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TOPIC 1: INTRODUCTION

Real Property Is land and interests in land and subdivided into two groups:
1. Corporeal hereditaments tangible real property ie land
2. Incorporeal hereditaments intangible interests in land such as easements
or rights of way.

DOCTRINE OF TENURE
i) Split system - no land is owned absolutely, all land is held of the Crown.
Crown must give grant to individuals to use land and the right to use land
is vested in the form of an estate.
Historically, Crown exercised its prerogative to give first grant to James Ruse to
start farming for food.

Traditional view of tenure:


Attorney-General v Brown
Reservation Where the Crown gives grant to private interests land while still
withholding the right to something. In this case, Brown was given grant to land
but not for coal mining. Brown started coal mining and Browns barrister argued
the traditional view of tenure was misunderstood, when the Crown acquired NSW
it did NOT have ownership the land but acquired sovereignty. Thus, the coal was
not owned by the Crown and Brown was not trespassing. The courts completely
denied this and said that in-fact, the doctrine of tenure applied even more
because the Crown claimed actual ownership of all the land in Australia. As such,
from this case, it was drawn that there was no indigenous land rights since the
Crown owned all the land.
The arguments run in this case were the same arguments in Mabo case.

Radical Title
- Legal fiction which supports the doctrine of tenure that the Crown has
notional interest in every piece of land.
- Is a notional, conceptual title that allows the Crown to control land of the land,
regulate and pass laws. It is not a real title and is similar to sovereignty (concept
in constitution/public law) but used in property law.
- On acquisition of the land, the Crown acquired sovereignty and not absolute
ownership called (beneficial ownership), because there were other owners (no
terra nullius).
Crown acquired radical title (or ultimate, final) which is the concommitant
of sovereignty
This gives the Crown the power to grant rights and interests in land.
Pastoral leases differ from exclusive possession.
Mabo beneficial ownership and

ESTATES
Estate Different bundles of rights and powers exercisable in respect of land.
Two types of estates, depending on the time in which they endure how long the
estate exists.
1. Freehold estates uncertain duration fee simple, life estate and
abolished fee tail
2. Leasehold estates - certain(definite) duration

Estate in Fee Simple


- Norman French: inheritable and no conditions
- Theoretically lasts indefinitely can be sold, devolve by will. Can end in two
ways: Crown can take land back but still may not end and held as an individual,
death without a will (intestate)
- Fejo: An estate in fee simple is, "for almost all practical purposes, the
equivalent of full ownership of the land [44]

Simultaneous Estates
Both exist at the same time, possession now is life estate. Possession in the
future is the reversion.
To A for life (reversion in the grantor)
To A for life remainder to B in fee simple
Both can be transacted at the same time so holder of the reversion can sell and
mortgage estate. B cant lease because A has possession. A can lease.

Native Title Right


Gove land rights case earlier decision on native title in NT. Attempted to argue
customary rights and failed in two ways:
1. Failed because native title didnt really exist in common law

2. Failed on facts Justice Blackburn was not the way western property right is,
had a spiritual relationship with land and not economic, not alienable.
Different to Meriam people in Mabo case had marketed gardening plots and
whilst still spiritual, was more economic.
Definition of Native Title - Native title has its origins in and is given its
content by the traditional laws acknowledged by and the traditional customs
observed by the Indigenous inhabitants of a territory. The nature and incidents of
native title must be ascertained as a matter of fact according to those laws and
customs. at 58 (Brennan J)
1. Need to show laws and customs by traditional owners
2. Need to show it was substantially uninterrupted dispossessed indigenous
people will not be able to claim native title.
Native title determinations will be different in every case and very difficult to
prove.
Native Title Act
S223 contains definition of native title.
Two types of claim:
1. By indigenous people to claim native title
2. The governments claim of no native title existing Non-claimant
determination under s6(1) of the Native Title Act
Once native title is claimed, it is protected and the government cannot build or
do anything unless there is no native title or cleared through future provisions.
Far West Coast Native Title Claim v SA (No. 7) (2013) [38] Mansfield J
a recognisable group or society that presently recognises and observes
traditional laws and customs in the Determination Area.
(1) they must be a society united in and by their acknowledgement and
observance of a body of accepted laws and customs;

(2) that the present day body of accepted laws and customs of the society,
in essence, is the same body of laws and customs acknowledged and
observed by the ancestors or members of the society adapted to modern
circumstances; and

(3) that the acknowledgement and observance of those laws and customs
has continued substantially uninterrupted by each generation since
sovereignty and that the society has continued to exist throughout that
period as a body united in and by its acknowledgment and observance of
those laws and customs; and

4) The claimants must show that they still possess rights and interests
under the traditional laws acknowledged and the traditional customs
observed by them and that those laws and customs give them a
connection to the land.

