If Person A is registered under Torrens à but exceptions arise: Neither party registered + watch out for postponing conduct:

Transcription

1 REAL PROPERTY TORRENSà ANSWER SCAFFOLDS Priority between two people: The parties of (Person A) and (Person B) are embroiled in a title dispute over the property of (name of property). (Person A) wishes to assert the primacy of (his/her) title over the potentially subordinate title in (.) of person B. If Person A is registered under Torrens à but exceptions arise: Prima facie, as (Person A) is registered under Torrens pursuant to s41 of the Real Property Act 1900 (NSW), (he/she) will typically be afforded indefeasible title over others. However, if (Person B) can establish that one of the exceptions to indefeasibility can be made out, particularly that regarding (fraud, short term tenancies, prior folios ) then the indefeasibility may be indeed be obviated. [Conclude]. Neither party registered + watch out for postponing conduct: Prima facie, neither (person A) nor (person B) are registered under Torrens Title pursuant to s41 of the Real Property Act, so title by registration will not be found, nor will the indefeasibility that necessarily follows it (Breskvar v Wall). If unregistered legal v unregistered equitable: Instead the priority between the unregistered interests will typically be settled in favour of the unregistered legal interest, if one exists, to the detriment of the unregistered, equitable interest (Northern Counties v Whipp; Wilkes v Spooner). However, this may not be the outcome if an example of postponing conduct can be successfully made out If both unregistered legal: Instead, as the unregistered interests appear to belong to the category of unregistered, legal interests, their priority will be determined in favour of the earlier interest. However, this may not be the outcome if an example of postponing conduct can be successfully made out. If both unregistered equitable: Instead, as the unregistered interests appear to belong to the category of unregistered, equitable interests, their priority will be determined in favour of the earlier interest. However, this may not be the outcome if an example of postponing conduct can be successfully made out. Consider the potential to caveat an interest Exception to indefeasibility Where otherwise (Person s ) interest in the property would have been prioritised over the (unregistered, legal interest/ equitable interest) by virtue of indefeasible title through registration (s41 RPA), (insert exception) operates as an exception to the indefeasible title

2 and will permit (Person ) priority in their interest, notwithstanding (Person s ) subsequent registration. Fraud exception section 43 of the RPA (Person A) may raise fraud exception to defeasibility in light of (Person s B) conduct in [apply facts]. It has been expounded that notice of itself is not fraud (Wicks v Bennett; Leros v Terara) as fraud requires the additional elements of personal dishonesty or moral turpitude (Stuart v Kingston). [Apply facts]. Misdescribed/ Omitted Easements section 42(1)(A1) of the RPA (Person A) may raise the omitted easement exception to indefeasibility pursuant to s42(1)(a1) of the RPA in light of [apply facts]. If (Person A) can procure an exception if it is found that an implied, prescribed or express easement or right of way has been omitted from the registered (s42(1)(a1)). (Apply facts to one of the following below) Express easement: If it was registered in approved form pursuant to s88(1) CA but was omitted from the RG. Prescribed easement: If there has been 20 years of uninterrupted enjoyment of a right, that an easement was granted expressly but lost (Dalton v Angus) Implied easement: An easement by implication created over ST when it was OST is still enforceable when it was converted to TT (Australian Hi-Fi v Gehl) If proven à exception to indefeasibility and the easement continues to exist Short Term Tenancy Lease Exception (Person A) may raise the short term tenancy lease exception to indefeasibility pursuant so s42(1)(d) of the RPA in light of (apply facts). To successfully procure this exception to indefeasibility it needs to be shown that the; tenant is in possession or entitled to immediate possession, that the period of the lease, together with any option to renew, does not exceed three years and that the registered interest had notice of the unregistered interest (s42(1)(d)). (Apply facts). Personal Equity Exception (Person A) may raise the personal equity exception to indefeasibility in light of (Person s B) conduct in (Apply facts). Discuss why it is unregistered, legal interest Unregistered Lease satisfying s23d of CA If (Person A) is unable to establish the short-term tenancy lease exception to indefeasible title pursuant to s42(1)(d) of the RPA, if the unregistered lease satisfies s23d of the CA, they would hold a legal interest. As per s23d of the CA, it needs to be shown that the lease does not exceed three years, the lease is for the best rent reasonably obtainable and the lease gives immediate right to possession. Unregistered Transfer or First Mortgage pursuant to s43a RPA (Person A) being a (purchaser of property/1 st mortgagee) is said to have a legal interest pursuant to s43a of the RPA if the dealing in question is a dealing registrable. To have a dealing registrable several requirements need to be proven which include:

