Real Prperty Exam Ntes 1
1. Old System Title DEEDS Created by parties t create and cnvey interest in land - 'A deed is the mst slemn act that can be dne in respect t prperty': Mantn v Parablic Pty Ltd s23b(1) Cnveyancing Act - Where the land is Old System, the alienatin f the fee simple and mst interests in land at law must be effected by deed. s38 Cnveyancing Act : Fr a valid deed need fur prerequisites: 1. signing 2. sealing 3. delivery 4. attestatin Althugh must cmply with frmalities, whether smething is a deed depends n the intentin f the parties. agreement f sale fr trrens land nt generally a deed (althugh can be amended t be ne) but becmes ne n registratin parties subjective intentin is relevant as well as cntent f instrument delivery is the final act f frmality can be actual r cnstructive. Intentin f when the parties wuld be bund by the deed. Legal Interest Created withut Deeds Oral Legal lease: 23D(2) Cnveyancing Act can have a legal lease enfrceable and valid where the lease is less than three years, created rally, fr the best rent reasnably btained and in pssessin. This can apply t land registered under the Trrens system als. Just a weird exceptin because the principle is s ld and enduring. Equitable interests prfit a préndre in writing nt deed mrtgage by depsit f title deeds purchase price resulting trust: when smene prvides funds fr the purchase f a prperty but is nt registered as legal wner, they are 2
recgnised as having an equitable interest in land cmmensurate t the amunt f purchase price prvided. beneficiaries rights under a trust right f purchaser/mrtgagee under valid agreement f sale/grant f mrtgage unpaid vendr (vendr s lien) right f a secnd r subsequent mrtgage grantee f an ptin GENERAL LAW PRIORITY RULES When the initial interest is lwer than the subsequent, the earlier interest takes prperty unless the later interest was taken bnafide, fr value and withut ntice: Pilcher v Rawlins Where the earlier interest is equal r greater than the subsequent interest, the earlier interest has pririty ( qui prir est tempre ptir est jure ) unless they are guilty f pstpning cnduct (als need t be bnafide, fr value and withut ntice). Cmpeting Legal Interests First legal interest in time prevails. Nem dat rule. Pririty depends n dates in which deeds came int peratin. still need t be bna fide, fr value and withut ntice but nt enugh in itself. Prir Legal v Subsequent Equitable General rule is hlder f the legal interest takes pririty. In bth this and the prir situatin, there are limited circumstances in which the later interest will take pririty, where the legal wner: 1. has expressly created the equitable interest 2. is party t sme fraud that has led t the creatin f the equitable interest 3. is guilty f grss negligence that has allwed the equitable interest t be created: Nrthern Cunties f England Fire Insurance C v Whipp 4. entrusts an agent with the title deeds with limited authrity t raise mney n them and the agent exceeds the authrity by creating a security fr a larger sum in favur f a persn wh had n ntice f the limitatin 3
5. where the title deeds are nt handed ver t an agent r smene else, but rather sme dcument which n its face appears t entitle the hlder t a beneficial interest in the land r t get the legal estate vested in him r her 6. estppel the legal wner is estpped frm asserting their legal title against the hlder f the equitable interest Cmpeting Equitable Interests When there are cmpeting equitable interest, the judge will lk at which is the better equity : Heid v Reliance Finance n purchaser fr value withut ntice dctrine. But generally, ntice f the earlier interest by the later interest hlder defeats their pririty is a distinct and fundamental grunds fr disqualificatin authr f their wn predicament Where the merits f the equities are equal, the first in time will prevail. Fr the later equitable interest t prevail, need t shw pstpning cnduct which cntributed t the later hlder acquiring their interest withut ntice: Abigail v Lapin: arming anther t represent themselves as RP Heid v Reliance Finance: arming anther t represent their title as unencumbered Breskvar v Wall: being negligent allwed anther t get n register Prir Equitable v Subsequent Legal later purchaser will prevail if the ntice is taken bna fide, fr value and withut ntice : Pilcher v Rawlins Ntice Requirement in relatin t the ntice part f being a bnafide purchaser fr value. There is a duty t inspect the land and t inspect the title deeds. The time in which ntice is relevant at the time cnsideratin is paid. ntice includes actual, cnstructive r imputed ntice. Requirement t avid cnstructive ntice Old system land 4