Post Yorta Yorta case, Native Title litigation has dropped off due to its complex
tests and now consent determinations between affected groups are more
common to negotiate rights.

Extinguishment
Only the Crown can affect or extinguish native title, not individuals even though
it appears to be, eg mining leases are granted by the government
1. Fejo - Grant of a fee simple extinguishes native title, since it gives
exclusive possession.
2. Wik Effect of the grant of a pastoral lease. Doesnt confer exclusive
possession and is just Crown land allowed to be leased with limited rights
(generally for the purposes of grazing on rangelands) Native title yields to
the extent of the inconsistency.
Extinguishment is a legal (not factual) test to be determined at the time of
the grant Brown HCA 2014

TOPIC 2: TORRENS TITLE


Land Ownership
- Torrens title is a system of title by registration

- Old system title OST is a system of registering title

Certificate of Title
First schedule names of vendor and purchaser
Second schedule mortgages, leases, easements, restrictive covenants

Timeline of Torrens Title


1.Exchange of contracts (Contract of Sale) Where the two contract
counterparts signed by other party is exchanged. Contracts are binding and
Court of equity can enforce contract so purchaser will be compelled by vendor to
pay.
2. Settlement/Completion (Transfer) is when the vendor hands over signed
transfer to purchaser. Full payment should have been paid at this point since the
transfer is signed for already (certificate of title).
3. Lodgment
4. Registration Lodgment is electronic now and registration should be day
after lodgment.
Apply s41, 42 and 43 of Real Property Act (RPA)
*Dont automatically assume what is lodged is registered unless told so.

Rules of Indefeasibility
1. Registered interests in the Second Schedule prevail over the registered person
in the First Schedule.
2. As between two interests registered in the Second Schedule, the interest first
registered has priority: s. 36 (9) of the RPA.
3. Registered interests prevail over unregistered interests.
Where a registered mortgage secures a forged loan agreement, the registered
mortgage secures NOTHING: Perpetual Trustees Victoria v English [2010] NSWCA
32
There is a distinction between this case and Mayer v Coe where there was a
mortgage for XYZ dollars and not as a loan agreement.

Indefeasibility of the Title


Title by registration: s. 41
- Torrens title is premised on the state giving title Commonwealth v NSW (1918)
25 CLR 325

- Torrens Title is a system of title by registration: Breskvar v Wall (1971) 126


CLR 376
Indefeasible (undefeatable): s. 42
- A forgery is void and ineffective pre-registration BUT indefeasible postregistration. Once the fraudulent signature is registered, is bounded if other
party is not party to the fraud.
(Mayer v Coe 1968) - the issue of indefeasibility of title and whether or not the
owner of a property could remove a mortgage which had been fraudulently
procured by her solicitor and been registered without her knowledge. Highlights
the importance of registration and the indefeasibility of title. When dealing with
two equally innocent parties, the Court will find for the party that is registered
over the unregistered party.
(Perpetual Trustees Victoria v English [2010] NSWCA 32)
The mortgage signed by Mr and Mrs English was to secure whatever was owed
under a separate loan agreement instead of being for a certain amount of
money. Mr English forged Mrs Englishs agreement. The mortgage secures $0
because Mrs English never signed the loan agreement. This case illustrates
that there is no indefeasibility of title when what was forged was not
actually apart of the contract for the sale of that particular property

Presumption of correctness: s. 43 The state assumes that all parties


registered are acting honestly and they hold no obligation that there is fraud
being committed.

Ambit of the register


Bursill Enterprises v Berger Bros (1971) 124 CLR 73
Plaintiff enjoyed an easement for right of way of defendants land and air space
from 3.6 metres up. Because Torrens is a system of registration, this easement
given to the predecessor allows for the plaintiff to enjoy indefeasibility to the
right of way and airspace above neighbours land.
Fels v Knowles (1906) 26 NZLR 604
The registered proprietors of certain property in New Zealand were trustees and
had leased the property for 14 years. The lease contained an option to sell
although the trustees had no power to sell BUT because it was registered, the
lessee had indefeasible right to exercise this option.
Koteff v Bogdanovic (1988) 12 NSWLR 472
Koteff makes an agreement with Mrs Bogdanovic that if she takes care of him, he
will leave her his estate. Koteff Jnr registered the estate and under Torrens, was
not subject to Mrs Bogdanovic, he did not agree to this and thus enjoys
indefeasibility title.
State Bank v Berowra Waters (1986) 4 NSWLR 398
On the First schedule is Berowra Waters. Second schedule is mortgager State
Bank
Berowra Waters is discharged from the mortgage after making all payment.
However, State Bank made the mistake and the mortgage was in fact higher. The
registration of the discharge allows for Berowra Water to enjoy indefeasibility and
the property is no longer secured. Debt may still be owed to State Bank but not
through the property.

