii)
To re-enter for non payment of rent
TLA s93(ii)
(iii)
To re-enter for breach of other covenants
TLA s93(ii) and s103; and the Property Law Act
(e)
Covenants against Assignments and Subleases
(i)
General right at law to assign or sublet
(ii)
Absolute (contractual) prohibition
(iii)
Qualified (contractual) prohibition
(1)
Construction of qualified covenants
(1)
Strict construction
(2)
“part with possession of the premises”
*Richardson v Somas [1967] WAR 109
*Lam Kee Ying v Lam Shes Tong [1975] AC 247
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(2)
“Unreasonably withholding consent”
(1)
PLA ss73, 79, 80 and 82
(2)
Relevant test
International Drilling Ltd v Louisville Investments
(Uxbridge) Ltd (1986) 1 All ER 321
M Mathieson, “’Reasonableness’ of a Landlord’s
Refusal to Consent…” (2003) 77 ALJ 155
(3)
6.
Is landlord liable in damages?
Yared v Spier [1979] 2 NSWLR 291
TERMINATION OF TENANCIES
(a)
At Common Law by:
(i) Effluxion of time
(ii) By notice - fixed and periodic tenancies
(b)
Statutory Termination PLA, s72
(c)
By Surrender and Merger
(d)
By Repudiation
*Shevill v The Builder’s Lic Board (1982) 56 ALJR 793
(e)
By Forfeiture
(i)
At common law
(1)
Breach of express/implied condition
(2)
Breach of other covenant
(ii)
In equity
(1)
Breach of express/implied condition
(2)
Breach of other covenant
(iii)
Formal requirements – demand and notice
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(1)
Breach of covenant to pay rent
ss92, 93(ii) TLA
s131 TLA
s81(9) PLA
(2)
Breach of other covenant
s93(ii) TLA
s81 PLA
Rugby School (Governors) v Tannahill [1935] 1 KB 695
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7.
(iv)
Right of re-entry
(1)
Right of peaceful re-entry
Hemmings v Stoke Poges Golf Club [1920] 1 KB 720
(2)
Action for possession
(v)
Waiver
(vi)
Relief Against Forfeiture
(1)
For failure to pay rent
(2)
For breach of other covenants
PLA ss81(2)(4), (6) and (10)
LANDLORDS’ OTHER REMEDIES
Note: The material covered in topic 7 is not examinable, however, it is
included in the Outline for completeness.
(a)
Self Help (See Distress for Rent Abolition Act 1936 WA s2)
(b)
Physical Retaking of Possession
Hemming v Stoke Poges Golf Club [1920] 1 KB 720
(c)
Damages and Injunctions
(d)
Action for Arrears of Rent
Limitation Act 1935 (WA) s4
(e)
Repudiation and Damages for Prospective Loss
*Shevill v The Builders’ Licensing Board (1982) 149 CLR 620
*Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157CLR 17
8.
(f)
Actions for Use and Occupation
(g)
Actions for Double Rent and Double Value Against Over Holding
Tenants
TENANT’S REMEDIES
Note: The material covered in topic 8 is not examinable, however, it is
included in the Outline for completeness.
(a)
(b)
Right of Set Off
Statutory Repair Orders
Health Act 1911 (WA)
(c)
Statutory Remedies
Trade Practices Act 1974 (Cth)
TPA ss52, 53, 53A and ss80, 82 and 87
Residential Tenancies Act 1987 (WA)
Fair Trading Act 1987 (WA)
(d)
Application of Contractual Doctrines
*Minister of State for the Army v Dalzeil (1944) 68 CLR 261
*National Camers Ltd v Panalpina (Northern) Limited (1981) AC 674
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9.
THE COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985
Note: The provisions of the Commercial Tenancy (Retail Shops) Agreements Act form part
of the subject matter of the assignment and students are to cover this material on their own.
Part I — Preliminary
1.
2.
3.
4.
5.
Short title
Commencement
Terms used in this Act
Application
Crown bound
Part II — Retail shop leases
6.
6A.
7.
8.
9.
10.
11.
12.
12A.
12B.
12C.
12D.
13.
13A.
13B.
14.
15.
Disclosure
Tenant guide
Rent based on turnover
Turnover figures not generally required
Key-money and goodwill
Assignment and sub-leasing
Rent review
Contribution to landlord’s expenses
Sinking funds
Contribution to other funds and reserves by tenants
Hours of operation
Tenants’ associations etc.
