Court-Ordered Sale Easements The Characteristics of Easements Types of Easements Creation of Easements...

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1 Cntents LAND LAW Fundamental Cncepts in Land Law... 3 The Trrens System... 7 Indefeasibility... 8 Exceptins t Indefeasibility (Nt) Vlunteers Fraud In persnam rights Shrt-term tenancies Overriding statutes Caveats Cmpeting equitable interests C-wnership Jint Tenancy Tenancy in Cmmn Rights f Enjyment f C-Owners Severance f Jint Tenancy Terminatin f C-Ownership Leases Frmatin SUBSTANTIVE REQUIREMENTS: FORMAL REQUIREMENTS: Implied Cvenants Enfrceability f Cvenants after Assignment Assignment f the Lease Privity f Estate Assignment f the Reversin Remedies FORFEITURE f Lease by Landlrd Remedies f Landlrd and Tenant in CONTRACT Mrtgages Tacking Rule Cvenants in Mrtgages Remedies f the Mrtgagee [lender] Pwer f Sale Statutry Duty: Ntice must be given t the Mrtgagr [brrwer] Equitable Duty Cnduct f Sale Statutry Duties in the Exercise f the Pwer f Sale

2 Curt-Ordered Sale Easements The Characteristics f Easements Types f Easements Creatin f Easements Extinguishment f Easements Freehld Cvenants Equity Cnditins f Valid Freehld Cvenants The Benefit f Cvenants Enfrceability f Freehld Cvenants The Intersectin f Freehld Cvenants with Public Planning Regimes NT & Crwn Grants Dctrine f Tenure Dctrine f Estates Mab Native Title The Nature f Native Title Cnnectin with the Land s223(1)(b) The Extinguishment f Native Title The Native Title Amendment Act 1998 (Cth)

3 Fundamental Cncepts in Land Law Dctrine f Tenure - Began in feudal England, where bundles f rights t land were spatially divided s that several peple culd have prprietary interests in ne piece f land. - One persn (tenant) hlds land f anther persn subject t perfrmance f bligatins (services and incidents). Ie, citizens titles can be traced t initial grant frm King. - Technically, all land is held directly f the Crwn (b/c all land titles riginate in Crwn grants): Mab - The mdern landlrd tenant relatinship is similar t traditinal tenure. - Traditinal dctrine f tenure acted t bstruct recgnitin f native title until Mab. NB: Land Acquisitin (Just Terms Cmpensatin) Act 1991 sets ut hw Crwn can take its land back. Dctrine f Estates A dctrine that divided land up upn the basis f time, r temprally. Estates can be either freehld r leasehld. Leasehld estates are less than freehld estates. Freehld Estates Fee Simple: - Full wnership f land, cnfers the lawful right t exercise ver, upn, and in respect t, the land all rights f wnership save the extent that any such right has been abrgated, qualified r varied by statute, by the wner f the fee simple r by a predecessr in title: Gumana v Nrthern Territry - Widest pwers f enjyment wrt all the advantages derived frm the land itself and anything fund n it: Wik - Entitles the wner t pssessin f the land fr an indefinite perid Life Estate - Created when an interest in land is given t a persn fr life and terminated n the death f the tenant. Leasehld Estates Fixed term lease: Peridic tenancy: Tenancy at will: lease fr a term that expires immediately at the end f the perid. this is similar t fixed term, but it des nt expire until apprpriate ntice is given. may be determined at any time by either party, subject t a packing up perid in sme cases. Tenancy at sufferance: when a tenant takes pssessin f the land lawfully pursuant t a lease, but cntinues wrngfully in pssessin after terminatin f the lease. Easement: A right t d smething n smene else's land. Easements always affect tw pieces f land - the land benefited (the 'dminant tenement') and the land burdened, (the 'servient tenement'). Emts 'run with the land'. Restrictive (r freehld) cvenants: A right t stp smene ding smething n their land, e.g. a right t prevent a neighbur building abve tw streys and blcking ur harbur view. Like easements, restrictive cvenants affect mre than ne piece f land; they affect land that is benefited (ie desn't have its view blcked) and land that is burdened (land that cannt have a building f mre than tw streys. Statutry Mdificatins t the Cmmn Law - Presumptin f dispsal f the entire interest in land, (ie, the fee simple). Rights t Prperty Right t use r enjy: Yanner v Eatn: prperty des nt refer t a thing, it is a descriptin f a legal relatinship with a thing. Usually treated as a bundle f rights. Right t alienate, r assign Right t exclude: yu have a private right t yur prperty, exercisable against the general public. Pssessin & Limitatin f Actin: Adverse Pssessin Pssessin: A persn with pssessin f land is in cntrl f that land t use and ccupy. 3

