TOPIC 1 INTRODUCTION TO LAND LAW Characterisation of interest in land There are two systems of land registration in Australia: 1. General Law Land 2. Torrens Title Land TORRENS LAND = TRANSFER OF LAND ACT 1958 (Vic) GENERAL LAW LAND = PROPERTY LAW ACT 1958 (Vic) Formalities required for the creation of legal interests in General Law Land All conveyances or dispositions in land need to be by deed to be legally enforceable at common law s 52(1) PLA A conveyance is defined in s 18 of the PLA as including a mortgage, charge, lease, assent, vesting declaration, disclaimer, release, surrender, extinguishment and every other assurance of property or of an interest by any instrument except a will The only exception to the rule is set in s 54(2) with respect to oral leases created for three years or less If no deed is registered, the interest may still be enforceable in the equitable jurisdiction Formality requirements for creation of equitable interests in land Needs to be in writing, but not necessarily executed by way of a deed S 53 PLA is the main provision relating (1) Subject to the provision hereinafter contains with respect to the creation of interest in land by parol (b) No interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by his agent, their unto lawfully authorised in writing or by will or by operation of the law (c) A declaration of trust respecting any land or interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by his will (d) A disposition of an equitable interest or trust subsisting at the time of the disposition must be in writing, signed by the person disposing of the same, or by his agent there unto lawfully authorised in writing or by will (2) This section shall not affect the creation or operation of resulting, implied or constructive trusts S 126 of the Instruments Act relates enforceability, of legal and equitable interests o Oral agreements are not enforceable Equitable interests arising out of part performance 1
TOPIC 2 & 3 CONCURRENT INTERESTS IN LAND Types of co-ownership There are fundamentally two types of co-ownership o Joint tenancies; and o Tenancies-in-common A joint tenancy can only exist where the rights and interests held by each co-owner are identical and satisfy what are known as the four unities. Where the four unities cannot be proven, but a joint right to possession exists, the co-ownership will generally constitute a tenancy in common EQUITY PREFERS TENANCY-IN-COMMON COMMON LAW PREFERS JOINT TENANCY (1) Joint tenancy General nature Joint tenancy is conceptually quite different from tenancy in common in that each joint tenant is jointly entitled to the whole estate so that there is a unity of the rights of joint tenants. There are four aspects of this unity and each is essential to the existence of a joint tenancy: 1. Unity of possession Catanzariti v Whitehouse 2. Unity of interest Wright v Gibbons 3. Unity of time Ward v Ward and 4. Unity of title Wright v Gibbons In addition to the four unities, there must be the intention to create a joint tenancy Campbell v Campbell o If there is no clear intention apparent then both law and equity resort to presumption of intention to resolve the question Although these four unities may be present in tenancy in common, joint tenancy is distinguished from tenancy in common by the right of survivorship and by the fact that joint tenants must hold their interest equally At common law a corporation was incapable of holding as a joint tenant either with another corporation or with a natural person Law Guarantee and Trust Society Ltd v Bank of England. Legislation now provides that a body corporate is capable of acquiring and holding any real or personal property as joint tenant as if it were an individual PLA s 28 1. Unity of possession Each co-owner is entitled to possession and enjoyment of the whole of the land and therefore cannot exclude the other co-owner from any part of the land Catanzariti v Whitehouse The consequences of unity of possession may be unexpected. For example, it follows from the fact that both parties are entitled to possession of the whole that either party can grant a lease to a third party Frieze v Unger. Consequently, the act of one joint tenant granting a lease to a person outside the co-ownership is effective to create a valid lease which will bind that tenant s undivided share Frieze v Unger. However the lessee does not have the right to interfere with the possession of the other joint tenant who had not joined in the grant of the lease Bull v Bull 2. Unity of interest Each co-owner has an interest identical to that of the other co-owners in nature, in extent and in duration Wright v Gibbons. It follows that all joint tenants hold equal shares 3