search f title deeds back t a gd rt f title at least 30 years ld: Cnveyancing Act s53 nthing suspicius abut validity f transactin Dcuments must cnvey full legal and beneficial wnership f land fr value Dcuments must be at least 30 years ld Nt bliged t search back any further, and if yu d, yu might get actual knwledge f previus equitable interest which yu re then bund by Trrens search Trrens register inspect land t ascertain wh is in pssessin (eg. a tenant) r wh is using it (eg. hlder f an easement): rule in Hunt v Luck. Rule in HUNT V LUCK: A purchaser wh knws that any persn is ccupying r using the prperty whether r nt as a tenant is n ntice (cnstructive) f the ccupant s r user s prprietary rights. If smene is n the land r using the land yu must ask why they re there and if they re claiming sme interest. If yu dn t make this inspectin, yu have cnstructive ntice f an interest that yu wuld have fund if yu had inspected the land. This als applies t ntice in relatin t Trrens title land. Cnveyancing Act 1919 (NSW) s 164 Restrictin n cnstructive ntice (1) A purchaser (f any prperty) shall nt be prejudicially affected by ntice f any instrument, fact, r thing, unless; (a) there is actual and cnstructive knwledge f the purchaser 5
(b) imputed ntice - ntice f an agent imputed t the principal - but nly imputed 'in the same transactin' statute narrws imputed ntice - at CL ntice culd be imputed if nt in the same transactin eg. slicitr acts fr yu in relatin t a parcel f land, and the slicitr acted fr anther party re the same parcel, the knwledge the slicitr received in the previus transactin will nt be imputed t yu. (1A) if purchasing land n bligatins t search the cmpanies charges register. Applies t purchases f land nly. Tabula in naufragi (plan in a shipwreck) If A acquires an equitable interest withut ntice f an earlier equitable interest but gain ntice befre they upgrade t a legal ntice, they can still say they had n ntice, ntwithstanding the fact that when they did acquire the legal interest they had ntic.e Rule in WILKES V SPOONER [1911] 2 KB 473 If yu take a legal interest frm a bna fide purchaser fr value withut ntice, yu re als prtected even if yu had ntice f the prir equitable interest r if yu re a vlunteer. Exceptin: prtectin cannt be claimed by a trustee/fraudulent party repurchasing prperty sld in breach f trust r acquired by fraud and then sld t a bna fide purchaser. This prevents laundering f the prperty by selling it t a bna fide purchaser then getting it back. 6
REGISTRATION If yu have tw cmpeting cnveyances f a legal interest, under the nrmal rules, the first in time prevails (nem dat rule). But if B (secnd in time) registers first, the effect f the legislatin is that B take pririty. Cnveyancing Act s184g Instruments affecting land t take effect accrding t pririty f legislatin (1) All instruments affecting land (except wills) take, which are executed r made bna fide, and fr valuable cnsideratin, and are duly registered, shall have and take pririty nt accrding t their respective dates but accrding t pririty f registratin theref nly. Cnflict interests must have been created by an instrument in writing and signed (des nt necessarily have t be a deed) befre s184g can apply. Otherwise use general law pririty rules. Examples f interest created WITHOUT writing: mrtgage by depsit f title deeds ra cntracts t sell r mrtgage (if n part perfrmance) vendr s lien leases recgnised under 23D(2) purchase price resulting trust The instrument claiming pririty must have been made bna fide (in gd faith) i.e. withut fraud r deceit and withut ntice f prir interests. If a instrument is vid r vidble due t fraud r undue influence etc, registratin des nt cure that flaw. s184g is subject t valuable cnsideratin. Ntice received befre the instrument is entered int will nullify the registratin. ntice received after executin f dcuments but befre registratin will nt nullify the benefit f 184G: Marsden v Campbell; Blackwd v Lndn Chartered Bank f Australia 7
