LAW 316 PROPERTY LAW FINAL EXAM NOTES!

LAW 316 PROPERTY LAW FINAL EXAM NOTES!! LAW 316 PROPERTY LAW FINAL EXAM NOTES! 1! MORTGAGES! 4! what is a mortgage?! 4! old system mortgages! 4! torrens title! 5! freehold! 5! Gurfinkel v Bentley Pty Ltd (1966) 116 CLR 98! 6! leasehold! 6! clogs on equity of redemption! 6! extinguishment of right to redeem! 7! postponement of right to redeem! 7! Knightsbridge Estates Trust Ltd v Byrne [1939] Ch 441! 7! collateral advantages! 8! Kreglinger v New Patagonia Meat and Cold Storage Co Ltd [1914] AC 25! 8! penalties! 9! statutory intervention! 9! relationship debt! 10! rights and remedies! 10! priorities! 12! LEASES! 12! creating a lease! 13! substantive requirements! 13! formal requirements! 13! types of leases at common law! 15! covenants in leases! 16! enforceability of covenants! 18! EASEMENTS! 21! Elements of an easement from Re Ellensborough Park [1956] Ch 131! 22! creation of easements! 23! Implied grant! 23! 1

Extinguishment! 24! covenants! 28! PERSONAL PROPERTY! 28! Chose in possession v chose in action! 28! Ownership and Possession! 29! Finders law! 30! Transfer of ownership of personal property! 32! Gifts! 34! theories and contemporary issues! 35! Cases! 35! what is property?! 37! cases! 37! theories! 37! Historical developments in property (textbook)! 38! boundary between property and other rights (textbook)! 42! Yanner v Eaton [1999] HCA 53; 201 CLR 351;! 50! CASE NOTES! 52! BRESKVAR V WALL (1971) 126 CLR 376! 52! Introduction! 52! Exposition! 52! Facts! 52! Decisional History! 52! Judgements! 52! Analysis! 52! Principles/Assumptions for Reasonings! 54! Policy Implications! 54! Conclusion! 54! BOGDANOVIC V KOTEFF (1988) 12 NSWLR 472! 54! Introduction! 54! Exposition! 54! Facts! 54! Decisional History! 54! Judgements! 54! Analysis! 54! Principles/Assumptions for Reasonings! 55! Policy Implications! 55! 2

Conclusion! 56! CLOS FARMING ESTATES V EASTON [2002] NSWCA 389! 56! Introduction! 56! Exposition! 56! Facts! 56! Decisional History! 56! Judgements! 56! Analysis! 56! Principles/Assumptions for Reasonings! 58! Policy Implications! 58! Conclusion! 59! MCGRATH V CAMPBELL (2006) NSWLR 229! 59! Introduction! 59! Exposition! 59! Facts! 59! Decisional History! 59! Judgements! 59! Analysis! 60! Principles/Assumptions for Reasonings! 61! Policy Implications! 61! Conclusion! 61! SUN NORTH INVESTMENTS PTY LTD V DALE [2013] QSC 44! 61! Introduction! 61! Exposition! 61! Facts! 61! Decisional History! 62! Judgements! 62! Analysis! 62! Principles/Assumptions for Reasonings! 63! Policy Implications! 63! Conclusion! 63 3

mortgages! what is a mortgage?! 1. Torrens Title: Security interest by way of charge! 1. i.e. security holder gain rights over the property, e.g. right to sell the property! 1. does not give right to acquisition of title! 2. Old system is security by way of ownership (because title to house is the security)! 2. registered under Torrens Title! 1. unregistered mortgages may have to be death with according to old system principles: King Investment Solutions v Hussain [2005] NSWSC 1076 (Campbell J at [44])! old system mortgages! 1. Over land! 1. Legal mortgage! 1. mortgagor conveys legal estate to mortgagee as security for a loan, which is reconveyed upon payment of debt! 2. deadline usually set very soon after, so many mortgagors lost title! 2. Equitable mortgage! 1. second mortgage using land as security was impossible, since no longer in possession (nemo dat rule)! 1. so mortgagor s could only mortgage their equity of redemption! 1. this would be an equitable mortgage! 2. can then, maybe, do a third mortgage on the equity of redemption, albeit one that is diminished! 2. also when legal interest incomplete, e.g. deed not properly executed, but writing exists in form of express or implied contract! 1. this applies the Walsh v Lonsdale (1882) 21 Ch D 9 principle, i.e. equity looks on that as done which ought to be done! 3. also equitable mortgage by deposit of title deeds! 1. part performance! 1. usually would need writing to form an equitable mortgage, as per s 23C of the Conveyancing Act 1919 (NSW), but sufficient part performance forms an exception to this: ANZ Banking Group v Widin (1990) 26 FCR 21! 2. over leasehold! 1. arises by assignment of the remainder of the lease, or by subleasing! 1. by assignment requires a deed and binds mortgagee to original covenants! 4

