Transfer of Land Formalities may hold have a proprietary or equitable interest in the land if the request formalities are satisfied or a specifically enforceable contract exists. Formalities For GLL a deed is required (s 52(1) PLA) and this must be signed (s 73) and sealed (s 73A) but need not be physically delivered (s 73B) For TS land registration takes the place of a deed (s 40 TLA) Formalities Required for GL Land To pass the legal title a deed of conveyance is required (s 52(1) PLA) in addition to a contract for sale A deed must be signed (s73 PLA) and sealed (s 73 PLA) but need not be physically delivered (s 73B PLA) Delivery nowadays refers to expressing intention to be bound rather than physical delivery (s 73B PLA) Contract of sale is not sufficient to transfer legal title and there is a period of time between signing the contract and when the interest is transferred. This is very unique because with other forms of proprietary interest transfer is instantaneous upon the execution of a contract. The reason for this delay is because under the old GL system there needed to be some time in between the contract and settlement to investigate the chain of title and ensure its bona fides. The Torrens System has obviated the need for this long period of investigation but the main use today is so that purchaser has time to obtain finance before settlement. Oral contracts for land are unenforceable This underpinned the importance of transaction of land Deed: version of a contract Formalities Required for TS Land Under TS Land registration takes the place of a deed (s 40 TLA) TLA s.40 (1)..no instrument until registered...shall be effectual to create vary extinguish or pass any estate...in land...but upon registration the estate...shall be created...or pass.. S.40 (2): Every instrument when registered shall be of the same efficacy as if under seal and shall be as valid and effectual to all intents and purposes as a deed duly executed and acknowledged... 33
1. Equitable Interest: As formalities haven t been met (look for oral contact and part performance)/ formalities have been met but the contract not fulfilled may be able to obtain relief if an equitable interest has been conferred. Equity might recognise the existence of an interest if there exists a specifically enforceable contract. Under the traditional equitable doctrine of conversion, the vendor would become a trustee for the purchaser and attain a charge/lien to secure the unpaid purchase money (Lysaght; Bunny cf. Tanwar) To be Specifically Enforceable: Must comply with s 126 IA or be oral evidenced by PP (Regent v Millett; Windin); AND There must be no bar to specific performance (Tanwar) The HCA in Tanwar questioned whether the doctrine of conversion exists in obiter. However, whether the law maintains the constructive trust approach (Lysaght; Bunny) or orthodox contractual principles (Tanwar) the crux of the question is still whether specific performance is available and if so then the purchaser has an interest Failure of Formalities? Equitable Proprietary Interests Even where the statutory formalities are absent, equitable doctrine may determine that the purchaser has acquired an equitable interest in the property. Equity might recognise the passing of title to the purchaser once there is a specifically enforceable contract of sale. This is known as the equitable doctrine of conversion. Under this doctrine, the vendor becomes a trustee for the purchaser who attains the beneficial ownership (Lysaght). The vendor then has a charge/lien as security for the unpaid purchase money. Specifically Enforceable Under Equity To be specifically enforceable, a contract for the sale of land must either be:!! In writing as required by s 126 Instruments Act 1958 (Vic) ie; Contract for!! sale or memo or note of agreement in writing signed by the person to be charged or by a person lawfully authorised in writing by that person; OR!! An oral contract supported by sufficient acts of part performance; AND!! There must be no bar to specific performance (consider the discretionary factors); AND!! Damages must be an inadequate remedy The policy justification for the rule in Lysaght is that the purchaser is quite exposed in this period between contract of sale and transfer of title. Accordingly, equity wants to ensure the purchaser does not have to pay full purchase price for property in the event that it is destroyed and thus equity recognises that vendor retains legal title but subject to purchaser s equitable title Where difficulties arise in the application of this doctrine is at what exact point is there a specifically enforceable contract? Situation in which there would be no doubt at all is where contract is signed, all purchase monies are paid and vendor has completed all relevant enquiries it is an executory K b/c all that is required is final execution of instrument. What if there is something less than this though? We go to the case law. 34