Right to at least 5 years’ tenancy
Avoidance prevented
Notices as to renewal of leases
Compensation by landlord
Act prevails
Part IIA — Unconscionable conduct
15A.
15B.
15C.
15D.
15E.
15F.
Terms used in this Part
Application of Part
Unconscionable conduct of landlords
Unconscionable conduct of tenants
Certain conduct not unconscionable
Powers of Tribunal relating to unconscionable conduct
Part III — Determination of questions
16.
26.
27.
Reference of questions to State Administrative Tribunal
Orders of Tribunal
Other jurisdictions
Part IV — Miscellaneous
28.
30.
31.
Protection
Regulations
Review of Act
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EASEMENTS
ARP CH 18.
STATUTES
Transfer of Land Act
Property Law Act
Public Works Act 1902 (WA)
Strata Titles Act 1985 (WA)
1.
DEFINITION AND PURPOSE OF EASEMENTS
2.
EASEMENTS DISTINGUISHED FROM OTHER REAL PROPERTY INTERESTS
3.
(a)
Leases
(b)
Licences
(c)
Restrictive Covenants
(d)
Natural Rights
(e)
Profit a Prendre
THE ESSENTIAL CHARACTERISTICS OF EASEMENTS
(a)
There must exist a dominant and servient tenement
(b)
The easement must accommodate the dominant tenement
Re Ellenborough Park [1955] 2 All ER 667, (1956) 1 Ch 131
(c)
The dominant and servient tenements must not be owned or
occupied by the same person
Note s136H TLA
(d)
The right must be capable of forming the subject matter of a grant
Reilly v Penttila [1974] VR 547
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4.
TYPES OF EASEMENTS
- Rights of Way
- Light
- Support
- Water
5.
CREATION OF EASEMENTS
Creation of easements at law and in equity:
(a)
By Express Grant
PLA ss57, 41
TLA ss63A, 64, 65, 65A, 66A and 68; Part IVA, sections 136A-136J
and s167A
(b)
Express Reservation
(c)
Statutory Easements
(d)
Implied Reservation
(e)
(i)
Easements of Necessity
(ii)
Intended Easements
Implied Grant
(i)
Easements of Necessity
(ii)
Intended Easements
(iii)
Non Derogation from Grant
(iv)
The Rule in Wheeldon v Burrows [1874-80] All ER 669
Ward v Kirkland [1966] 1 All ER 609
Stevens and Evans v Allan & Armanasco (1955) 58 WALR 1
(v)
General Words Imported by s41 PLA
Ward v Kirkland [1966] 1 All ER 609
(vi)
By Implication from the Description of Land
(vii)
Simultaneous Conveyances of Land by One Owner
(viii)
Plan of Subdivision
TLA ss167A and Part IVA
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(f)
Estoppel
Crabb v Arun District Council [1976] Ch 179.
(g)
Prescription - Long User
Prescription Act 1832 (6 Will iv 4) (WA)
Limitation Act 1935 (WA)
TLA s68
Dimasi v Piromalli [1980] WAR 57
Antonio Gangemi and Gangemi v Marilyn Watson (1994) 11 WAR 505
6.
EASEMENTS IN THE TORRENS SYSTEM IN WESTERN AUSTRALIA
(a)
Noting easements on the Certificate of Title
ss63A, 64, 65 and 66A TLA
(b)
Position of easements under the Torrens System
S68 TLA
7.
EXTINGUISHING EASEMENTS
(a)
By Agreement
TLA s129C(1)(b)
(b)
By Abandonment
TLA ss129C, 229A, 229B and 230
(c)
By Merger - Does it apply under TLA?
(d)
By Resumption for Public Purposes under the Public Works Act
(e)
By Order of the Court
TLA s129C
8.
REMEDIES
(a)
Damages
(b)
Abatement (self help)
(c)
Injunction
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PART THREE
Calendar of Lectures
Week
Date
Part of Course
31 (1)
28 July -1 August 2008
32 (2)
4 - 8 August 2008
33 (3)
11 15 August 2008
34 (4)
18-22 August 2008
9(e) and 10(a) (cont’d).