4 Indefeasibility Real Prperty Act 1900 (NSW) s 42 Indefeasibility f title, Registratin creates title The registered prprietr s interest will be abslutely free f all ther interests claimed in the land, except thse registered. Ie, the registered wner has an undefeatable interest. Fraud will vitiate a registered title. Registratin creates r transfers legal title. s 43 Nt impeded by ntice, Ntice f an unregistered interest is ineffective, except in cases f fraud. (Knwlg f an unreg interest fraud) Prspective purchases need nt inquire abut the previus reg prp s registratin. (s43 creates a new pririty rule) s 41 - Dealings nt effective until recrded in Register Only instruments registered under this Act will be effective fr interest in land. s 42(1)(d) Unregistered leases fr terms f 3 yrs r less bind the registered prprietr. Shrt-term leases fr < 3 yrs need nt be registered. The Trrens register is cnclusive wrt wnership f land. Frazer v Walker [1967] at [580] > Indefeasibility f title describes the immunity frm attack by adverse claim t the land r interest wrt which he is registered, which a registered prprietr enjys. Indefeasibility refers t "any estate r interest in land recrded (incl mrtgage, lease, easement, fee simple) The bjectives f Trrens title are: Prvide a cnclusive register encmpassing all the facts relative t the title, Ensure that purchaser s nt adversely affected by any infirmities in the vendr s title which d nt appear n the register; saving the time and expense f persnally investigating the title, Prvide a guarantee by the State that the register fli is true and cmplete. Sectins 42 and 43 RPA create a new pririty rule: s42: Title nly by registratin. Registered title is indefeasible. OLD: nem dat rule (yu cannt give what yu haven t gt; earlier legal interest prevails) s43: N purchaser is bund by ntice f an unregistered interest. OLD: bna fide purchaser rule Deferred / Immediate Indefeasibility? Applies where a persn (the 'frger') frges the signature f the real registered prprietr n a transfer and sells the prperty t an inncent purchaser. Immediate indefeasibility applies. s45 Real Prperty Act: Bna fide purchasers & mrtgagees are prtected irt fraudulent transactins - Prtects BFPFV where the vendr s title was registered fraudulently. - The defrauded party [rig wner] has an equitable interest & can cancel the reg title f the fraudulent party befre the title is transferred t a bna fide purchaser. Immediate Gd indefeasible title is transferred t the bna fide Purchaser immediately n registratin f frged instrument. (Prtects purchasers.) 8

5 Deferred The title f a bna fide purchaser wh registers a frged instrument is defeasible, (s can be set aside by a curt) UNLESS the Purchaser has already passed title alng t a subsequent purchaser, at which pint the title becmes indefeasible. Immediate indefeasibility prmtes 'dynamic security' (r 'ease f transactin'), which prtects the reasnable expectatins f the f purchasers that they will acquire gd title. Gd dynamic security facilitates easy and cheap transfers (because the purchaser desn't have t investigate) and thus encurages peple t buy assets. Land title registratin is meant t prmte tw frms f security security f title (making existing prperty rights secure) and ease f transactin (making cnveyancing quicker, easier and cheaper). Nt having any indefeasibility wuld run cntrary t the purpses f having trrens title. Assets C v Mere Rihi [1905] - Accepted the principle f immediate indefeasibility. Frazer v Walker [1967] - [authrity] Upheld the principle f immediate indefeasibility. s45 RPA: NSW Parl endrsed Frazer v Walker; cnfirmed immediate indefeasibility. Hence, a purchaser registered via a vid instrument (eg, by fraud r errr) nevertheless btains indefeasible title immediately (as lng as the purchaser didn't cause the fraud). Breskvar v Wall (1971) Facts: Fraudulent party filled in the blank transfer f title dc w the name f his grandsn. Grandsn registered the title, sld it t a BFPFV. Held: Registratin creates title [even if the vendr is fraudulent, but the purchaser is bna fide]. Orig wners lse; title f BFPFV is indefeasible. Registratin f a vid instrument by a BFPFV is effective, creates indefeasible title. Registratin f title btained by fraud by the fraudulent party is defeasible. The title is subject t the defeasible title f the defrauded vendr. The fraud creates an equitable interest n the part f the defrauded [rig wner], (the legislatin allws an exceptin fr fraud). They can thus cancel the registratin f the fraud [wh fraudulently registered the title]. Hw, nce the [fraudulent party] transfers his title t a third party (bna fide, gd cnsideratin), it becmes a questin f pririties: If the third party cmpletes registratin entirely, than he btains indefeasible title. If the third party desn't cmplete registratin befre the riginal vendr bring a claim, the vendr's earlier equitable interest prevails ver the third party's later equitable interest. UNLESS the rig vendr's cnduct helped encurage the third party's false assumptin that the title vested with the fraudulent party (eg, pstpning cnduct in handing ver the blank transfer). Nte; s43a RPA wuld nw settle the pririties dispute. (Prtectin as t ntice f persn purchasing land befre registratin. (See Cmpeting Equitable Interests.)) Instruments Vid fr Defects Other than Frgery The effect f registratin in rendering vid instruments indefeasible is nt cnfined t frgeries: Stry v Advance Australia Bank. Other examples f vid instruments leading t indefeasible title n registratin are: Mrtn v Black: Unauthrised alteratin by the mrtgagr s slicitr did nt affect the rights f the mrtgagee Bradlands Internatinal Finance v Sly: Registratin f a dcument purprted t be executed under a pwer f attrney but befre the pwer f attrney was signed Spina v Cnran Assciates: Registratin f a mrtgage executed by an attrney acting beynd the pwers cnferred by a pwer f attrney Cnslidated Develpment v Hlt: Registratin f an instrument invalid at cmmn law because f the rule against perpetuities 9