2. Writing Requirement need note memorandum or agreement in writing signed by the person to be charged or their agent, (s.126). The question of what constitutes a sufficient 'memorandum' or contract is debated in ANZ v Widin: A memorandum must include the description of (a) the subject matter, (b) the signature of the parties and (c) a reference to the transaction. Documents may be combined together to constitute such a memorandum, so long as the document which is signed by the defendant party makes a reference to the other document which the plaintiff seeks to incorporate (it does not need to be signed). Contracts for the sale of land have to satisfy the writing requirement to pass and equitable interest in land Must be signed by both parties Instruments Act s 126(1): No action can be brought unless the agreement is in writing, signed Person to be charged, the person you are getting the land from If they don t sign you cant enforce Thus, the contract, note, or memorandum MUST be in writing signed by the person charge or their agent If Contract Passes: Whilst a valid contract for equity to intervene must be capable of specific performance (Bunny;Tanwar) If Contract Fails: Failing to comply with s126 s contract unenforceable, although, if partly performed equity may order specific performance (Widin). ANZ v Widin (1990) 102 ALR 289 Sufficent Note or Memorandum Facts: Considered whether an instrument of mortgage (being an interest in land like a fee simple) fulfilled the writing requirement to create an interest in land for the mortgagee, which was enforceable as against Windin s trustee in bankruptcy It was important because W went into bankruptcy and needed to know what was enforceable against the trustee NB mortgages can be registered under the Torrens System but they can exist without this Mortgage form and authority to complete were signed by W on 5/1/83 Neither document included the date or the particulars of title in relation to the property, although the Bank manager s diary did identify the property so a number of separate documents only one of which mentions details of the land Loan advanced to W on 14 Jan The issue was determining the date, it was a matter of when not if because under the bankruptcy regime if the mortgage came into effect less and 6 months before bankruptcy then it would be unenforceable The bank documents that W executed did not include a description of the land used as security for the mortgage. Issue: was there an equitable mortgage, was there a note or memorandum in writing satisfying s.126 requirements? Held Hill J details of the land had to be included in whatever was signed by W. 35
Here the details of the land were in another document, the diary note of the Bank manager that diary note could only be related to the mortgage by oral evidence which was inadmissible. At first instance the court found that the instrument of mortgage failed to meet the writing requirements. it was blank no volume or folio number etc none of the documents referred specifically to the home in Belleview Hill either No way of identifying what property was being taken as security Title was mislaid by authorities not signed and fulfilled until the 20 th This decision was confirmed on appeal (writing requirements not met) however, there were sufficient acts of part performance to validate the mortgage, so that it was enforceable as against the trustee. Effect of failing to comply with s126: contract unenforceable, although, if partly performed equity will order specific performance 3a. Part Performance (Millett;Widin) Failing to comply with s126 s contract may be unenforceable, although, if partly performed equity may order specific performance. The contract is evidenced as oral by, thus only needs to demonstrate part performance to obtain equitable relief. Millett established a 3 tests for the determination of PP, however Widin adopted the strict test, thus it is likely would need to satisfy performance that was unequivocal and referable to the contract of the kind alleged (Millett; Windin). (P) may content the acts do not have to be required under the contract, and may be referable to the general nature of the contract alleged (Miller). It is sufficient if the acts were unequivocal and referable to a contract of the general nature as the one alleged. (Millett) The acts did not have to be required by the contract. It is enough that they were carried out under it. (Millett) Payment of money alone is insufficient (Widin) On appeal it was held that the payment referred to some kind of agreement in the nature of a mortgage points to a contract to the nature of the contract alleged (Widin) Also said it would be unconscionable to allow a bankruptcy to rely on the bankruptcy act to get out of the mortgage (Widin) Least strict - Steadman v Steadman test acts must, on balance of probabilities, point to existence of some contract and be consistent with contract alleged Strict must be unequivocally, and in their own nature, referable to some such agreement as that alleged (Earl of Selbourne from Maddison) Strictest acts must necessarily imply the existence of the contract alleged (Lord O'Hagan in Maddison) may contend though not satisfying the strict test on the balance of probabilities (The act) points toward the existence of the contract (Millett; Stedmann), whilst this could be made out it is unlikely to be accepted as Stedman has not been accepted in Australia. (D) may contend the Strictest Test must apply and acts must necessarily imply the existence of the contract alleged (Lord O'Hagan in Maddison; per Millett). Yet as was confirmed in Widin the strict test is the current criterion for PP. 36