1. s 78(1)(D) of the Conveyancing Act tempers implies a series of covenants that must be fulfilled! 2. by sublease (more popular)! 1. grant to the mortgagee of a term, just short of the residue, of the lease! 2. usually contains a proviso! 1. causes a surrender by the mortgagee on repayment of the debt! 2. mortgagee, in obtaining a sublease, is not liable for the covenants in original head lease! torrens title! freehold! 1. Registered (legal)! 1. ss 56(1) and 57 of the RPA! 2. although not a transfer of title, mortgagee receives all benefits of indefeasibility upon registration of mortgage: Lyons v Lyons [1967] VR 169! 3. legal interest is in form of a charge, not title! 1. therefore, nothing preventing mortgagor from creating a strong of mortgages, registered or not! 1. not necessarily equitable mortgages either! 2. however, terms of original mortgage may prohibit further mortgages breach of such terms would be breach of the original mortgage! 2. also means no need to redeem title after mortgage paid: Forsyth v Blundell (1973) 129 CLR 447! 2. Equitable mortgages! 1. can be though number of ways, including:! 1. completion and execution of mortgage instrument in statutory form which is not registered: Barry v Heider (1914) 19 CLR 197; J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546; Windella (NSW) Pty Ltd v Hughes (1999( NSW ConvR 55926.! 2. implied agreement to give a mortgage, e.g. deposit of Folio of Register as security for money advanced! 1. old system principles apply here! 2. Theodore v Mistford Pty Ltd (2005) 221 CLR 612! 3. express but informal agreement to give a mortgage! 2. equitable mortgages on equitable interests, e.g. mortgage of a beneficiary s interest in a Torrens property! 5

3. Possible to execute registered transfer of Torrens title land with intention of only securing a debt! 1. equity looks beyond form to the intention of the parties! 1. if intention was clearly security, then will be considered a security! 1. but since transfer of title, equity of redemption applies! Gurfinkel v Bentley Pty Ltd (1966) 116 CLR 98! 4. P transferred property, of which he was registered proprietor subject to 2 mortgages, to D! 5. found that this transaction, though it looked like a sale, was in substance a loan only! 1. P was to buy back property at higher price than sale price (value higher than sale price even)! 2. P remained on property! 3. P said he was a person who was illiterate and in financial distress, and not in good position to negotiate well, and ergo D took adv of P! 6. P lost in 3/2 split, as difference between mortgage and sale with right of repurchase! 7. Also Atia v Nusbaum [2011] QSC 44! 1. son executed mortgage in favour of mother to amount of $1million registered as a 2nd mortgage! 2. mother unhappy with son s partner, and enforced mortgage! 1. found that agreement not a sham, defendant (mother) had not represented or agreed that she would not seek repayment of the agreed amount! 8. can be protected by caveat: Sander v Twigg (1877) 13 VLR 765; Lapin v Abigail (1930) 44 CLR 166 at 1934; Gurfinkel v Bentley Pty Ltd (1966) 116 CLR 98! 9. this is all in contradiction to ss 39, 39C and 57(1) of the RPA, which requires mortgages to be executed and registered in the approved form! 10. justice in not disadvantaging mortgagor may explain this! leasehold! 1. if leasehold loans mortgages, mortgage takes effect as statutory charge! 1. power of sale and foreclosure available to mortgagee: ss 57 and 64 RPA! clogs on equity of redemption! 1. being able to have property returned to you is a key part of mortgages! 1. terms that prevent this, set the redemption rate unfeasibly far in the future, or fetter property with oppressive collateral terms which extend beyond redemptions, all are clogs on equity of redemption! 1. where found, equity will ignore the formal terms and permit mortgagor to redeem on repayment! 6