3. Unity of time All joint tenants take a vested interest at the same time and by virtue of the same event. Consequently, where the attainment of a vested interest depends on the individual fulfilment by each of the potential grantees of a contingency which cannot occur at the one time (such as attaining a particular age) then their interests cannot be held as joint tenants Ward v Ward 4. Unity of title Each joint tenant must derive title from the same instrument or act o EG: if A and B are joint tenants, a conveyance by B to C of the whole of B s interest will result in A and C holding as tenants in common, if only for the reason that they acquired the interests at separate times. In other words, such a conveyance severs the joint tenancy Wright v Gibbons Similarly if two or more persons acquire an estate by adverse possession under the statutes of limitation at common law they hold their interest as joint tenants unless the circumstances indicated otherwise o EG, persons who were entitled to the equitable estate in the land as tenants in common would, on acquiring legal title by adverse possession, be regarded as tenants in common at law MacCormack v Courtney Right of Survivorship or jus accrescendi Where there are two joint tenants, at the death of one of them, the interest of that joint tenant is extinguished and the remaining joint tenant is solely entitled to the interest in the whole of the land. If one joint tenant dies his interest is extinguished. He falls out, and the interest of the surviving joint tenant or joint tenants is correspondingly enlarged Wright v Gibbons This right of survivorship is essential to the existence of a joint tenancy and a joint tenancy cannot survive its destruction. Although a joint tenant may dispose of the interest held in joint tenancy during life, because of the right of survivorship, it is not possible to dispose of that interest by testamentary disposition Swift v Roberts. However, it is possible for joint tenants to make mutual wills which thereby effect a severance Re Wilford s Estate If more than one joint tenant remains then the joint tenancy continues between the survivors and, if there is no severance, the last survivor becomes solely entitled. The concept of each joint tenant being absolutely entitled means that this right of survivorship does not result in an accretion to the interest of the survivor. Since by definition each joint tenant is entitled to the whole of the estate which is held in joint tenancy, the effect of the death of one is only to extinguish a similar right and not to increase the interest of the survivor Eastgate v Equity Trustees Executors and Agency Co Ltd The element of mutuality and equality is important to the concept of survivorship as each joint tenant must have a chance of being the survivor. However, this does not mean that each joint tenant s chance of being the survivor must be equal. EG: there is no reason why a 90 year old and a 20 year old may not hold as joint tenants even though, statistically, the 20 year old must have a greater chance of being the survivor The right of survivorship is recognised by the Torrens system legislation in a number of jurisdictions which provide that persons registered as joint proprietors are deemed to be entitled as joint tenants. On the death of any person registered as a joint tenant the Registrar, on application in the appropriate form and on satisfactory proof of death, must register the surviving joint tenant or tenants as the proprietor of the land TLA s 50 o NB that s 30(2) of the TLA deems two or more persons registered on the title of Torrens title land to be joint tenants The right of survivorship is essential to the existence of a joint tenancy and therefore an indication that there is to be no such right is sufficient to rebut the assertion of a joint tenancy Re Robertson Uncertainty over the order of the death of joint tenants (as for example where both die in the same accident) is settled by legislation providing that the deaths shall be presumed to have occurred in the order of seniority PLA s 184 and Edwards v Mansfield 4
(2) Tenants in common Conceptually tenancy in common is a very different form of co-ownership from joint tenancy. Each co-owner is regarded as having a separate interest in the property and as being entitled to a distinct or undivided share Nullagine Investments Pty Ltd v Western Australian Club Inc Of the four unities, only unity of possession is necessary for a tenancy in common Nullagine Investments Pty Ltd v Western Australian Club Inc Tenants in common may hold different interests, for example a life tenancy and a fee simple. They may have purchased their interests or have received them by succession from different parties and these interests may have vested at different times as on the marriage of one and the coming of age of another Whether the relationship is a joint tenancy or tenancy in common will ultimately depend on the intention of the grantor Green v Green The interest a tenant in common holds is a distinct interest in the relevant property which may be devised by will and which will otherwise fall into the estate of the deceased tenant in common As a practical matter, the most important differences between the two forms of co-ownership are that tenants in common may have unequal shares and that there is no right of survivorship between tenants in common Haddelsey v Adams However, it is possible to create a tenancy in common with a right of survivorship by express provision Creation of co-ownership Creation under the common law Under common law, where land is conveyed to two or more persons as co-owners, it is presumed that they take their interests as joint tenants. This presumption can be rebutted in four situations: 1. A joint tenancy will be rebutted if one of the four unities are absent 2. A joint tenancy will be rebutted is the grant contains words of severance 3. Equity prefers to regard parties as tenant in common of the beneficial interest 4. At common law there is a presumption of joint tenancy, but