Priorities under Torrens Title


Exceptions to Indefeasiblity
1. Prior folios: s. 42 (1)(a) of the RPA
In the unlikely event where there are two certificates issue by the Registrar
General, the prior folio will prevail when there is an inconsistency/mistake.
2. Profits a prendre: s. 42 (1)(b) of the RPA
Prendre: from the Latin to take. Is a right to take from another person's land
something that is part of the soil or is on the soil and is the property of the
landowner. Dont have to register but can prove the right to.
3. Misdescribed parcels: s. 42 (1)(c) of the RPA It is possible to rectify a
mistake on the Register if the boundaries are misdescribed.
4. Omitted easements s42 (a1) An easement is a section of land registered
on your property title, which gives someone the right to use the land for a
specific purpose even though they are not the land owner. An example is a
shared driveway. Can only create an easement in writing through a deed.

If the easement created under old system and is proven, it is omitted and still
enforceable under Torrens title. James v Stevenson (1893) AC 162. **Look at
actual easements topic
1. Registered v registered
2. Registered v unregistered
3. Unregistered v registered

OST Principles
Unregistered v unregistered
- An unregistered equitable interest is an interest enforceable in Equity by an
order for specific performance, either party can be compelled to complete
contract: Tanwar Enterprises v Cauchi (2003) 217 CLR 315
James v R-G (1967) 69 SR (NSW) 361 - If easement is registered under
Torrens and removed by mistake to the Registar, is an omitted easement.
Castle Constructions v Sahab Holdings v RG [2013] HCA 11; (2013) 247 CLR 149
If deliberately removed, can enforce implied or prescriptive easement if created
under old system. Cannot if created under Torrens.

Exception to Indefeasibility: Short Tenancies


**Refer to in leases topic
S42(1)(d) protects the unregistered lessee and the lease(oral or in writing) is
enforceable, provided that:
1) Period of lease + option to renew in total is not greater than 3 years AND
2) The registered owner/mortgagee acquired interest with notice. Notice is
actual knowledge or constructive knowledge.
Clyne v Lowe (1968) 69 SR (NSW) 433 - Constructive Notice
Arose from Landlord and Tenant Amendment Act 1948 which prevented rent from
increasing to tenants. Clyne did not actually know the name of the occupant nor
did he know the precise details of the lease. The court applied s42(1)(d) to the
facts and determined that Clyne had constructive notice of the lease because of
his failure to inquire from the person in fact in possession as to her title or rights.
United Starr-Bowkett v Clyne (1967) 68 SR 331
Clyne borrowed money from building society, registered as mortgagee. Clyne
defaults in the mortgage and mortgagee tries to sell the property, knowing land
occupied by person other than mortgagor.

Notice s164 of CA

a) Actual Notice
Actual knowledge of the leaser, must be personally within that persons
knowledge
b) Constructive Notice
Purchaser should have known as a reasonable person in this position and made
an enquiry or searched Registrar.
Marsden v Campbell (1897) 18 LR (NSW) (Eq) 33
Purchaser was aware vendor had a mortgage and vendors mortgagee land had
animal grazing on it. Purchaser was unaware that this land was leased by
mortgagee.
Held: If purchaser had made all the enquiries that a reasonable person in his
position would have made, such as asking the mortgagee the basis upon
property being grazed, then the purchaser would have had constructive notice of
the lease.
Usually, the occupation of land by person other than vendors family will amount
to constructive notice (Hunt v Luck 1902; Hodgson v Marks 1971).
c) Imputed Notice
Is the notice of an agent, whether actual or constructive and imputed to the
principal. May be notice of solicitor, spouse or employee of principal.