35 (5)
25-29 August 2008
10 (cont’d) and 11
36 (6)
1 -5 September 2008
12(a), (b) and (c)
37 (7)
8 -12 September 2008
12(cont’d)and
Torrens:
1, 2, 3, 4, 5, 6, 7(a) & 7(b)
7(b)(cont’d), 7(c), 7(d), 7(e)
& 8(a) and (b)
8(c) - (i) (cont’d) 9(a)-(d)
Mortgages1 and 2
(Mortgages Topic 3 covered by students
by way of assignment)
STUDY BREAK
15 September – 19 September 2008 (Week 38)
39 (8)
22-26 Sept 2008
Mortgages 4
40 (9)
29 Sept- 3 Oct 2008
Mortgages 5
41 (10)
6 -10 October 2008
Leases 1,2,3,4 and 5(a)
42 (11)
13 - 17 October 2008
43 (12)
20 - 24 October 2008
5 (b), (c), (d) (e) and 6
6(cont’d)
Easements: 1, 2, 3 and 4
44 (13)
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5, 6, 7 and 8
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PART FOUR
General information
GENERAL RULES, POLICIES AND PROCEDURES FOR ALL
LAW UNITS
The Law School has a range of rules, policies and procedures that apply to all LLB
units, unless expressly varied by the unit co-ordinator. They should be read in
conjunction with this unit outline. A summary of the general rules, policies and
procedures ca be found at http://www.lawstudents.law.uwa.edu.au/ or in hard copy
available from the Law School office, ground floor, Law Link building.
As the rules, policies and procedures are updated from time to time, students should
ensure that they consult the latest version. The version applicable to this unit is the
January 2008 edition.
The summary of the general rules covers the following:

Ethical Scholarship, Academic Literacy and Academic Misconduct

Academic Conduct Essentials (ACE)

Equity and Diversity in the Law School

Use of Inclusive Language

Students with Special Needs

Lectopia

Where to Direct your Enquiries

Contacting Staff in the Law School

Assignments:

o How to submit your Assignment
o Obtaining an Assignment Cover Page – the Assignment Cover Page
Generator
o Extensions
o Late Submission of Assignments
o Exceeding Word or Page limit
o Handing back and collecting assignments
Assessment:
o
o
o
o
o
Deferred Exams
Requests for Special Consideration
Supplementary Exams
Appeals Against Academic Assessment
Scaling
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CHARTER OF STUDENT RIGHTS AND RESPONSIBILITIES
The Charter of Student Rights and Responsibilities sets out the fundamental rights and
responsibilities of students and their organisations at UWA. It recognises that excellence in
teaching and learning requires students to be active participants in their educational
experience. It upholds the ethos that in addition to the University's role of awarding formal
academic qualifications to students, the University must strive to instil in all students
independent scholarly learning, critical judgement, academic integrity and ethical sensitivity.
The Charter also recognises that students are central to a dynamic University community. In
doing so, the University recognises the importance of student rights, responsibilities and
opinion and encourages diversity within the student body.
For the full text of the charter, please refer to:
http://www.secretariat.uwa.edu.au/home/policies/charter
STUDENT GUILD CONTACT DETAILS
The University of Western Australia Student Guild 35 Stirling Highway Crawley WA 6009
Phone: (+61 8) 6488 2295 Facsimile: (+61 8) 6488 1041 E-mail:enquiries@guild.uwa.edu.au
Website: http://www.guild.uwa.edu.au
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PART FIVE
Discussion Problem Questions
In the property course, Discussion Problem Questions are used to both supplement
lecture material and to give students the opportunity to discuss problems in the
various areas of the course. The problems used do reflect the type of questions the
students will be expected to answer in the mid-semester assignment and end of
semester examination.
Discussion Problem One
Question 1
Mr. Pickworth owns land registered under the Transfer of Land Act (TLA) in Western
Australia. He went to Beijing for the Olympic Games and left various duplicate
Certificates of Title in the “safe” custody of a firm of solicitors. The firm’s articled law
clerk, Hapless, impoverished and desperate (because he is grossly under paid)
removed one of the duplicate Certificates of Title from safe custody.
Hapless forged Pickworth’s signature on a Transfer form, transferring Pickworth’s
land in favour of a fictitious person, Sam Finch. Hapless arranged for the Transfer in
favour of Sam Finch to be registered.
