Property 2 & 3 Exam Notes 3012LAW

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1 Property 2 & 3 Exam Notes 3012LAW 1

2 The Torrens system A system of title by registration. The system involves a base of land not people. There is a registrar, the Land Titles Act 1994 (Qld) grants powers to the registrar (ss 6, 15, 17-22, & 25-36, 186) Indefeasibility Indefeasibility is created by sections 37, 38 and 185 of the LTA. Section 184 (1) states that a RP in a lot holds the interest subject to registered interests affecting the lot but free from all other interests. Section (2) states that the RP is not affected by actual or constructive notice of unregistered interests affecting the lot. S 37 Creation of indefeasible title An indefeasible title for a lot is created on the recording of the particulars of the lot in the freehold land register. S 38 Meaning of indefeasible title The indefeasible title for a lot is the current particulars in the freehold land register about the lot. S 184 Quality of registered interests (1) A registered proprietor of an interest in a lot holds the interest subject to registered interests affecting the lot but free from all other interests. (2) In particular, the registered proprietor - (a) Is not affected by actual or constructive notice of an unregistered interest affecting the lot; and (b) Is liable to a proceeding for possession of the lot or an interest in the lot only if the proceeding is brought by the registered proprietor of an interest affecting the lot. (3) However, subsections (1) and (2) do not apply (a) to an interest mentioned in section 185; or (b) if there has been fraud by the registered proprietor, whether or not there has been fraud by a from or through whom the registered proprietor has derived the registered interest. (4) The time of execution of the documentation effecting a transfer, lease or other interest in land does not have any legal significance except in circumstances involving at least two unregistered interests. (5) Generally speaking registered interests are legal in nature whereas unregistered interests are equitable in nature. Section also guarantees a system of compensation. There is an emphasis on the time of registration, which is when the interest is created. The effect of registration is the doctrine of indefeasibility, defined by Lord Wilberforce in Frazer v Walker. Section 188C provides a 12 year limitation period on actions from the time the affected party knew or ought to have known about the circumstances resulting in the deprivation. 2

3 Case law has recognized two types of indefeasibility: i. Deferred indefeasibility Indefeasibility is deferred if the transferring instrument is void upon the basis that the previous RP is incapable of transferring good title. This would apply in cases of a ficticious transferee (Gibbs v Messer). ii. Immediate indefeasibility Indefeasibility is created once registration has occurred, despite any defects in the title instrument. Breskvar v Wall has established that deferred indefeasibility does not apply in Queensland and that immediate defeasibility is the preferred approach. Elements of indefeasibility per Whalan: 1. Paramountacy; 2. Protection against Notice; 3. Ouster of Possession; and 4. Protection of the Purchaser. 1. Paramountcy: Registered interests take priority over non-registered interests. S 184 Quality of registered interests (1) A registered proprietor of an interest in a lot holds the interest subject to registered interests affecting the lot but free from all other interests. 2. Protection against notice: Even if a person who takes a registered interest has notice of a prior unregistered interest, this person s interest remains protected. S 184 (2)(a) provides that: (2) In particular, the registered proprietor (a) is not affected by actual or constructive notice of an unregistered interest affecting the lot. 3. Ouster of possession: No claimant can disturb the Registered Proprietor s possession unless the claim falls within an exception listed in the Land Title Act s 184(2)(b) provides that: (2) In particular, the registered proprietor - (b) is liable to a proceeding for possession of the lot or an interest in the lot only if the proceeding is brought by the registered proprietor of an interest affecting the lot. Furthermore, s 184(3) provides that: (3) However, subsections (1) and (2) do not apply (a) To an interest mentioned in section 185; or (b) If there has been fraud by the registered proprietor, whether or not there has been fraud by a person from or through whom the registered proprietor has derived the registered interest. 3