in equity, there is a preference for tenancy at common. Equity will regard co-owners as tenant in common, even if the legal title is held at joint tenants There are two crucial factors to consider in the creation of co-ownership: o The four unities must be present for the creation of a joint tenancy Wright v Gibbon. Only unity of possession is essential for co-ownership generally. Therefore if there is unity of possession but any other of the four unities is missing, the co-owners hold as tenants in common Nullagine Investments Pty Ltd v Western Australian Club Inc Intention of the grantor The intention of the grantor must also be considered. If all four unities are present the common law presumes that co-owners held their interest as joint tenants unless there was evidence in the conveyance that the grantor intended to create a tenancy in common Morley v Bird. Terms in the conveyance indicating intention to create a tenancy in common are known as words of severance Robertson v Fraser Provided that the necessary incidents are present, whether co-owners hold as tenants in common or as joint tenants depends on the intention of the grantor expressed in the relevant instrument. However where this intention is not clear, the common law presumes that there was a joint tenancy. Words of severance Words of severance are any words in the grant which indicate that the co-owners are to have divided, distinct or individual shares 5
The underlying concept is that, although the land is not physically divided, although unity of possession exists, the shares or interests in the land are divided. Hence any indication that the interests are unequal indicates a tenancy in common, not merely because the proportions are unequal but from the mere fact of there being proportions Robertson v Fraser o Robertson v Fraser (1871) Will left residue of estate to Johnson and Fraser for their own absolute use and benefit. A codicil added Warren shall and may participate in the residuary estate. Johnson died. Issue: Was the residue left to J, F and W as joint tenants or as tenancy in commons. Held: Effect of the will and codicil was to create a tenancy in common [A]nything which in the slightest degree indicates an intention to divide the property must be held to abrogate the idea of a joint tenancy, and to create a tenancy in common I have no doubt that the word participate is sufficient to indicate an intention to divide. Per Lord Hatherley LC Judgment suggests that on the basis of the will alone the court would have found a joint tenant. However, the words in codicil illustrated the true intention of testator there were no words of severance in the will itself, they appeared in a separate document. The codicil didn t amend the will, but it showed but the true intention of the teasetor were Surrounding circumstances will be used to determine an intention to sever Since a joint tenancy involves an undivided share in undivided land the mere concept of proportion (equal or otherwise) is incompatible with the concept of joint tenancy Re North Consequently, since a grant to A and B equally (Denn d Gaskin v Gaskin), to be divided in equal shares and proportions (Payne v Webb) or equally to be divided (Compton v Compton) implies a division, the phrase indicates a tenancy in common Heathe v Heathe Other examples of limitations indicating a tenancy in common include: o To A, B and C share and share alike Heathe v Heathe o Amongst all the children of A and B Richardson v Richardson o Unto and among A, B and C Richardson v Richardson o To all the children of A and B respectively Lashbrook v Cock o To A and B equally Rentoul v Rentoul and o To A and B divided between them Peat v Chapman Where the instrument is ambiguous, the context in which the instrument is made may be of assistance in resolving the issue Re Barbour o Re Barbour [1967] T left property to sister and two brothers to share and share alike as joint tenants. Brother died. Held: a joint tenant and thus property passed to remaining siblings under rights of survivorship. Had the court found a tenancy in common the deceased brother s 1/3 share would have been divided amongst 16 beneficiaries. There was intention joint tenants and the nature of the property and gift, the property was agricultural which siblings had worked together, meant expedient to find joint tenant Look also to the circumstances of the grant and words indicating intention Creation in equity Equity takes the opposite approach to the common law. Even where co-owners expressly hold as joint tenants at law, equity presumes them to hold as tenants in common in three main circumstances where the right of survivorship would be unconscionable. These circumstances are: 1. Where unequal contributions are made to the purchase price 2. Where security is taken for a loan and 3. Where the interest held as co-owners is acquired to serve the commercial interests of the parties However, equity follows the law and recognises a joint tenancy where the parties have contributed equally to the purchase of the property Delehunt v Carmody The certainty and equality of a tenancy in common is preferred by equity Re Woolley. Thus, wherever co-owners are tenants in common at law, they are also tenants in common in 6