Hapless then approached one of the law firm’s clients, Harry McFeast, who had
recently been awarded a large worker’s compensation payout. McFeast had
mentioned to Hapless that he was interested in investing his compensation payout in
a secure investment. Hapless advised McFeast that there is nothing safer than
“bricks and mortar” and arranged for McFeast to lend $100,000 at 15% interest per
annum to “Sam Finch” on the security of a first mortgage over the land registered in
the name of Sam Finch. McFeast paid over the $100,000 to Hapless and Hapless
prepared the Mortgage form and forged the signature of Sam Finch as mortgagor
and Hapless himself “witnessed” Finch’s signature. Hapless delivered the duplicate
Certificate of Title and executed Mortgage form to McFeast.
Consider the interests of the various parties to this transaction in the following
circumstances. In preparing your answer you must demonstrate a sound
understanding of both the reasoning in Gibbs v Messer [1891] AC 248 and also the
criticisms of this case. You may also assume that Hapless is nowhere to be found!
1.
Pickworth returns before registration of the mortgage in favour of McFeast;
2.
Pickworth returns after the mortgage in favour of McFeast has been
registered;
3.
For the purpose of this question, briefly discuss the position if the land in this
question was general law land and therefore, the TLA is not applicable.
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Question 2
You are a solicitor and you have just acted for Mr & Mrs Jones on the purchase of
land registered under the Transfer of Land Act (WA). Two weeks’ after settlement is
effected and the title registered in the Jones’ name they are at your office and they
are irate. They have just discovered the following:
(i)
The next door neighbours on the southern side of the Jones’ land have told
them that twenty years ago they fenced part of the Jones land and have been
using it ever since. They (the neighbours) intend to lodge a claim with the
Registrar of Titles to have part of the land in the Jones’ title included in their
title.
(ii)
The local authority’s building surveyor has visited the Jones and told them
that the building plan for their extensions will not be approved because the
authority has a drainage easement across that part of the land on which the
extension is planned. The authority says that it has acquired the easement
under the provision of the Public Works Act in Western Australia, by vesting it
while it was owned by a prior registered proprietor.
(iii)
The previous owners, the Smiths, had leased the property to tenants. The
lease is for a term of three years with an option to renew for two more years.
The lease has one month left to run and the tenants are purporting to exercise
their option for a further term of two years.
(i)
The Jones have received a demand for unpaid land tax on the property for the
preceding three years and the Commissioner of State Taxation is threatening
to sell the land if the outstanding land tax is not paid within 14 days.
In each of the above instances, advise the Jones of their legal position and suggest
what (if anything) can be done to assist them. You can assume that in none of the
four instances was there anything on your search of the registered title which would
have indicated a problem.
Discussion Problem Two and Three Facts
(ADAPTED FROM 2007 EXAM)
Archie owns a house in Nedlands and in 2002 Archie developed a chronic illness.
He asked his brother Frank to come and look after him and live with him in his
house. Frank had a lucrative job on a mine site in the Pilbara and though he wanted
to look after his brother he did not want to lose his well paid job. Archie made it clear
to Frank that if Frank came to look after him (Archie), Frank would be entitled to live
in the Nedlands house for the rest of Frank’s life. On the basis of this agreement,
Frank gave up his job, re-located to Nedlands and looked after Archie.
About 2 years later Archie and Frank decided it would be best for Archie if Archie
and Frank moved to a small apartment that was closer to the hospital. Archie rented
out his house in Nedlands to Zara. The lease was for a term of 4 years commencing
in September 2004 with an option to renew the lease for a further 2 years. The
option to renew allows Zara to renew the lease on giving written notice of intention to
renew at least 1 month prior to the expiry of the lease in September 2008. Zara
registered this lease.
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In May this year Archie died. Archie’s Will included the following clause: “I leave my
Nedlands house to my daughter Jill with every hope that she will do the right thing by
Frank.” Jill asked Frank what was the meaning of this clause. Frank explained in
detail the agreement that had been made between him and Archie. He finished his
explanation by asking, “You’ll do the right thing by me, won’t you Jill?” Jill gave
Frank a big smile and nodded her head. Frank felt reassured that all would be well
and decided there was no need for him to waste his money by getting any legal
advice as to whether he should protect his interest.