6 Hrvath v Cmmnwealth Bank: A mrtgage given by a minr was indefeasible C-Operative Prperty Develpments v Cmmnwealth Bank: Registratin f an invalidly executed mrtgage gave the mrtgagee an indefeasible title in the absence f fraud. Indefeasibility f the terms in a registered instrument Cvenants are an essential part f a registered lease (incrprated term). The first in time takes pririty / is indefeasible; bw a cvenant/ leasehld interest + mrtgage interest. Karacmiakis v Big Cuntry affirmed Mercantile Credits: The curt held that a cvenant t pay rent is an essential and intimate part f the interest created upn registratin. Mercantile Credits v Shell (1976) Facts: Tenant s lease agreement had a cvenant w an ptin f renewal f their lease after 5 years. The landlrd defaulted n payment f their mrtgage. The mrtgagee [lender] wished t claim their rights t sell the land. Held: Tenant s right f renewal prevailed ver mrtgage as it was registered first in time. Right f renewal is s intimately cnnected with the lease that it shuld be regarded as part f the lease and entitled t the same pririty as the lease. Des nt extend t a persnal right created by a cvenant. Indefeasible interests (eg, ptin fr renewal) will expire if the time fr their exercise expires. What is indefeasible in a vid mrtgage? Is the brrwer s cvenant t pay enfrceable n registratin f vid/frged mrtgage (they didn t take ut the mrtgage, but their prperty is secured as security)? THREE APPROACHES Full indefeasibility: The lender can hld the registered wner persnally liable fr the debt. The indefeasibility f a registered mrtgage plainly extends t the brrwer s cvenant t pay: Pyramid Building Sciety v Scrpin Htels [1998] 1 VR 188 N indefeasibility: While the mrtgagr s security interest is indefeasible, the cvenant t pay is nt: Grgic v ANZ Banking Grup (1994) HC indirectly supprted this apprach in Gumland v Duffy Brs (2008), when they said that the mrtgagr s cvenant t pay des nt tuch and cncern the land. Limited indefeasibility: The persnal cvenant t pay is made enfrceable by registratin nly t the extent necessary t make the mrtgagee s security interest effective: Duncan; nt endrsed in NSW. Exceptins t Indefeasibility Fraud, In persnam Rights, Shrt-term Tenancies, Overriding Statutes, Caveats. (Nt) Vlunteers A Vlunteer is ne wh des nt give valuable cnsideratin fr their title (eg, a gift dnee, a devisee under a will). NSW: being a vlunteer is nt an exceptin t indefeasibility. Immediate indefeasibility (s42) extends t vlunteers in NSW: Bgdanvic v Kteff NSW, Prir t Bganvic v Kteff: indefeasibility prvisins did nt prtect a vlunteer. The effect f denying indefeasibility: any equitable interests wuld survive registratin f title and be enfrceable against the vlunteer. Current law: Bgdanvic v Kteff (1988) NSW 10

7 Immediate indefeasibility extends t prtect vlunteers. Registratin creates title. A vlunteer wh registers their title (received under gift) will be prtected frm attack frm prir unregistered equitable interests. Other states differ n whether vlunteers enjy indefeasibility (nt in Victria: Rassmussen). > The High Curt has arguably reslved this issue thrugh sme biter dicta in Farrah Cnstructins v Say- Dee, in which it indicated that vlunteers d btain indefeasibility, and n distinctin is made between vlunteers and purchasers. Fraud The title f a FRAUDLUENT registered prprietr is defeasible. Their title cannt prevail against the interest f the persn defrauded (ss 42, 43). Waimiha Sawmilling Case: The term fraud means dishnesty, a wilful and cnscius disregard and vilatin f the rights f ther persns. There must be smething in the nature f persnal dishnesty r mral turpitude : Butler v Fairclugh. Blurring f distinctin bw the inpersnam and fraud exceptins: Bahr v Nichlay. (as the in persnam exceptin has expanded t include uncnscinablility.) Fraud must be perative: Fraud will nly be an exceptin t indefeasibility if the fraud is 'perative'. - Ie, if the fraud actually caused a persn t act in a way that is detrimental t himself. - If the fraud resulted in n harm, it wn't affect indefeasibility: Bank f Suth Australia v Fergusn (1998) Bank f Suth Australia v Fergusn The dcument was nt prepared fr...used fr the purpse f...[nr] have the effect f, harming, cheating r therwise being dishnest. The fraud must be perative (ie, perate n the mind f the persn said t be defrauded and t have induced detrimental actin by that persn). It is fraud t cllude r trick smene int nt registering their interest: Waimiha Sawmilling Fraud against the Hlder f a Prir Unregistered Interest Ntice is effective if fraudulent purchaser is ntified f prir unregistered interest) Lke Yew v Prt Swettenham Rubber Facts: Held: LY bught 58 acres f 322 acres frm Euspe withut registratin. Euspe sld 322 acres t PS n cnditin that they nt disturb LY s pssessin. PS ffered LY mney t surrender his rights. He refused. PS bught actin fr pssessin as registered prp f entire 322 acres. The verbal assurance PS gave t Euspe t induce the transfer f prperty was given fraudulently; PS went back n its prmise. PS is guilty f fraud, their title is defeasible. [PS rdered t transfer 58 acres t LY.] It is nt fraud fr a registered prprietr t merely acquire title with ntice f an existing unregistered interest, r t take a transfer knwing that its registratin will defeat such an interest: Bahr v Nichlay Fraud Distinguished frm Carelessness Carelessness in examining a dc fr fraud, r the failure f a party t make inquiries (even if they were R), will nt make a registered prprietr guilty f fraud. Assets v Mere Rihi Failing t discver the fraud f anther (by nt making inquiries) is nt fraud. The fraud must be 'brught hme' t the party Ie, the party must be a part f the fraud t cme within the exceptin. Hw, wilful blindness (shutting ne's eyes t avid implicatins) is fraud. (Ie, Having suspicins f fraud, but nt making inquiries s as t nt find ut.) A persn wh hnestly believes that a transfer is legitimate and free frm fraud is nt guilty f fraud. > Thus, cnstructive knwledge (knwledge which shuld and culd have been 11