Regent v Millett (1976) 50 ALJR 799 Facts: R and M entered into a terms contract (contract for the sale of land accept prior to purchase the person buying can move in): Property bought by R for 4500, loan taken out for 3500 over the property R agreed with M that in consideration of M oaying off the mortgage and repaying the 1000 deposite M could live in the house Once it was paid off they would transfer the title to them M entered into possession of the property prior to paying the full purchase price and having the title transferred to them M fell behind on payment that had orally agreed too, R led M to belive he would have the property transferred on payment, M sought about improving the house R did not live up to his work and did not want to transfer the property M defaulted on payments and R refused to transfer the property Issues: Was R and M s agreement enforceable (partly performed)? Had there been sufficient acts of part performance to validate the contract? Held: Yes: it was sufficient if the acts were unequivocal and referable to a contract of the general nature as the one alleged. The acts did not have to be required by the contract. It is enough that they were carried out under it. HC set out 3 tests to work out if there was sufficient part performance to prove the oral contract Least strict - Steadman v Steadman test acts must, on balance of probabilities, point to existence of some contract and be consistent with contract alleged Strict must be unequivocally, and in their own nature, referable to some such agreement as that alleged (Earl of Selbourne from Maddison) Strictest acts must necessarily imply the existence of the contract alleged (Lord O'Hagan in Maddison) Australia and New Zealand Banking Group v Widin (1990) 102 ALR 289 Part Performance Issue Facts Oral agreement + part performance was argued as an alternative ANZ had partly performed the agreement by endorsing and accepting bills and having W sign various loan documents Held: Hill J held that the bank s acts were unequivocally referable to a contract of the general nature of that alleged by the bank - a mortgage PP made out The court applied the strict test, holding that the ANZ s acts were unequivocally referable to a contract of the general nature of that alleged by the bank (a mortgage). In the first instance the HC said no as payment of money alone is equivocal it doesn t point to the contract specifically alleged On appeal it was held that the payment referred to some kind of agreement in the nature of a mortgage points to a contract to the nature of the contract alleged Also said it would be unconscionable to allow a bankruptcy to rely on the bankruptcy act to get out of the mortgage 37
3b. Specific Performance As s contract of sale that fulfills s.126 requirements, an equitable interest in land may by created, pending transfer of the legal interest upon registration. This would make a trustee in equity, and the equitable owner (Lysaght). The extent of s equitable interest is commensurate to the purchase moneys paid (deposit presumably at least 10%)(Bunny). However, equitable interests of the purchaser are commensurate with the availability of specific performance, it is not enough for a purchaser to simply point to a contract of sale, they need to actually demonstrate that SP is or was (Bunny) available to them in order to obtain relief (Tanwar). Equitable title will thus not exist if the contract cannot grant specific performance. For a specifically enforceable contract must be ready willing and able to complete the contact (Bunny; Tanwar). (P) may argue they have a specifically enforceable contract simply upon signing (Bunny), however this line of reasoning muddied in light of Tanwar. Case Examples Guzumping cases once a 3 rd party is involved you cannot get the land back looking at damages only (Bunny) Specific performance was not possible because the land was already registered to the third party creating indefeasibility of title. (Bunny) However, it was at the time the contract was signed as Bunny was ready willing and able to complete the contract (Bunny) A Vendor under an uncompleted contract is NOT a trustee for the Purchaser (Tanwar). The moment you have a valid contract for sale, the vendor becomes in equity a trustee for the purchaser and the beneficial (equitable) ownership passes to the Purchaser (Lysaght Per Jessel MR) The Vendor has a charge or lien on the land as security for the unpaid purchase money and the right to possession until money paid (Lysaght) Where there is a clear and undisputed contract, the Court will not permit the vendor to transfer the legal estate to a third person because in equity the property has already been transferred to the purchaser. (Bunny) Once the equitable doctrine of conversion applies the purchaser has a fully-fledged equitable interest in the land which they can alienate it in all sorts of ways (i.e. purchaser can devise, sell, charge, etc their interest) (Bunny) (D) will argue that (P) was not ready willing and able to perform the contract and as such the contract could not be specifically enforced due to (eg. subject to finance clause). As such the Guzumping was not a breach of trust (Bunny). This argument would be consistent with Tanwar where breaches of essential terms did not entitled SP despite a valid contract (Tanwar). Tanwar arguments Vendor might make: A Vendor under an uncompleted contract is NOT a trustee for the Purchaser. A Purchaser s equitable interest under the contract is commensurate to the availability of specific performance A Purchaser in serious breach cannot insist on specific performance, but does have a lien to recover payments. Although unable to obtain equitable relief (P) may still seek to enforce or seek damaged under contractual law. 38