Exception to Indefeasibility: FRAUD ss42 and s43


Notice of itself is not fraud Wicks v Bennett (1921) Vendor sold property to
purchaser who was registered, pre s42(1)(d) to protect unregistered tenants.
Purchaser has notice of unregistered lease. Held: Not fraudulent to know about
tenant. Notice of itself is NOT fraud
Stuart v Kingston (1923):
Fraud is personal dishonesty and moral turpitude
Loke Yew v Port Swettenham [1913]
Eusope owned land and sold part of his land to purchaser Lake Yew and
remainder to P.S. L transferred but not registered for title. P.S. said well look
after L.Y and transfers ALL of land, including L.Y. and tried to evict L.Y. Held: P.S.
had fraud in statement, got the transfer on the false basis. This case is good law
but not the authority as Bahr v Nicolay case.
Breskvar v Wall (1971)
Torrens case involving land in QLD which went to the HC. Breskvar was registered
in first schedule of title and borrowed money from Petri (mortgagee). Petri
persuaded B to sign a blank transfer and puts grandsons name Wall as the
purchaser. W does not pay and thinks it is a gift from P, unaware of this fraud by
P. W sells land to company Alban and had lodged for registration but not yet
completed. Breskvar finds out the fraud and argues not subject to this transfer,

never sold the land and wants to reinstate. W argues indefeasibility as he is


registered.
HELD: Fraud is imputed on Petri against Wall, even if he does not know (agent
acts fraudulently on behalf of principal). Breskvar will NOT lose to the fraudulent
party and entitled to damages. Between Breskvar and Alban, B is guilty of
postponing conduct and loses to the more innocent A with better equitable
conduct. (Need to draw clear distinction on the priority of equitable interests).
Different to Mayer v Coe
Schultz v Corwill Properties (1969)
Corwill is registered owner and controlled by a woman. Womans son is the
solicitor of Corwill and borrows money from Schultz without her knowledge.
Schultz is registered mortgagee. Son never paid and forges discharge of
mortgage. C is in first schedule and S is now ceases to be second schedule on
the registrar. S argues son is agent for C and should be imputed onto her
company.
Held: Son acting for himself frolic of his own and not on behalf of C. Different to
Breskar v Wall where Petri was acting on behalf of Wall (gift) and to be imputed.

Fraud must be actual or equitable but NOT constructive:


Assets Co v Mere Roihi [1905)
Assets Co purchased land from Maori people without requisite consent and
registered, now has indefeasible title. The NZ native title legislation was subject
to indefeasibility under own NZ law. Held: no such thing as constructive fraud.
Must have actual fraud and As lack of compliance to legislation is not fraudulent.
Bahr v Nicolay (No 2) (1988)
Fraud extends to equitable fraud against conscience, not just actual fraud.
Bahr(unregistered) owned property and sold and transferred to Nicolay who
leases it back to him. Nicolay is registered in 1 st schedule and B ceases to be
registered. B sells to Thompson who is now registered and has indefeasibility. T
acknowledged lease to B and option for B to repurchase for 45k. Property rises
dramatically and T does not want to give it back to B for 45k.
HC held when T acknowledged Bs option to repurchase, he had honor the
agreement of his transfer on the basis that he was subjected to the option.
Mason/Dawson JJ: relied on fraud. Argued that fraud should not be limited to
dishonesty that takes place PRIOR to registration.
Wilson/Brennan/Toohey: fraudulent intention must be formed PRIOR to
registration. Not fraudulent to depart from promise given prior to registration.
Applied personal equities exception.
Under personal equities, Thompson (registered) agrees with Nicolay to be
subjected to Bahr.

Leros v Terara (1992)


High Court affirmed correctness of Wick v Bennett case, where notice of fraud
does not constitute to fraud. There was an option for a lease of 5 years and
option for the tenant to renew lease for another 7 years. The landlord (vendor)
puts the property on the market and asks purchaser to accept this 7-year lease
extension. Purchaser disagrees and not willing to negotiate. Vendor then offers
property without being subject to the lease and buys the property. The
purchaser has notice of lease but not agreed to be subjected the lease, unlike in
Bahr v Nicolay where it was agreed. Therefore, notice of the lease is NOT fraud.
National Bank v Hedley (1984)
Mr Hedley goes to National bank to negotiate a mortgage and forges signature of
Mrs Hedley. Officer reports that he witnessed both signatures although he did not
know there was a forgery.
Held: Bank committed fraud with Registrar General by not properly witnessing
both signatures. Mr Hedley is subjected under equity to pay a new mortgage to
the bank under his portion. Mrs Hedleys portion would be excused.
Bank of South Australia v Ferguson (1998)
Ferguson applies to loan money from the bank and provides accurate details on
his financial position. The bank officer falsifies financial details to get loan
approved. The bank lends the money and cannot repay. Fergusons lawyers
discover the officers fraud to the bank and alleges fraud. The fraud was between
the Bank and the Officer, and Ferguson was not subject to the fraud (at all times
he was aware of how much money he was to receive). The approval of the loan
did not constitute financial advice that Ferguson could afford the repayments.
For fraud to be operative, it must operate on the mind of the person said to
have been defrauded. There was no causation between the fraudulent action
and the loss incurred.