8 discvered by making nrmal inquiries) des nt apply t fraud. Actual knwledge f the fraud is necessary. Pyramid Building Sciety v Scrpin Htels Facts: A mrtgage was fraudulently executed by an unauthrised emplyee. Lender had n knwledge f irregularity and mrtgage was registered. Held: Mrtgagee [lender] was NOT guilty f fraud Fraud des nt extend t negligent errrs r reckless indifference by a persn. False Attestatin f Instruments Fraud: if an emplyee f the mrtgagee [lender] falsely attests the signature f the transferr [brrwer] n a transfer/mrtgage. Nt fraud: if the mrtgagee hnestly believed the impster t be the persn they were impersnating. Grgic v ANZ Banking Grup, Russ v Bendig Bank False attestatin was nt fraud Facts: Bank emplyees did nt detect fraud in registering f mrtgage (brrwer was an impster). Held: Nt fraud under s42. The bank fficer hnestly believed the impster t be the persn she was impersnating, and acted with n cnscius knwledge f the truth r falsity f what he had dne. If reasnable steps had been taken t check the identity f persn purprting t be the registered prprietr, lss may have been prevented. BUT due t immediate indefeasibility and narrw scpe f fraud exceptin, the lss fell n the registered prprietrs nt the mrtgagees. Westpac v Sansm False attestatin was fraud Facts: Bank fficer falsely attested husband s signature n mrtgage even thugh they did nt witness the husband sign. Was deemed fraud. Russ v Bendig Bank Facts: Clerk falsely attested the frged signature despite nt seeing mther sign, and despite instructins never t attest a signature withut seeing the persn sign in frnt f her. Her superir registered the mrtgage, nt knwing f the false attestatin. Bank tried t sell prperty, mther argued that bank's interest was defeasible due t fraud. Held: N fraud. Bank s title [mrtgage] is indefeasible. Clerk knew she attested falsely, BUT her cnduct was nt dishnest (ie, nt a a willful and cnscius disregard and vilatin f the rights f ther persns'). - She did nt knw that the signature was frged, r that the Plaintiff did nt want the mrtgage. T be fraud, their cnduct must be dishnest and f cnscius mral turpitude. Cnsidered whether the law clerk gained anything frm the situatin, their pssible dishnesty, and knwledge f fraudulent signature n paperwrk. Davis v Williams Facts: A clerk imprperly registered a prperty t help avid stamp duty. Held: Nt fraud; She didn t understand the cnseq f her actins, and was just trying t help. Vella v Permanent Mrtgages (NSW); Hiltn v Gray; Ryalene v Registrar f Titles. Carelessness, incmpetence r stupidity d nt amunt t fraud Original registered prprietr wh lses thrugh fraudulent registratin f a frged dcument may be entitled t cmpensatin frm the state. Fraud and Agency A party may be guilty f fraud if its agent acted fraudulently: Assets v Mere Rihi Schultz v Crwill Prperties 12