3 o Accompanied by a CT or direction by RG to use the CT (s36(6)) o Must either be a transfer or a first mortgage o After settlement (receives CT) and before registration o Dealing must be stamped, otherwise it is not registrable (Stamps Duties Act) o The dealing must be in approved form, without defect o The dealing must not be void (Mayer v Coe; Jonray v Partridge) o Person taking the dealings has no notice pre-settlement (Iac v Courtenay) o Dealing must be the next dealing registrable (Iac v Courtenay) Discuss why it is unregistered, equitable interest Since (Person A) was unable to establish a legal interest protection pursuant to (s23d/ s43a) because (apply facts) this would render their interest at hand to be an unregistered equitable interest. If one of the two legal interests isn t proven equitable by default Unregistered Leases: o Does not satisfy s23d of CA or s42(1)(d) o A lease longer than 3 years is equitable interest (Carberry v Gardiner) o If option to renew brings lease to more than three years, this is an equitable interest as it is not protected by the short term tenancies exception (s42(1)(d) RPA). Section 43A o If the dealing was not registrable Further unregistered equitable interests: As (Person A) is (choose from one of the options below & apply facts). (Person A) would have an unregistered equitable interest. E.g. Purchaser who has exchanged contracts but has not settled (Tanbar) A 2 nd subsequent mortgage Agreement to grant a mortgage provides an unregistered equitable mortgage in the property o Agreement to grant a mortgage any mortgage where approved form has not been used (ANZ v Widin) Person who holds mortgage secured by title deeds (Cooney v Burns) o Where a financer lends money consideration for the title deeds being deposited with the lender by the borrower, the lender enjoys the benefit of an unregistered equitable mortgage over the property (Cooney v Burns) Person who has benefit of an agreement to lease Beneficiary of an interest under a trust cannot register a trust (s82 RPA) Person enjoying benefit of a restrictive covenant Introducing Postponing conduct: Where otherwise (Person s) interest in the property would have been prioritised over the (equitable interest) of (Person s) if the former is guilty of some act of postponing conduct, then (Person) may yet succeed. Postponing conduct involves an act or omission by which the holder of an equitable interest in property will cause their prior equitable claim to lose

4 priority to a later claim (Heid v Reliance). Regarding the case at hand [apply facts]. In this case before us, [Person] may have penetrated an act of postponing conduct with respect to [insert type of postponing conduct]. TORRENS TITLE SYSTEM Torrens title is a system of land registration (s41 RPA) Estate of registered proprietor paramount (s42) unless exceptions arise GENERAL EXCEPTIONS TO INDEFEASIBILITY First schedule o Registered owner; at a time of registration of sale, the vendor s name is erased from the First Schedule and replaced by the purchaser s name Second schedule o Mortgagors (borrowing, with property as security) o Lessees o Easements (swapped rights on land) o Restrictive Covenants 1. Registered interests in the second schedule prevail over registered persons in the first schedule (s41 &42 RPA; Mayer v Coe). 2. As between two interests registered in the second schedule, the interest first registered has priority (s36(9) RPA). 3. Registered interests prevail over unregistered interests (s43 RPA). EXCEPTIONS TO INDEFEASIBILITY Prior Folios: s41(1)(a) RPA Where the Land Title Office makes a mistake, and there are two different CoT s for the same piece of land, the older CoT prevails Title of the first person tobe registered will prevails (s42(1)(a) RPA) Profits a Prendre: s42(1)(b) RPA Profit a prendre- profits to be taken from the land; right to enter upon the land and remove the soil or its produce (e.g. turf, timber, crops) created over OST land which is then converted to TT Where the profit a prendre was created over TT land, then it is only omitted where all steps have been taken including the execution of necessary documents and lodging them for registration Misdescribed parcels: s42(1)(c) RPA Where the RG has misdescribed a parcel of land (including its boundaries) and a surveyor can demonstrate that the registrar is incorrect, s42(1)(c) provides an exception to indefeasibility (Michael v Onisiforou). Person who is burdened would have the ability to rectify the misdescribed parcel on the Register Omitted/ Misdescribed Easements: S42(1)(A1) RPA