In June 2008 Jill became the registered proprietor of the Nedlands house. Jill
became very excited about the development potential of the Nedlands house (the
“property”). Jill was looking forward to Zara’s lease expiring in September so she
could start to develop the property.
This week Jill has received 1 phone call and one letter as follows:
1.
A phone call from Frank who has just learnt of Jill’s plans for the property.
Frank is furious with Jill. Frank told Jill that he has rights to the property and
that he will be requesting the Commissioner for Titles to correct the Certificate
of Title to reflect his interest.
2.
A letter from Zara giving notice of her intention to renew the lease for a further
2 years.
Jill has come to see you and advised you of all the matters raised above.
Discussion Problem Two
Jill seeks your advice on two quite specific questions. First, can Frank challenge
Jill’s registered title on the grounds of fraud? Second, advise Jill fully as to Zara’s
rights to the property. You should also explain to Jill what the position would be if
Zara’s lease was neither registered nor protected by caveat.
Discussion Problem Three
Refer to the facts.
Jill also seeks your advice as to whether Frank can challenge Jill’s registered title on
the grounds of any other exception to indefeasibility including Frank’s claim for a
correction of the Certificate of Title.
Discussion Problem Four
(ADAPTED FROM 2007 EXAM)
Wendy became the registered proprietor of land in January 2007 and commenced
building on the land with money she had saved. After a few months Wendy realised
that further funds would be required to continue with the building works. Wendy
borrowed $50,000 from Gargantuan Bank and executed a mortgage in favour of
Gargantuan over the land to secure the $50,000. A few months later Wendy made
alterations to the building plans and the builders informed Wendy that another
$50,000 would be required to complete the building according to the altered plans.
Wendy borrowed this money from Harriet and executed a mortgage over the land to
secure Harriet’s loan. Neither Gargantuan nor Harriet have registered their
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mortgages nor have they lodged caveats to protect their mortgages, though Harriet
has obtained the Duplicate Certificate of Title for the land.
Finally, in July 2008, Wendy’s house was completed and Wendy borrowed a further
$20,000 from Gino to finish the landscaping. Before Gino agreed to the loan, Gino
searched the Certificate of Title of the land at Landgate (the Titles Office). As there
were no encumbrances noted on the Certificate of Title, Gino lent Wendy the
$20,000 and Wendy executed a mortgage over the land in favour of Gino to secure
Gino’s loan. Gino lodged a caveat to protect his mortgage in late July 2008.
Wendy is worried that she may default on the mortgages to Gargantuan, Harriet and
Gino. Advise Wendy fully as to the order of priorities between the competing
mortgages.
Discussion Problem Five and Six Facts
(ADAPTED FROM 2006 EXAM)
Bert owned land in Albany upon which he conducted a restaurant business called
“Bert’s Beanery”. Bert wanted to sell the property. Owen, a chef, approached Bert
with an offer to purchase the land and the restaurant business. As Owen, the only
interested purchaser, could not come up with the $200,000 purchase price, Bert
agreed to accept $100,000 in cash from Owen and a mortgage over the restaurant in
the amount of $100,000 to secure the remaining monies owing on the purchase
price. On January 15 2006, the Transfer of the restaurant land into Owen’s name
and the $100,000 Mortgage in favour of Bert were registered against the property.
Owen was also in need of finance to make improvements to the restaurant. Last
Resort Finance Company agreed to provide Owen with a loan of $100,000, to be
paid by way of 4 advances of $25,000 on February 1, May 1, August 1 and October
1 2006. To secure the loan, Last Resort took a mortgage over the restaurant in the
amount of $100,000. Last Resort made the first $25,000 advance on February 1
and, the same day, lodged a caveat against the restaurant land to protect its
mortgage.
Owen commenced operations in early February and soon after Owen was ready to
expand. Owen approached Last Resort for a second loan of $60 000 but Last
Resort refused. All other banks also refused to lend to Owen and as a final attempt
to secure a loan Owen approached Moonbucks Coffee Co. Moonbucks agreed to
lend $60,000 to Owen on the following conditions: first, that Owen would serve only
Moonbucks Coffee at the restaurant for the next ten years; second that the $60,000
would be repaid in monthly instalments over three years, with interest payable at a
commercial rate; and, third, that Owen would grant a mortgage against the
restaurant land in favour of Moonbucks to secure the loan. Owen was desperate
and so he agreed to these conditions. On March 20, 2006, Moonbucks advanced
the $60,000 to Owen and the mortgage agreement in favour of Moonbucks was
executed.