9 There are tw pssible agency situatins: 1. The agent himself has acted fraudulently. If the agent was acting within the scpe f his actual r apparent authrity (given t him by the principal) then the principal will be guilty f fraud. 2. The agent has learned f the existence f fraud by anther. If the agent has actual knwledge f fraud (nt cnstructive), then the agent will be presumed t have cmmunicated t the principal all infrmatin that he gained 'in the curse f carrying ut the transactin'. Statutry Prvisins t Impse a Duty n Mrtgages s56c(1) Real Prperty Act: A mrtgagee [lender] must, befre ldging a mrtgage fr registratin, take reasnable steps t ensure that the mrtgagr [persn wh, r n whse behalf, the mrtgage was executed] is r will becme the registered prprietr. Reasnable steps are deemed t be taken if the mrtgagee cmplies with regulatins: s56c(2). Similar prvisin applies fr the transfer f a mrtgage: s56c(8) Cmpensatin is nt payable wrt any lss r damage suffered by a mrtgagee [lender] r transferee arising frm its failure t cmply with s56c: s129(2)(j). In persnam rights A claim in persnam (against a persn) may arise frm legal r equitable causes f actin. Plaintiffs may bring a claim in persnam against a registered prprietr: Frazer v Walker (per Wilberfrce LJ). Claims in persnam arise frm a dealing /relatinship bw the plaintiff and registered prprietr. (unlike claims in rem, which are prperty rights that the plaintiff can assert against the wrld). Bahr v Nichlay (N 2) Facts: B had a cntract with N fr repurchase f their land. N sld land t T, wh knew f and agreed t the repurchase clause (cl 4). Hw, T refused t sell t B when they tried t exercise the repurchase ptin. Held: Cntract between Bahrs and Nichlay gave rise t legal right. Legal right enfrceable against Thmpsn because he undertk t be bund by it. A trust relatinship arse bw Thmpsn and Bahr, as T was nt party t the riginal cntract. Indefeasibility prvisins are designed t prtect a purchaser frm defects in the predecessr s title, nt t free him frm his wn cntractual prmises (interests with which he has burdened his wn title. ) The registered prprietr is bund by bligatins he agreed t as a basis fr btaining title. An exceptin t indefeasibility is made fr dishnest repudiatin f a prir interest that the registered prprietr acknwledged r agreed t recgnise. Gunns v Balani [2011] FCA 431 Fllwed Bahr v Niclay Where a mrtgagr [brrwer] has expressly agreed t be bund by a cntract with a purchaser, the registered mrtgage is subject t the purchaser s prir unregistered interest. Valbirn v Pwprp [1991]: Where a purchaser cntractually agrees t be bund by an existing unregistered lease, they are bund by this persnal equity. Lgue v Shalhaven Shire Cuncil In persnam rights bind yu bth befre and after registratin. Mercantile Mutual Life Insurance v Gsper 13

10 Facts: Husband frged wife s signature t vary mrtgage. Bank registered mrtgage using the CT (bank nt authrised t use CT fr this purpse). Held: Wife had a persnal equity against the bank, t deprive them f their interest acquired thrugh the frged mrtgage. Equity arse because the mrtgagee [lender] breached its bligatins t the wife as custdian f the CT (nt because the instrument was frged). They were nt authrised t use her CT t register the variatin. The decisin in Mercantile Mutual Credits has been seriusly criticized. The bank had n knwledge f the frgery, s had n reasn nt t register the mrtgage. Eg, If husband had stlen the CT and given it t the bank, there wuld be n cause against the bank; s why is the bank liable if it already had the CT? Must be a Knwn Cause f Actin A plaintiff can nly bring an in persnam claim if there is a knwn cause f actin in law r equity (eg, breach f cntract, misrepresentatin etc): Grgic v ANZ Banking Grup. Cnlan v Registrar f Titles An in persnam claim must be based n mre than an innate sense f fairness. It must be a recgnised legal r equitable case f actin. An in persnam exceptin can arise where: A registered prprietr wh has agreed t sell their prperty denies the agreement befre registratin is cmplete cnstitutes breach f cntract. A trustee denies a beneficiary their interest and registers in anther s name breach f trust. A purchaser wh has bught a huse under a cntract affected by a vitiating factr in persnam claim based n misrepresentatin /undue influence /duress. Must be an Element f Uncnscinablility A registered prprietr is nt susceptible t a claim in persnam unless he has acted uncnscinably. Whilst the curt in Cnlan held that mere uncnscinability is nt enugh t supprt an in persnam claim, and that a knwn cause f actin must arise, there is sme suggestin that uncnscinability is a requirement (in additin t a knwn cause f actin) f the in persnam exceptin. Vasss v State Bank f Suth Australia Facts: Held: V s signature was frged by their c-wner n a mrtgage dc. The bank had n knwledge f the frgery and registered the mrtgage. Bank eventually tried t sell huse. V bjected. V lst, as the bank (reg prp f the mrtgage) did nt act uncnscinably. A registered prprietr is nt susceptible t a claim in persnam unless he has acted uncnscinably. (The bank s title as mrtgagee is nt defeated by the fact f frgery, as they were inncent f fraud r knwledge f the fraud.) The bare fact that a party has nt assented t the transactin in an instrument registered under Trrens system legislatin des nt give that persn a right enfrceable by in persnam actin t have the transactin reversed. Hwever, the Queensland Curt f Appeal disputed this: White v Tmasel [QLDCA] Facts: An auctineer acted utside his authrity by selling W s huse t T fr a price lwer than specified. T cmpleted registratin, and W sued claiming rights in persnam. T argued they did nthing uncnscinable. Held: Uncnscinability is NOT a general requirement (McMurd J). Whether this law applies in NSW has been debated White v Tmasel was nt fllwed in Battenberg v Unin Club (fr ging t far ), but fllwed in Harris v Smith (ie, the plaintiff shuld nt be required t prve uncnscinability). It remains unclear exactly what the law is, but uncnscinability and its imprtance shuld be nted. 14