Exceptin fr land: a purchaser s ntice (f the existence f an earlier interest) between the making f the cntract and the cnveyance will deprive the cnveyance f prtectin: Schles v Blunt. prcess f registratin abrgates nem dat rule: Fuller v Gdwin must be a cnflict - cmpeting instruments must deal with the same interest s184g deals with cnflicts between registered AND unregistered instruments interests simply need t be created by instruments in writing. Des nt affect thse interests created earlier withut writing: Fuller v Gdwin; Mnking Gee v Tahs Registratin is cnstructive ntice t the wrld that yu have an interest applies t bth equitable and legal interest and t cmpetitin between legal and equitable interests MOONKING GEE V TAHOS [1963] SR (NSW) 935 Establishes that the legislatin applies t bth legal and equitable interests and pririty disputes between the tw and that registratin gives greater pririty regardless f which interest is higher under general law principles. Tahs wned OST land. Cntracted t sell the land t Mnking. At that pint, M btained an equitable interest in the land. Lines f cmmunicatin gt crssed, T's slicitrs tld him that they fund ut that M was nt ging t prceed with the cntract. S T decided t sell the land t a third party, X. Exchanged cntracts with X and executed a deed f cnveyance with X. X gt an equitable interest, acquired deed f cnveyance. BUT meanwhile, M fund ut there had been an exchange f cntracts with X (didn't knw abut deed). Slicitrs decided t prtect M's equitable interest by registering s M had pririty. M had a registered equitable interest created by an instrument created by the cntract fr sale. Meanwhile, X had acquired the legal estate but the difference between M and X was that M had a registered equitable interest while X had a legal interest. Curt held that M tk pririty. Pririty fllws accrding t date f registratin between cmpeting interests and will attach t a registered instrument cnferring an equitable title ver ne cnferring a legal ne. M was entitled t rder specific perfrmance against T. X lst ut. s184g changes the framewrk f reference under ld law where there is n registratin. Nw, is there an instrument and when was it registered. 8
2. Trrens Title "The Trrens system f registered title...is nt a system f registratin f title but a system f title by registratin..." : Breskvar v Wall (Barwick CJ) DOBBIE V DAVIDSON (1991) 23 NSWLR 625 Trrens first intrduced in 1857 t SA. Easier t intrduce than in England because still a lt f unalienated land land was a far mre mveable cmmdity than in England. Real Prperty Act 31B The Register Sets up the Register. (2) Register shall be cmprised f: (b) dealings registered under this r any ther Act. 3 Definitins Dealing - Any instrument ther than a grant r caveat which is registrable r capable f being made registrable under the prvisins f this Act, r in respect f which any recrding in the Register is b this r any ther Act r any Act f the Parliament f the Cth required r permitted t handle. 134 Trrens Assurance Fund Safety net where due t the mismanagement r neglect f the Registrar- General, smene lses their wnership r interest in land, they can make a claim against the assurance fund. 36 (9) Dealings registered with respect t the same interest (ntwithstanding any ntice) take pririty in the rder f registratin. (11) Upn registratin, a dealing shall have the effect f a deed duly executed by the parties wh signed it useful fr vercming lack f cnsideratin and extend limitatin perid fr 12 years. Binds the parties wh actually sign the dealing even thugh ther expected signatries did nt sign. even befre registratin, a prperly executed dealing may perate as a cnditinal deed ( escrw ) which is cnditined n registratin. 40 Manual Fli cnsidered evidence f title This sectin makes the title indefeasible by ging t the evidentiary value f a fli f the register making it cnclusive evidence f the facts that the relevant land is held under the Act and f the prprietrship and evidence f all ther particulars recrded theren. 9