equity. Further, in the following specific fact situations equity presumes that the co-owners are tenants in common in equity In each of these circumstances equity presumes a tenancy in common. If there is evidence that the co-owners who provided the purchase price in unequal shares intended nevertheless to take as joint tenants in equity, they will take as beneficial joint tenants o The presumption of advancement may operate to presume that the purchaser intended to pass the entire beneficial interest to the other party where they fall within one of the relevant classes of person Dunbar v Dunbar 1. Unequal contributions Where co-owners have provided the purchase money in unequal proportions, they hold in equity in proportion to their contribution to the purchase price Lake v Gibson If they advanced equal amounts they will be presumed to have purchased with a view to the benefit of survivorship and will hold as joint tenants even in equity Lake v Craddock Even if the legal title is in the name of only one of the contributors to the purchase price, the interest would be held on a pro rata basis in equity (Bull v Bull) unless evidence could be brought to show that there was an intention for the parties to hold as joint tenants Pink v Lawrence The presumption also applies where a person assumes joint liability under a mortgage, rather than making a contribution to the purchase price Ingram v Ingram The presumption will not apply where the beneficial interests of the parties are declared in the conveyance Goodman v Gallant 2. Security for a loan Where the interest is held as security for a loan and the grantees were equal or unequal contributors to the loan, they were deemed in equity to hold as tenants in common Morley v Bird The assumption is that mortgagees lend money by way of investment and it will not be assumed, in the absence of evidence to the contrary, that a mortgagee would intend the benefit of the investment to pass to the co-owner in the event of the mortgagor s death. In such a case the parties would hold in proportion to their contribution to the loan Petty v Styward o The presumption will however be rebutted where it can be established that the lenders intended to acquire the mortgage jointly and mutually. Legislation in most jurisdictions now protects persons who deal with joint mortgagees by implying a joint account clause into mortgages to two or more persons PLA ss112-113. This allows the mortgagor to repay the mortgage loan to one of the mortgagees and be able to have the entire mortgage discharged 3. Co-ownership for commercial purposes Where the interest held as co-owners is acquired to serve the commercial interests of the parties it will be deemed to be held as tenants in common in equity This category is generally described as applying to joint tenants who hold the property as a partnership asset Lake v Gibson (five persons co-operated in the development of land with a view to increasing its value and producing a profit. Although the five held as joint tenants at law, it was held that the five were tenants in common in equity, for otherwise the principle of survivorship would operate to defeat the aim of making a profit for the partner who happened to die first) The principle is that persons who are business partners, whether formally or informally, will hold property of which they are co-owners as tenants in common in equity although they may be joint tenants at law Malayan Credit v Jack Chia However, while partnership may be the most common example of relationships falling into this category, it is not essential and the joint tenants will be regarded as tenants in common if the commercial element is present even if they are not partners Malayan Credit v Jack Chia 7
Malayan Credit v Jack Chia (1986) Five year lease of office space. Parties agreed to 62/38 division of floor space. Invoiced separately for deposit and for amount consummate with floor space allocation. Also paid rent etc according to this ratio. Lease contained no words of severance. Chia applied for order for sale and equal division of proceeds/premises What was the relation of the parties in law? JOINT TENANT What was the relation of the parties in respect of the equitable interest? TENANCY IN COMMON o NB that the court in Malayan Credit focused on the inherent flexibility of the equitable jurisdiction, and felt that the circumstances in which equity would intervene was not limited to the three accepted exceptions. o Factors which the court felt indicated the existence of a tenancy in common in equity included: a. The fact that the lease was taken to satisfy the different commercial interests of both Malayan Credit and Jack Chia b. The parties had made meticulous calculations regarding the floor space and the rent due c. The rent due was invoiced separately d. The deposit due on the premises was paid in the same unequal contributions as under the rent payments Rights and duties of co-owners Right to possession The right of each co-owner to possession of the whole of the land includes a right to invite another person to live on the premises Thrift v Thrift Each co-owner may grant an interest in the land to another person, provided that this does not interfere with the possession of the other co-owner Catanzariti v Whitehouse o EG: the lessee under a lease granted by one joint tenant may not prevent other joint tenants who were not parties to the lease from entering the premises and the nonparticipating joint tenants cannot exclude the lessee Frieze v Unger