4 4. Protection of the purchaser: A bona fide purchaser is protected against claims arising from the fraud or an error of a predecessor-in-title - Latec Investments Ltd v Hotel Terrigal Pty Ltd. Boundaries to land i. Airspace: how high is a persons interest ii. iii. iv. Minerals: below the land Horizontal: lateral boundaries Fixtures: contents of the property Airspace: above the land Old rule: ad coleum the owner of land owns everything up to the sky and down to the centre of the earth (Bury v Pope) Older cases - favours public benefit (Bernstein v Skyways & General 1978 aerial photos) Newer cases favour owner. - Relevant test: Conduct which may interfere with any ordinary uses of the land including significant commercial gain - LJP Investments v Howard Chia Investments (1989) - Consider economic gain and reason for interference Bendall v Mirvac Minerals: below the land Starting position: persons own all above and below land Bury v Pope Restrictions: - CL o Gold and silver belong to the Crown - Case of Mines - Statute o Mineral Resources Act 1989 (Qld) o Petroleum Act 1923 (Qld) and Petroleum and Gas (Production and Safety) Act 2004 (Qld) o Geothermal Energy Act 2010 (Qld) o Water Act 2000 (Qld); See Hazlett v Preznell o Atomic Energy Act 1953 (Cth) Horizontal/lateral boundaries Water - Boundaries involving creeks and waterways: s 9 of the Land Act 1994 (Qld): - Rivers, Creeks and Banks vest with the crown. (Hazlett v Presnell, s 13A of the Land Act 1994 (Qld) - In the case of tidal waters, the crown owns up until the high water mark. (Svendsen v State of Queensland) 4

5 - Doctrine of accression and erosion (Hazlett v Presnell per Gibbs CJ, Mason, Murphy, Wilson, Brennan and Deane J): In the event of change in a course of river, the legal boundary of the land would change if a) the change was gradual and imperceptible; and b) the change was a result of natural phenomena Encroachment: - Encroachment means encroachment by a building, including encroachment by overhang of any part as well as encroachment by intrusion of any part in or upon the soil s 182 PLA - Application for relief in respect of encroachments: s 184 of the Property Law Act 1974 (Qld) provides that: - Either an adjacent owner or an encroaching owner may apply to the court for relief under this division in respect of any encroachment. - Building means a substantial building of a permanent character, and includes a wall. - S 185(1) provides that: - On an application under section 184 the court may make such order as it may deem just with respect to The payment of compensation to the adjacent owner; and The conveyance, transfer, or lease of the subject land to the encroaching owner, or the grant to the encroaching owner of any estate or interest in the land or of any easement, right, or privilege in relation to the land; and The removal of the encroachment. - Under s 185(2), the court may take account of the following factors in determining the scope of relief which is granted: i. The fact that the application is made by the adjacent owner or by the encroaching owner, as the case may be; and ii. The situation and value of the subject land, and the nature and extent of the encroachment; and iii. The character of the encroaching building, and the purposes for which it may be used; and iv. The loss and damage which has been or will be incurred by the adjacent owner; and v. The loss and damage which would be incurred by the encroaching owner if the encroaching owner were required to remove the encroachment; and vi. The circumstances in which the encroachment was made. Fixtures v Chattels Starting point: quicquid solo plantatur solo cedit what is attached to the land, becomes part of the land (Minshall v Lloyd per Parke) When will a chattel become a fixture? Consideration needs to be given to the degree and purpose of annexation (Holland v Hodgson) 1. If a item is fixed to the ground then the item is presumed to be a fixture and the onus is on those who object to prove otherwise; 2. If an item is not fixed to the ground, then the object is presumed to not be a fixture and the onus is on those who object to prove otherwise; and 5

6 - In considering whether or not an item is a fixture, consideration should be given to: o Whether or not it was intended as permanent; and o Whether or not there was an intention to improve the land (Australian Provincial Assurance Co v Coroneo per Jordan CJ) Probably fixtures: - Bolted things (Australian Provincial Assurance Co v Coroneo) - Steam engine bolted to concrete floor (Hobson v Gorringe) - Dishwasher would create significant disfigurement to the house if it was removed (Farley v Hawkins) - Shed bolted concrete base, not easily removed (Farley v Hawkins) - Stove and carpet (Palumberi v Palumberi) - Air-conditioning unit connection to power and water supply (Belgrave nominees v Barlin-Scott Air- Conditioning) - House resting on stumps (Reid v Smith) - Pipes embedded in ground (North Shore Gas v Commissioner for Stamp Duties, cf Com. Main roads) Probably chattels: - Chairs in theatre - although bolted if they were meant to be moved around (Australian Provincial Assurance Co v Coroneo) - Tapestry intention for enjoyment of resident, not to improve value of land (Leigh v Taylor) - Tv aerials, venetian blinds, non built-in cabinet (Palumberi v Palumberi) - Embedded gas pipes because the gas co had mere license (Commissioner of Main Roads v North Shore Gas Co) 6