11 The expansin f the in persnam exceptin t include uncnscinability has blurred the distinctin bw the in persnam and fraud exceptins: Bahr v Nichlay. Special Equity Cases An in persnam (persnal equity) exceptin which incrprates the element f uncnscinablility is the equity where a wife has t set aside a surety given t a third party t secure the debts f her husband. Breach f Trust Yerkey v Jnes: in sme circums it may be apprpriate t give special prtectin t a wife wh gives a surety (cnfirmed in Garcia v NAB, where the curt left pen the pssibility f extending this principle t de-facts). A registered prprietr wh btains registratin f prperty in breach f fiduciary duty t the transferr [purchaser] cannt rely n their registered title and claim indefeasibility t escape liability: Tataurangi Tairuakena v Mua Carr. The same applies where the registered prprietr acquired title under circumstances giving rise t a cnstructive trust: Bahr v Niclay. Breaches f trust r fiduciary bligatins cntain the requisite element f uncnscinability t bring an actin against the registered wner in persnam. This breach f trust has been brught as knwing receipt under the first limb f Barnes v Addy. Mistake Farah Cnstructins v Say-Dee 1 st limb; knwing receipt f trust prperty des nt give rise t a claim in persnam. Cnsequence is gazumping, p nd limb; the breach f trust r fiduciary duty must be dishnest r fraudulent, then will be fraud as an exceptin t indefeasibility. In the absence f fraud, cmmn mistake des nt make a registered title indefeasible: Merrell Assciates v HL Nminees. In sme circumstances, a persnal equity (in persnam right) may arise against a registered wner wh has Acted uncnscinably in taking advantage f the transferrs unilateral r mutual mistake: Majestic Hmes v Wise, r Where a transferee uncnscinably retains land transferred under mutual mistake: Lukacs v Wd. Unlawful Actin by Public Authrities Lgue v Shalhaven Shire Cuncil [1979] A cuncil failed t bserve the statutry requirements in selling land fr verdue rates, and unlawfully bught the land itself. The irregularities did nt invalidate the sale, and even if they did, the invalidity did nt create a persnal equity. Cnclusin n the scpe f the in persnam (persnal equities) exceptin The scpe f the in persnam exceptin has sinificantly narrwed recently. Althugh the HC in Bahr v Niclay (n 2) envisaged persnal equities as a brader in scpe than the fraud exceptin, persn deprived f their land thrugh frgery f a transfer r mrtgage nw have little chance f successfully asserting a persnal equity against a caeless transferee r mrtgagee if there is n fraud: Pyramid Building Sciety v Scrpin, Vasss v State Bank f SA. Shrt-term tenancies There is an exceptin t indefeasibility fr shrt term tenancies in all Australian jurisdictins. The expense and incnvenience f registering shrt term leases (and the cst f their enfrceability against third parties) utweighs the advantages. 15

12 Cmpeting equitable interests LESSON: REGISTER / CAVEAT YOUR INTERESTS, PEOPLE! Pririty rule: the registered prprietr s title is nly subject t thse interests n the register, even if they had ntice (ss 42, 43). BUT RULES: Better Equity Rule - Pririty will g t 1 st in time, UNLESS hlder f 1 st equity is guilty f pstpning cnduct: Abigail v Lapin - If equities are equal in all ther respects, pririty ges t the first in time: Rice v Rice Ntice Rule - If the later equitable titlehlder had ntice f the prir equitable interest, the prir equitable interest wins: Mffett v Dilln Summary Regards pririty disputes bw multiple unregistered interest hlders (wh each have an equitable interest, s54a CA). Since the Trrens system prvides a methd fr equitable interest hlders t prtect their interest by caveating, nt caveating is significant when determining the "merits" f an equitable interest. The Trrens system prvides mechanisms t ntify thers f the existence f interests in land. If smene cannt register their interest, they can caveat it. Caveating is encuraged t ntify f an interest in land. It is gd practice t ldge a caveat where yu have an interest in land that has yet t be registered. Failure t caveat is punished by harsh measures (eg, in a dispute with a later equitable interest, the earlier uncaveated equitable interest will lse): Abigail v Lapin. Hw, a caveat may nt be nec if the later equitable interest culd have fund ut abut the earlier. Als, it is nt nec t caveat ne s equitable interest under a cntract fr sale (s54a CA) in the 6wks bw signing the cntract and registratin. (But there is a risk that in the meantime the vendr culd sell t anther purchaser.) [Rule: 1 st in time prevails unless there is pstpning cnduct]. When a vendr passes an equitable interest t ne persn, and then passes it again t anther persn, general rule: The earlier title nly succeeds if the tw equitable interests are equal in all respects. If ne has better equity t anther, the time factr is immaterial. Rice v Rice The 'time' f the equitable interest shuld nly be used as a last resrt t determine pririties between equitable interests. Instead, the curt examines the 'merits' f the interests. The merit is examined by lking at: 1. Nature and cnditin f the equitable interest, s54a CA, 2. Special circumstances f the interest in this case, 3. Entirety f a party s cnduct (eg, failing t make prper inquiries, r nt caveating an unregistered interest, will diminish a party s merit). There is a cmpeting line f authrity that reverses the Rice v Rice rder: The first-created equity has pririty, unless n the merits there are reasns why it shuld be pstpned: Lapin v Abigail, cnfirmed in J&H Just v Bank f NSW. An exceptin t the general rule is the cncept is made in the instance f a ntice: If the later equitable titlehlder had ntice f the prir equitable interest, the prir equitable interest wuld win: Mffett v Dilln Fr unregistered titles (but have a cntract fr sale f land) see s43a RPA: Fllw the pririty rule (first in time prevails) > except where there is fraud. 21