41 Dealings nt effectual t pass any estate r interest until Recrded in Register in the manner prvided by the act. 82 Trusts are nt registrable under the legislatin. Any trust interests will nt be nted n the register. (2) But can ldge a dealing with the RG which wn t be registered describing the nature f the land which is held n trust:- (3) The RG can then recrd a caveat frbidding registratin f any instrument nt in accrdance with the trust. 57 Mrtgages in Trrens system are charges (unlike OST). Owner retains legal interest but becmes incumbent t a mrtgage in favur f the financial institutin. Once registered, it btains the benefits f indefeasibility, s may fr example ave the right t recver mneys under a mrtgage where the signature f the mrtgagr has been frged. Bringing the Land under the Real Prperty Act All land alienated by the Crwn after 1 January 1863 is Trrens Land. Befre that still under Old System Title. Three methds f bringing such land under Trrens system: creating a fli f the Register fllwing a primary applicatin creating a qualified fli f the Register creating a limited fli f the Register Primary Applicatins: the apprpriate prcedure t initiate the prcess f bring the land under the Act. caveats can be made against Primary Applicatins t prhibit the land cming under the Act. The caveat lapses three mnths after ldgement unless curt rder t extend r curt prceedings t establish interest in title. Qualified title: tw stage cnversin initially RP s prtectin frm interests utside the register is qualified, then later cmplete indefeasibility is cnferred. Limited title: Enabled the cnversin t Trrens title f land with bundaries insufficiently defined t permit the creatin f rdinary r qualified flis. 10
INDEFEASIBILITY OF TITLE The Trrens system is a system f title by registratin as distinct frm the system f registratin f title under the ld system. Under the Trrens system, the title derives frm the RG s act in registering an instrument, nt frm the parties executing an instrument. Therefre, it is very hard t challenge a registered title due t the indefeasibility f title granted by the Trrens system. Prvisins f the RPA which suggest indefeasibility f Title 40 Manual Fli cnsidered evidence f title and that the land has been duly brught under the act 42 Estate f Registered Prprietr Paramunt (1) Ntwithstanding the existence in any ther persn f any estate r interest which but fr this Act might beheld t be paramunt r t have pririty, the RP fr the time being f any estate r interest in land recrded in a fli f the Register shall, except in the case f fraud, hld the same, subject t such ther estates and interest and such entries, if any, as are recrded in that fli, but abslutely free frm all ther estates and interests that are nt s recrded, except: (2) Exceptins 43 Purchaser frm Registered Prprietr nt t be affected by ntice (1) Except in the case f fraud, n persn cntracting r dealing with.a transfer frm the RP f any registered estate, shall be required t inquire r ascertain the circumstances.in which the estate was registered r shall be affected by ntice direct r cnstructive f any trust r unregistered interest.and the knwledge that any such trust r unregistered interest is in existence shall nt f itself be imputed t be fraud. Must be purchasing prperty frm RP and prperty must be registered. Then n required t investigate the manner in which they acquired r registered the prperty r be affected by ntificatin f any unregistered interest 43A Prtectin as t ntice f persn cntracting r dealing in respect f land under this Act befre registratin 124 RG may state case fr Supreme Curt 135 RG may settle claims Sme questins were left unanswered, which led t tw schls f thught: Deferred indefeasibility - because yu had acquired yur registered interest directly thrugh smene's wrngding, yu wuld nt acquire an indefeasible and indefensible title. The title wuld nly becme indefeasible 11