7 Exceptions to indefeasibility 1. Court orders 2. Other statutes 3. Fraud = s 184(3)(b) 4. In Personam = s 185(1)(a) 5. Short Lease = s 185(1)(b) 6. Omitted Easement = s 185(1)(c) 7. Adverse Possession = s 185(1)(d) 8. Earlier Existing Indefeasible Title = s 185(1)(e) 9. Two Indefeasible Titles = s 185(1)(f) 10. Wrongful Inclusion = s 185(1)(g) 11. Petroleum Interests = s 185(1)(h) 12. Greenhouse Gas Interests = s 185(1)(i) 13. Geothermal Interests = s 185(1)(j) Fraud Section 184(3B) of the LTA - Must involve conduct which is dishonest or lacking moral decency; - Therefore limited only to legal fraud whether there is intentional deceit and not equitable fraud where a person gains an unfair advantage despite a lack of intention of doing so; - Must be committed or brought home to either a registered proprietor or an agent who was acting in accordance with the authority of the registered proprietor; - Can include instances in which a person s suspicions are aroused as to a particular state of affairs and the person fails to make further enquiries for fear of learning the truth as this amounts to conduct which lacks moral decency. - (Assets co v mere Roihi per Lord Lindley) The fraud complained of must relate to the current state of the title. Fraud on the part of the predecessor in title will not make the title of the current RP defeasible (Hinds v Uellenendahl) To set aside indefeasibility on the basis of fraud there must be a causal link between the fraudulent act and the obtaining of the registered interest which has resulted in the loss or deprivation (South Australia v Ferguson) Elements of fraud: 1. There must be an actual fraud A conscious, dishonest act and not constructive fraud (little bits and pieces which may amount to fraud). 2. The RP must have actual knowledge of the actual fraud The RP must have actual knowledge of the unfair benefit, not constructive. Mere constructive notice of an unfair benefit will result in constructive fraud as it cannot be established that the person intended to deceive in any way or that they acted immorally in effecting the transaction (Grgic v ANZ) 1 1 Bank officer not guilty of fraud because he did not know of the forged signature 7

8 - Suspicions. However, actual knowledge not required if there is evidence that suspicions were aroused and the truth was avoided (Waimiha Sawmilling Co v Waione Timber) 3. Notice must be accompanied by deceit or moral turpitude. Mere notice without the person also engaging in dishonesty or moral turpitude will only amount to constructive fraud, which is not covered by the statutory fraud exception (Stuart v Kingston per Knox CJ and Starke J) 2 - Repudiated pre-contractual assurances - Dishonesty or moral turpitude can occur when an assurance is made prior to the transaction that an existing interest be protected subsequently, which is repudiated after registration. - Can include: o A deliberate plan from the outset to defeat this existing interest (Loke Yew v Port Swettenham Rubber Company) o Or, if the assurance was intended to be honoured from the outset BUT the surrounding circumstances (or the matrix of circumstances ) would result in the repudiation amounting to moral turpitude (Bahr v Nicholay) Loke Yew v Port Swettenham Rubber Co Facts: - The Rubber Company purchased a large tract of land from Eusope - Loke Yew was an unregistered part owner of this land - Eusope made it clear that they would only sell if Loke Yew gave an assurance not to disturb possession - Once the rubber company became the registered proprietor the company sought to take the entire land dispossessing Loke Yew Held: - Court accepted that the rubber company acted fraudulently and transfer Loke Yew the parcel they had interest in - The rubber company had more than mere knowledge of Loke Yew s registered interest - There was evidence of a deliberate plan to defeat Loke Yew s unregistered interest and this amounted to fraud. Bahr v Nicolay Facts: - The Bahr s were the registered proprietor s of land in Western Australia - In order to finance their plans to develop the land they entered into a financial arrangement with Nicholay 2 There, there was a breach of trust resulting in the wife of a beneficiary acquiring trust property, but no immoral conduct, she did not act dishonestly 8

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