13 The imprtance f Ntice in Equitable Pririties Reversal f Rice v Rice first in time will win unless there is sme pstpning cnduct. Abigail v Lapin Facts: Lapins executed a signed transfer f title t Heavener as security fr a lan (s H was the registered title hlder). H mrtgaged the land t Abigail. Abigail did nt register the mrtgage. Hence, A & L had cmpeting unregistered interests. Held: Abigail had pririty. Rule: The first-created equity has pririty, unless n the merits there are reasns why it shuld be pstpned, (nte, this reverses the rder f Rice v Rice). Lapins demnstrated pstpning cnduct: (L did nt transact safely thru Trrens system!) The Lapins armed Heavener with the CT and means f dealing with estate as the abslute legal wner s they induced Abigail t believe H wned the land and act t his detriment. Lapins als failed t ldge a caveat, which wuld hve alerted Abigail/thers t their interest. Butler v Fairclugh Facts: Gd [registered mrtgagr] entered int an equitable mrtgage with Butler [a charge], s54a CA. Butler did nt ldge a caveat and failed t register until 7 days later. Hw, 2 days later, Gd had sld the lease t Fairclugh. Held: Fairclugh had better equity. The claimant wh is first in time may lse pririty by any act r missin which induces a claimant later in time t act t his prejudice. Heid v Reliance Finance Crp Facts: Heid gave transfer dcs and CT t ddgy slicitr. Reliance [lender] advanced mney n an mrtgage t the slicitr, using the prperty as security. R did nt register the mrtgage. Held: Reliance had pririty. Rule: first in time prevails unless there is pstpning cnduct. Heid armed the slicitr with the ability t represent t third parties that Cnnell was the unencumbered wner f the land in fee simple, which was pstpning cnduct. Shuldn t have trusted slicitr! Just Hldings v Bank f NSW Facts: Bank did nt ldge caveat r register its mrtgage w Jsephsn (reg prp). Jsephsn executed 2 nd mrtgage w JH, als unregistered. Hence, cmpeting unregistered interests. Held: Bank had pririty. Prima facie, applying the first in time rule, Bank f NSW wins. Failure t ldge caveat des nt necessarily mean lss f pririty. This des nt cnstitute allwing subsequent persns t regard title as clear f equitable interests. Bank held CT, which was prtectin against a 2 nd mrtgage. (Bank hlding CT is essentially equivalent t hlding a caveat as n registratin culd ccur withut CT.) JH s pstpning cnduct: JH shuld have written t Bank requesting CT befre executing mrtgage! Mffett v Dilln Facts: M had an equitable charge (s54a CA) and ldged a caveat. Bank tk mrtgage withut ntice f equitable charge. Held: Equitable charge had pririty; Persn taking w/ ntice f earlier equity takes subject t it. Full actual knwledge f the existence f an earlier interest is fatal t the later equitable interest prevailing. If a later equitable interest knew f an earlier equitable interest, they have n grunds fr cmplaint! s43a RPA 43A Prtectin as t ntice f persn cntracting r dealing wrt land under this Act befre registratin. 22