An easement created by one co-owner is binding on the other co-owner so long as the easement does not interfere with the non-participating co-owner s exercise of the right to possession and other rights in relation to the land Hedley v Roberts o Hedley v Roberts (?) Liability for occupation rent Generally a co-owner in sole occupation is not liable at law or in equity to pay occupation rent to the non-occupying co-owners Luke v Luke. This is due to the fact that by possessing the land the co-owner is merely exercising their inherent right to live on the premises Thrift v Thrift. However there are exceptions to this general rule: 1. Occupation rent is payable by a co-owner who has wrongfully excluded other coowners by force, violence or threats of violence Goodtitle v Tombs 2. Occupation rent may be payable where one co-owner occupies and uses the property pursuant to an agreement with the other owner Parker v Sell 3. An occupying owner who wishes to be compensated for improvements to the land will only succeed if he or she pays occupation rent Brickwood v Young Similarly a co-owner who successfully resists a claim for occupation rent will not be entitled to an allowance for improvements Marriot v Franklin Thus, if the occupying co-owner wishes to claim a contribution for improvements made to the land they must be prepared to off-set this against an amount that reflects the benefit of the occupation enjoyed Brickwood v Young o Brickwood v Young The appellant s predecessor in title erected houses on coowned land, which significantly increased value of land. On termination of the coownership the A claimed for reimbursement for building costs. Held: The equity 8
created in favour of the A s predecessor in title could run with the land and bind the other co-owners successors in title Note: as an equitable proprietary right, it would be defeated by a BFPFVWN (bona fide purchaser for value without notice) The occupation rent in this respect is not a positive amount owing. It is a set-off only, not an absolute liability, so that the amount can never exceed the amount allowable for the improvements and repairs Brickwood v Young Where an occupation fee is payable, its amount is calculated to reflect both the proportionate interest of which occupation has been enjoyed and the market rental Forgeard v Shanahan. So, for one of two equal co-owners occupying the property, the occupation fee is generally one-half of market rent for one of three co-owners, the fee is two-thirds of the market rent and so on Re Gorman o The amount for which the occupying co-owner is liable is not strictly rent but profits lost by the excluded co-owner. The measure of damages is usually the value of the market rent which the occupier should have paid. It is not relevant whether the excluded co-owner would have been able to let the premises Lamru v Kation o Rather than calculating an occupation fee, if the occupying co-owner is claiming credit for paying mortgage instalments that comprise both capital and income, it is often simpler to treat the interest component as equivalent to an occupation fee, leaving the capital component only to be credited Ryan v Dries o Squire v Rogers (1979) S let caravans, flats and rooms on co-owned land. S spent over $100,000 on improvements. As a result of Cyclone Tracey the increased value of property only amounted to $15,000. S claim for reimbursement was limited to $15,000 o Biviano v Natoli (AVO case) the court discussed appropriateness of market rate as basis for calculation of rent in cases of co-owned land. Facts: The female partner obtained an AVO against her male partner and the court found that this did not constitute an ouster. Then the mal partner made claim/application for sale of property and division from sale of property b/w two co-owners, however, she made a defense saying she owned both legal and equitable part of property and she never had any intention of giving him any of the equitable interest in the house. From the moment she filed he became liable for occupation rent. Discussed how the market rate could actually be effected by the fact that you already have one person in occupation, then the rent you may ask may be less than if you left the house vacant 1. Wrongful exclusion (Luke v Luke) The qualification of an occupying co-owner's exemption from liability on the basis of exclusion applies only where the exclusion or ouster has been wrongful. It will be wrongful where it is accomplished by violence or threats of violence (Dennis v McDonald) or (in the case of the matrimonial home) by bringing pressure to bear by commencing divorce proceedings Re Pavlou But there is no wrongful exclusion where a co-owner leaves as a result of acts which are no more than an exercise of the other co-owner's right of occupation, even though those acts make continued occupation unattractive or difficult for the person who has left Chieco v Evans o Ferguson v Miller no ouster by asphalting or concreting part of commonly owned access strip) o Jacobs v Seward no ouster merely by putting lock on gate) o Biviano v Natoli the enforcement of an apprehended violence order did not amount to an ouster, but a continual persistence in denying the co-owners title was). 2. Express agreement (Cowper v Fletcher) A co-owner will be obliged to pay occupation rent where an express agreement states such liability Leigh v Dickeson 9