5 Where a conveyance of a legal interest under OST is incomplete, a mortgagee may be able to acquire rights in equity. If a deed isn t properly executed, but writing exits and it s an implied contract, there may be sufficient intention (National Provincial and Union Bank of England v Charnley), or if there is an express agreement to create a mortgage, evidenced in writing and there is consideration, equity may uphold it (Walsh v Lonsdale). POWERS OF THE MORTGAGEE 1. Mortgagee Sale Mortgagees are able to sue for the debt under s99a and 100CA (if OST) or s61 and 62 RPA (if TT). [Mortgagee/ Mortgagor] seeks advice as to whether the mortgagee had a right to sell the mortgaged property. The facts state that the mortgage is over TT land [reason for TT] and so that the mortgage is governed by s57(2) RPA. s57(2) RPA dictates that three prerequisites must be satisfied before the mortgage is granted the power to sell the mortgaged land. First, the mortgagor must have defaulted in payment of the mortgage (s57(2)(a) RPA). [Apply Facts]. Second, a notice must have been served requiring compliance within one month after service (s57(2)(b) RPA). [Apply Facts]. Finally, the requirements of the notice must not have been complied with within one month (s57(2)(c) RPA or s111 CA for equitable or unregistered TT mortgages). [Apply Facts]. Insert one of: - Thus, given that the three requirements stipulated by the RPA are satisfied, [mortgagee] is authorised to sell the mortgaged land (s58(1) RPA). OR - Given that [NAME IT] requirement/s is/are not satisfied, any sale of the mortgaged land by [mortgagee] is invalid under RPA. Therefore, [mortgagor] should seek an injunction in equity to prevent the sale of [property]. (Allfox Building Pty Ltd v Bank of Melbourne Ltd). 2. Foreclosure (OST & TT) [Mortgagor] seeks advice as to whether the foreclosure exercised by [mortgagee] was legally valid. Foreclosure occurs where the mortgagee (banker/lender) exchanges the debt for ownership of the mortgaged property. Mortgagees are able to sue for the debt under s99a and 100 CA (if OST) or s61 and 62 RPA (if TT), so it becomes rare to foreclose.. A mortgagor is entitled to exercise the right of foreclosure over TT land under s61 and 62 of RPA, provided that eight prerequisites within those provisions are complied with. 1. Mortgagor must have defaulted in payment of the mortgage (s61(1) RPA). [Apply facts]. 2. A notice must have been served requiring compliance within one month after service (s57(2)(b), s61(2)(b) RPA)),( Apply Facts). 3. The requirements of notice must not have been complied with within one month. [Apply facts]. 4. There must have been a properly conducted auction (s61(2)(b) RPA), [apply facts]. Sale must be necessary: o There must be a sale of land, not a gift or an exchange of the property.