14 C-wnership Jint Tenancy JOINT TENANCY: Where tw r mre ppl simultaneusly hld an interest in the same parcel f land. Jint tenants hld equal shares in the land. Must be nted n the CT; Real Prperty Regulatin 2008, reg 6. 2 essential features: Right f Survivrship and the Fur Unities. Right f Survivrship Jus accrescendi = when ne tenant dies, the estate remains with the surviving jint tenants. The effect f the death is simply t free the prperty frm the cntrl f ne f its wners, thus the interest f the deceased cannt be bequeathed r dispsed f by will. A jint tenant can, hw, sever the jint tenancy during their lifetime, creating a tenancy in cmmn which can then be passed n thrugh a will. s35 CA: If there is uncertainty as t wh died first, the lder persn is deemed t have died first; meaning the prperty flws t the yunger and hence t their estate. s25 CA: A crpratin can hld prperty as if it was an individual, and the disslutin f the cmpany is equal t death with respect t determining survivrship. The Fur Unities The fllwing 4 unities must be present fr a jint tenancy t exist: Unity f Pssessin: Each wner is entitled t pssessin f the whle prperty, nt exclusively fr themselves but t be enjyed tgether with the ther tenants. Unity f Interest: The interest f each jint tenant must be the same in nature, extent and duratin. Unity f Title: All jint tenants must derive their interests frm the same dcument r act. Unity f Time: All f the jint tenants interests must vest at the same pint in time. Tenancy in Cmmn In a Tenancy in Cmmn, each tenant has a distinct yet undivided share in the prperty (n distinct bundaries are drawn), which can be dealt with at their liberty. Can be gifted r sld. There is n right f survivrship, interest passes thrugh his/her will. Only unity f pssessin must exist fr a tenancy in cmmn. Presumptin: Tenancy in Cmmn [Outdated] CL presumptin is that an interest given t tw r mre persns either is jint (c-wnership) unless there are wrds f severance: Mrley v Bird (1793) This presumptin has been verridden by legislatin = s26 CA (p 602) S26 Cnstructin f cnveyance f any prperty beneficially t tw r mre persns tgether (1) In the cnstructin f any instrument cming int peratin after the cmmencement f this Act a dispsitin f the beneficial interest in any prperty whether with r withut the legal estate t r fr tw r mre persns tgether beneficially shall be deemed t be made t r fr them as tenants in cmmn, and nt as jint tenants. (2) This sectin des nt apply t persns wh by the terms r by the tenr f the instrument are executrs, administratrs, trustees, r mrtgagees, nr in any case where the instrument expressly prvides that persns are t take as jint tenants r tenant by entireties. At law, the presumptin is that tenants are tenants in cmmn, (nt jint tenants): s26 CA. 24

15 Registratin f ppl as jint tenants cnclusively determines the nature f their interest. Hw, this des nt prevent jint tenants establishing that they are tenants in cmmn in equity: Re Fley; Calverley v Green. In EQUITY, tenants in cmmn is als presumed: Delehunt v Carmdy. There are 3 situatins where there will be a presumed tenancy in cmmn at equity (even if there is a jint tenancy (c-wnership) at law). Business partners: Lake v Craddck (1732), - TiC presumed, therwise persn wh died first wuld lse all f his investment. Mney advanced n a mrtgage: Re Jacksn (1887), - TiC presumed where 2+ ppl advance mney n a mrtgage (in equal shares r nt), therwise ppl wuld frg their mney if they shuld die befre it was repaid. Unequal cntributins t the purchase price: Rbinsn v Prestn (1858), - TiC presumed; Equity will cnsider hld the cntributrs as TiC in prprtin t their respective cntributins fr wnership. - Held as TiC; sn cannt evict mther if she cntributed: Bull v Bull - TiC presumptin has been extended t jint liability under a mrtgage: Ingram v Ingram If equal cntributins: jint tenancy is presumed, If a cnveyance expressly declares beneficial interests: jint T: Gdman v Gallant Malayan Credit v Jack Chia-MPH (1986) Privy Cuncil Facts: Jack Chia and Malayan Credit leased a prperty tgether ff the landlrd. Bw them, they allcated flr space, apprtined the rent and were separately inviced. They were jint tenants at law. Held: Tenancy in cmmn presumed in equity. The 3 est categries [abve] presuming a TiC are nt clsed; it is circumstantial. Six features pinted twards the arrangement being ne f tenants in cmmn: The lease was taken t serve the separate interests f bth parties Prir t lease the parties had determined wh wuld ccupy which area The parties divided rent and charges in prprtins crrespnding t their sectins. They paid stamp duty and survey fees in unequal shares crrespnding t their part. The rent and service charges were paid in unequal shares Rights f Enjyment f C-Owners Right f Occupatin Each c-wner has the right t pssess and enjy the whle f the land. Cnsequently, ne c-wner can t sue anther fr trespass, except where a c-wner is excluded anther frm pssessin: Stedman v Smith. The right t pssess and enjy includes the right t invite smene t live n the premises: Thrift v Thrift Occupatin Rent A C-wner wh elects nt t exercise their right f pssessin is nt entitled t claim cmpensatin frm ccupying c-wners: Luke v Luke A c-wner wh is in sle ccupatin is (usually) nt liable fr ccupatin rent. Exceptins t this rule: Ouster by anther c-wner. If the parties agree n payment f ccupatin rent: Leigh v Dickesn (1884) A defensive equity: Rent may be payable if the ccupying c-wner seeks t charge the nnccupying c-wner cmpensatin fr imprvements the ccupying c-wner has made. Where a dmestic relatinship has brken dwn, rendering the departure f ne party reasnable in the circums: Callw v Rupchev 25