1. courts will obviously not ignore rights of mortgagee, ensuring essential nature of mortgage remains intact, and that the mortgagor does not serve to acquire some collateral advantage, e.g. exclusive dealership or supplier: Toohey v Gunther (1928) 41 CLR 181, where Toohey was to be exclusive supplier to Gunther! 1. today, this is violation of s 47 of Competition and Consumer Act 2010 (Cth)! 2. Noakes & Co Ltd v Rice [1902] AC 24 at 30 stresses importance of redemption! 2. note: move from formal requirements to unconscionability! extinguishment of right to redeem! 1. mortgage will not be valid if:! 1. denies right to redeem! 2. impedes or is designed to prevent redemption: Fairclough v Swan Brewery Co Ltd [1912] AC 565 at 570.! 1. mor 17 years left of lease, entered into mortgage that allowed only monthly installments for next 17 years! 1. lease would expire when mortgage did! 2. this held to be void as mortgagor would only be able to redeem property once the interest in it had expired so brought forward the date of redemption! 1. NOTE: such instalments held valid in Santley v Wilde [1899], but this decision has been criticised in Noakes v Rice! 2. hence, no terms that allow claiming of property before redemption date! 3. reserves an inetrest in the property after right to redeem has been exercised: Samuel v Jarrah Timber and Wood Paving Corp Ltd [1904] AC 323 at 326! 2. once a mortgage, always a mortgage: Seton v Slade (1802) 32 ER 108 at 111! postponement of right to redeem! 1. setting time for redemption must be reasonable! 1. reasonableness determined by nature of security, accepted practices for mortgages or that tupe, and reasonable expectations of the mortgagor! 2. not always consistent 28 years void in Morgan v Jeffreys but 20 years valid in Davis v Symons! Knightsbridge Estates Trust Ltd v Byrne [1939] Ch 441! 2. mortgagor required to pay off debt in 40 years! 3. held not to be a clog! 1. clogs only when redemption becomes illusory, or it is unconscionable to delay that much! 2. 40 years deemed reasonable! 4. note: National Credit Code may cover residential mortgages, and so, may regulate when they are to be repaid! 7

collateral advantages! 1. advantage that extends beyond the repayment of the loan including interest! 1. e.g. agreement to purchase goods from the lender as designated supplier! 2. this is seen as burdening the property! 1. if only operational until date of redemption, then not void: Biggs v Hodinot [1898] 2 Ch 307! 2. unreasonable not permitted: Esso Petroleum Co Ltd v Harper s Garage (Stourport) Ltd [1968] AC 269! Kreglinger v New Patagonia Meat and Cold Storage Co Ltd [1914] AC 25! 2. K agreed to lend money to P for 5 years, which was repaid in 2.5! 1. issue was whether a trade tie valid! 1. was to remain effective until end of 5 years! 2. meant that P to prvode K with sheepskins at the best proce offered by other potential purchasers of skins! 1. if K didn t want skin, could be sold to others, but K would retain some commission! 3. P wanted to stop after loan paid! 2. HoL held that not a clog on redemption as skins agreement separate to loan! 1. although at same time, different in substance! 2. relevant question was: were they in substance a single and undivided contract or two distinct contracts?! 1. In Toohey v Gunther, held to be same contract, hence clog! 3. In Noakes v Rice, owner of pub mortgaged lease to brewery for 26 years, and also agreed to buy malt from brewery whilst lease remained on foot, even if mortgage repaid! 1. HoL held this to fetter the interest in the property (the lease), as it lessens availability of the property in the hands of the tenant during the period and beyond the period of the term! 1. should be free! 2. in Biggs v Hoddinott, similar facts, but held not to be clog since trade tie ended with mortgage! 4. Eased up on tolerating collateral advantages in Westfield Holdings Ltd v Australian Capital Televesion Pty Ltd (1992) 32 NSWLR 194 (Young J) requiring that the collateral advantage be unconscionable! 1. Barrett J agreed with this in Lift Capital Partners Pty Ltd v Merrill Lynch International (2009) 73 NSWLR 404! 1. Lift made loans to clients, who used that money to buy shares on stock exchange! 1. Lift borrowed money from Merrill Lynch! 8