nce it had been cnveyed t a third party acting n the existing state f the register. immediate indefeasibility - registratin was cnsidered t be main issue. FRAZER V WALKER [1967] 1 AC 569 Privy Cuncil preferred immediate indefeasibility. Mr and Mrs Frazer were registered prprietrs f estates in fee simple. Mrs F frged her husband's signature t a mrtgage which was registered. Mrtgagee became registered as prprietr f mrtgage. Mrtgagee exercised pwer f sale and sld the prperty t a purchaser wh was als inncent f fraud. Purchaser registered and became new wner. Mr F fund ut and sught t have mrtgage and subsequent transfer set aside. Q was whether ne ught t ascribe t the principle f deferred r immediate indefeasibility. Privy cuncil preferred immediate indefeasibility. S, apart frm fraud n the part f the persn prcuring the registratin, the registered prprietr hlds free f all ther interests. This did nt prevent a persn bringing a claim in persnam (see Persnal Equities). BRESKVAR V WALL (1971) 126 CLR 376 Immediate indefeasibility was cnfirmed in Australia. The registered prprietr f an interest in land under the Trrens system f title hlds the legal title t such an interest, ntwithstanding that he became registered by his wn fraud r that f his agent. The fact that an instrument f transfer f Trrens system land is vid r vidable des nt prevent the transferee frm acquiring an indefeasible interest in accrdance with the instrument when it is registered. Plaintiffs executed a blank transfer f interest and gave it with title deeds t P as security fr lan. Because they didn t put their names n it, it was nt valid. P, acting as agent fr W, fraudulently inserted W s name n the transfer and registered it. Cntracted t sell land t A. Befre executed transfer ldged fr registratin, plaintiffs placed caveat n the register. A was a bnafide purchaser fr value withut ntice and had bught the land in reliance upn the state f the register. Fund that A had pririty ver right f plaintiffs. GIBBS V MESSER [1891] AC 248 Exceptin: Cannt rely n immediate indefeasibility if yu are dealing with a fictitius persn. Cnfirmed by s3(1) definitin f Fraud amended in 2000 t include invlvement with a fictitius persn. T gain indefeasibility, 43 requires yu t deal with the RP, which they hadn t dne since fictitius persn. Butt hwever, says it is difficult t see why the interventin 12
f a fictitius RP shuld disqualify the benefits f indefeasible title. Unclear what wuld happen since peculiar facts have never happened again. Interpreted by sme as supprt fr deferred indefeasibility. Cncept f deferred indefeasibility nw discarded in favur f immediate indefeasibility in Australia, but Gibbs v Messer was never verruled. Outcme f particular facts has never happened again, s unclear what wuld happen. Lady went t g verseas, gave lawyer all her legal dcuments including CTs and Pwer f Attrney in favur f her husband, went verseas. Slicitr frged the husband s signature n the transfer and transferred t smene wh did nt exist. Slicitr had the land mrtgages by fictitius persn and tk the mney frm the mrtgage. When she returned, her land was transferred t this fictitius persn but the prperty had been mrtgaged. Curt decided that the mrtgagee, the financiers, culd nt rely n the principle f immediate indefeasibility because the mrtgagr was a fictitius persn, despite it being registered. s43 requires yu t have had a dealing with the registered prprietr. Obviusly had nt dealt with registered prprietr s cannt rely n immediate indefeasibility. Interpreted as favuring deferred indefeasibility but put t rest in Frazer v Walker etc but still the exceptin f fictitius persns. Amendment added in 2000 t RPA appears t cnfirm the exceptin f Gibbs v Messer: s3(1) added definitin f fraud t invlving a fictitius persn. s118(1)(d) prvides an exceptin t indefeasibility f title when a persn has been deprived f land by fraud. Other cases which have fllwed immediate indefeasibility: Mayer v Ce (1968) 88 WN NSW 549 M left land with slicitr. C was als a client f the slicitr. S tld C that M wanted t brrw mney. C handed ver mney t S in return fr M s mrtgage and land title which was frged by the S. C had an indefeasible title. When dealing with tw equally inncent parties the Curt will find fr the party that is registered. Schultz v Crwill Prperties Ltd (1969) 90 WN 529 A registered mrtgage is extinguished by a registered discharge f the mrtgage even where the discharge is frged. (Hwever, althugh the mrtgagee s interest in the land is extinguished, the mrtgagr s cvenant t repay may survive.) 13