6 o A mortgagee is under a statutory obligation when selling to take reasonable care to ensure the best price is obtained (s111a CA; CAGA v Nixon) 5. The highest bid at the auction must have been less than the debt owed (s61(2)(c) RPA) [Apply facts]. 6. Upon application by the mortgagee, the Supreme Court must make a decree nisi, where the mortgagor is given a specific time-frame within which to repay the mortgage debt (s62 RPA) [Apply facts]. TT registered apply to RG; mandatory 6 months OST or unregistered TT apply to the court; discretion of period, usually 6 months 7. The mortgagor must have failed to repay within that time-frame [Apply facts]. 8. The court must have ordered the foreclosure in absolute (s62(3) RPA) [Apply facts]. Provided that these requirements are met, the actual foreclosure occurs when the RG issues a foreclosure order and records it in the Register (Van den Bosch v Australian Provincial Assurance Association Ltd) 3. Right to sue on a personal covenant A mortgagee may sue the mortgagor for any default under the mortgage contract. Only the original mortgagor, or his personal representatives if he dies, will be liable this way. If there is a mortgagee sale, and the sale does not cover the debt, the mortgagor may attempt to recover this difference by suing on personal covenant (s100 CA) If mortgagor dies, mortgagee can sue the estate of the deceased for the amount of debt and no more (s100 CA) If the mortgagee sells the property and the funds obtained from the sale are insufficient to cover the mortgage debt, the mortgagee can pursue the mortgagor for the shortfall (s100 CA) If the mortgagor defaults on the principal, but continues to pay principle for at least 3 months and the mortgagee accepts that money, the mortgagee may not commence proceedings (s92 CA) 4. Right to possession as a remedy Old title mortgage: the mortgagee retains legal title and therefore the legal right ot possession of the secured land Torrens title mortgage: the mortgagee retains a statutory charge and therefore the legal right to possession remains with the mortgagor as holder of the legal title When the borrower defaults, the mortgagee may take possession (s60 RPA). Mortgagee, upon default in payment by the mortgagor, may enter into possession of the mortgaged land (s60 RPA) Put otherwise, under TT, if the mortgagor is in default, the mortgagor will be entitled to take possession of the secured property once adequate notification of the default has been given to the mortgagor (s60 RPA)

7 5. Right to appoint a receiver to collect rents A receiver is a manager of the property who takes the income from the property and uses that income to pay off the mortgage debt. The receiver is deemed the agent of the property and must properly regulate the income of the property. A court exercising its inherent jurisdiction may also appoint a receiver. In both old system and TT land, the receiver (appointed under s115a and 109(1)(c) CA) must act in good faith and not sacrifice the interests of the mortgagor. He must manage the property, receive income in the name of the mortgagee or mortgagor and exercise delegated powers of the mortgage. Receive is entitled to: Manage the mortgaged property Receive income in the nature of the mortgagor or mortgagee Exercise any powers delegated by the mortgagee 6. Right to lease as a remedy Under old system, the mortgagee can grant a lease, even when the property is not in possession. Under TT, the mortgagee must be in possession. 7. Right to improve mortgaged property The mortgagee must account for rent/ profit, including those that he would have recerived had he not been neglectfully out of possession (Fyfe v Smith). He may improve the property to make it saleable, and may be reimbursed for this (Matzner v Clyde). The mortgagee should ensure that all expenditure enhances the value of the property, it must not change the character, and be justifiable at the time (Southwell v Roberts). IMPROPER SALE REMEDIES Assuming that [mortgagee] has the right to exercise a sale of the mortgaged land, [mortgagor] seeks advice as to whether that sale was validly exercised. When selling mortgaged land, the mortgage is required to take reasonable care to ensure that the land is sold at no less than the market value, where the market value is ascertainable; or in another case, the best price that may be reasonably obtained in the circumstances (s111a(1) CA). This provision applies to mortgages under TT land (s11a(8) CA). [Apply facts]. Mortgagee must act bona fide and not recklessly (i.e. the good faith test) (Kennedy v De Trafford)- cases below: Pendlebury v CML: deficient ad in paper, auction under not fair circumstances, employee of mortgagor colluded with purchaser, land worth 2000 pounds sold 720 pounds. Held to not be acting in good faith. o Mortgagee must not recklessly or wilfully sacrifice the interests of the mortgagor and that if he does, he is to be regarded as having not acted in good faith