On May 1, 2006, Last Resort advanced $25,000. On July 15, 2006, Moonbucks
lodged a caveat against the restaurant to protect its mortgage. On August 1, 2006
Last Resort made a further advance of $25,000. On October 1, 2006, Last Resort
made its final advance of $25,000, as required by the mortgage.
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In October, Owen approached Moonbucks about purchasing coffee from other
suppliers. Moonbucks responded by threatening to sue if Owen failed to comply with
the agreement.
Discussion Problem Five
Advise Owen whether he can pay off Moonbucks’ mortgage early and whether he is
obligated to continue purchasing coffee exclusively from Moonbucks for the
remainder of the ten year period. Give detailed reasons and judicial authority for
your answer.
Discussion Problem Six
Refer to the facts.
(a) Do any of the further advances made by Last Resort take priority over the
mortgage in favour of Moonbucks? AND
(b) Can Moonbucks rely on the doctrine of tabula in naufragio to improve its
position? AND
(c) Would your answer to (a) be different if both Last Resort and Moonbucks had
registered their respective mortgages?
Give detailed reasons and judicial authority for your answers.
Discussion Problem Seven
Joel rents space in a warehouse on a monthly basis for storage of his prize bobcat
collection. The warehouse is used by a variety of other collectors of farm and light
industrial machinery. Each area in which the various pieces of machinery are stored
is fenced off by a sturdy chain, secured with a hefty padlock. All the collectors have
their own separate keys for the different padlocks, as well as a common key for the
overall door to the warehouse.
Joel is going through a busy time at his work and fails to come and look at his
collection for a number of months. When he finally does go to view his collection, he
is horrified.
The owner of the warehouse has been building a new shopping complex on land
next door, with the result that a vast quantity of sand has blown into the warehouse
through the main entrances. This sand has become lodged in the machinery,
requiring maintenance and repairs.
Further, a vandal has sprayed graffiti all over Joel’s favourite bobcat, with the result
that it will need to be repainted.
Joel comes to see you about whether he has any recourse against the landlord for
the damage to his bobcat collection.
Discussion Problem Eight
Pamela runs a “healthy lunches” outlet in a small, suburban food hall. Pamela wins
Lotto and decides to fulfil her lifetime dream of travelling around the world.
She finds a potential buyer for the business in the form of Lola May. Lola May runs a
string of “healthy lunches” outlets around Perth and seems to be a very successful, if
hard nosed businesswoman.
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Pamela’s lease for the healthy lunches outlet contains a “qualified covenant” against
assignment, requiring that she must first obtain the landlord’s consent before
assigning the lease of the premises to any other party. When Pamela approaches
her landlord regarding the sale, however, he reacts with horror. He says he has met
Lola May before and “can’t stand the woman”, because she is so bossy and “loud
mouthed”. He says she will make life miserable for he and the remaining tenants at
the food hall and will be nothing but trouble.
When Pamela protests that she can’t be forced to stay on at the food hall, the
landlord states that not only can he require her to stay on but, in any event “if she is
so keen to go on her world tour, she can afford to pay him out for the balance of her
lease term and save herself the trouble of finding a new (and acceptable) tenant”.
Pamela comes to see you about what can be done. Advise her fully on her rights and
obligations in respect of the proposed assignment of the lease.
Discussion Problem Nine
Connie owned a very large and picturesque piece of land. The land surrounded a
lake which she also owned. Ten years ago Raj bought a portion of this land, called
“Lakeviews”, from Connie. Lakeviews did not directly adjoin the lake but had
magnificent views over the lake. Raj had been interested in buying Lakeviews as a
result of an advertisement which said:
“For Sale - “Lakeviews”. A 1000 square metre property
with potential for excellent boating and fishing.”
Since buying the property Raj had been in the habit of walking from Lakeviews
across a portion of Connie’s land to gain access to a jetty which was also owned by
Connie. Raj used the juetty to fish from and also to tie up his boat which was
moored at the jetty.
Recently Connie sold her remaining land to Alex. Alex has built a fence around his
property preventing Raj from gaining access to the jetty and his boat.
Advise Raj fully of his legal position.
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