CF Australian & New Zealand Banking Grup Ltd v Barns (1994) 13 ACSR 592 Held that Gibbs v Messer applied t hld a registered mrtgage ineffective which had been given by a cmpany disslved under the Cmpanies Cde. Limits f Indefeasibility indefeasibility des nt nullify natural rights inherent in land simply because they are nt utlined in the fli eg. bligatin t maintain the supprt which land affrd t adjacent land in its natural state easements when interests acquired under invalid legislatin an interest is t uncertain Frgeries Whilst frgeries are a nullity under the Old System, in Trrens, the registratin cures the vidness t create an indefeasible prprietary interest. What abut nn-prprietary interests? eg. cntractual rights and bligatins p. 757-60 'All Mneys Mrtgage' Curts have distinguished between tw types f Trrens mrtgage ld style which secures a single stated sum specified in the mrtgage dcument and specifies all the terms f repayment, and new style, the all mneys which secures an advance frm time t time. OS cntains an express bligatin t repay the state sum and the terms f repayment. All mneys might nt d s usually expressed in a lan agreement which is nt registered. Unless the lan agreement is incrprated int the mrtgage, the bligatin (cvenant) t pay is fund nly in a cllateral dcument and nt in the mrtgage. The nature f the cvenant determines the extent t which debts referred t in the mrtgage are enfrceable against the secured land. If lan dcuments are frged, there may nt be any readily identifiable persnal cvenant t pay frm the mrtgage in favur f the mrtgagee. PROVIDENT CAPITAL LTD V PRINTY & ANOR [2008] NSWCA 131 14
Indefeasibility f a mrtgage will nt secure repayment unless the persnal cvenant t repay is in r incrprated int the registered mrtgage. If it is nly utlined in the lan agreement which is unregistered and fraudulently executed, it will nt secure repayment. Printy lived in US wned land in Sydney. Smene fraudulently btained a replacement CT and tk ut tw mrtgages. First mrtgage was an 'all mneys' mrtgage with Prvident. Required mrtgagee t repay 'secured mney' being all mneys wing frm time t time by the mrtgagr t the mrtgagee. Where mney was wing pursuant t a 'related agreement' the mrtgagr cvenanted t repay the mney in accrdance with that agreement. Secnd mrtgage frm secnd financier nt an 'all mneys' mrtgage. It specified the amunt wing and cntained a cvenant t repay. When rgue didn't repay mney, Prvident exercised pwer f sale under s57(2) f RPA which talks failure t bserve the cnvenant "in " the mrtgage r failure t pay with the terms "f" the mrtgage f mney secured "by" the mrtgage. In this case, the cvenant in the lan agreement t pay debts incurred under the lan agreement was nt incrprated in the mrtgage. The secnd 'ld fashined' mrtgage was nt challenged, Printy recgnized it btained indefeasibility. PERPETUAL TRUSTEES VICTORIA LTD V ENGLISH (2010) 14 BPR 27 Whether there is an effective incrpratin f the lan agreement int the mrtgage is a questin f cnstructin f the mrtgage. In mst cases befre the curts, has been fund they were nt effectively incrprated. Husband and wife were jint tenants, ne frged the signature f anther t enter int a lan agreement and mrtgage with PTV. Mrtgage did nt expressly incrprate the lan agreement but prvided the mrtgage secured amunts payable under a Secured Agreement and that liability was jint and several. Mrtgage was registered. Held that despite the frgery, the mrtgagee acquired an indefeasible title, but this des nt necessarily extend t cnstructin f the mrtgage dcuments. Interpreted the Secured Agreement as being ne that bth mrtgagrs needed t acknwledge and bth sign s it secured nthing. Even thugh it was registered, defects in the lan agreement which were never validly created, s n funds were secured by the mrtgage. Just because a mrtgage is registered, desn t mean it will be effective if lan agreements are nt validly created, despite theretical indefeasibility. Vaughn (2008) 82 ALJ 671-673: The fundamental flaw in the all-mneys mrtgage in Printy was that thse mrtgages secured an bligatin t cmply with a (vid) lan agreement which are therefre vitiated. They did 15