Exception to Indefeasibility Personal Equity


This exception to indefeasibility has been recognized by the Privvy Council
(Frazer v Walker) and by the High Court (Barry v Heider; Bahr v Nicolay)
Personal equity is subject to

Barry v Heider (1914)


Schmidt, when lending Barry money had dishonestly makes him sign a transfer
rather than a mortgage. Schmidt then mortgages the house in favour of Heider
(who is unaware of the fraud in the original transfer). Heider lodges the transfer
and the mortgage. Before it is registered, Barry finds out, and challenges the
mortgage, claiming that since he is still registered, and Heider is unregistered,
his title is indefeasible.
The high court held that a personal equity exception to indefeasibility will exist
where:

A registered person creates the unregistered interest; and/or,


A registered person engages in conduct that contributes to the
creation of the unregistered interest.

Although Barry did not create Heider, he armed Schmidt to create Heider by
executing the transfer.

Transfer (?)
Barry
Schmidt
(in
reality
only
a
mortgage)
(registered)
(unregistered)

Mortgage

Heider
(unregistered)

**See Bahr v Nicolay case

Mercantile Mutual Life Insurance Co Limited v Gosper (1991)


This case is seen as controversial, but continues to be authority. It regards a
fiduciary duty where there is an existing legal relationship between
parties.
Facts
Gospar owns land and is registered in the first schedule
o In the past, she borrowed money from Mercantile
o This borrowing was recorded in the second schedule as a mortgage
Her husband, without her knowledge or permission
o Goes to Mercantile
o To double the loan
o Although the house was still worth enough to secure the loan
Mercantile agreed to the increase in debt: on the condition that Mrs.
Gospar signed the variation
o Mr. Gospar forged her signature
o The variation was registered
Mr. Gospar dies
o Mrs. Gospar did not know of the variation

Held
Justice Meagher, in dissent, said that this was a case of pure Mayer v Coe and
that upon registration of the variation, it became indefeasible. He stated that
the fraud was between the bank and the third party, and that, thus, fraud did not
break indefeasibility (Mercantile was not aware of Mr. Gospars fraud).
Kirby, stated that Mercantile owed Mrs. Gospar a duty to inquire of her (rather
than of her husband), since it was her mortgage being extended.
The authoritative judgment comes from Marney:

Since there was a pre-existing relationship between Mercantile and


Mrs. Gospar (i.e. that of mortgagor and mortgagee)
o Mercantile owed a fiduciary duty to Mrs. Gospar not to use
the CT (which was in their possession) without her express
authority
o This duty was breached, thus she has equity.
Thus, if there is no pre-existing relationship, the mortgagee, upon
registration, acquires immediate indefeasibility.

This has been challenged by Windeyer, who says that as a matter of


conveyancing practice, consent is rarely given, and, thus, that no fiduciary
duty could have been owed. This was given in obiter in an unreported case, and
awaits higher confirmation before becoming authority.

This case challenged the authority of Gospar, but was differentiated factually and
held to be more similar to Mayer v Coe, since there was no pre-existing
relationship between the parties, unlike in Gospar.
Facts
Grgic was a registered owner
o Wife and son went to ANZ to negotiate a mortgage (unbeknownst to
Grgic)
ANZ says I would like to meet Grgic
o Wife/son brought an imposter
o Who signed mortgage
Mortgage was registered
Held
Since there was no pre-existing relationship, registration created indefeasibility.

s 56C of the Real Property Act is Enacted


This section requires the bank to satisfy themselves of the true identity of people
signing mortgages: they must keep records. It is not yet in effect, but will affect
the above cases.

Storey v Advanced Bank


This case regards the company seal.
Facts
Storey negotiates a loan with Advanced Bank
o In the name of a company
o Storey is the director, but he requires board approval for loan
He doesnt get board approval, but affixes company seal
Held
If, prima facie, the company seal is affixed, there is no requirement for the bank
to check with the board.
This case is an example of either fraud or personal equity.

Snowlong Pty Limited v Choe


Facts
A landlord is subject to an unregistered 5 year lease.
o Purchaser agrees to buy, subject to the lease
o Purchaser registers
Purchaser seeks to kick out tenant, since his title falls outside of the short
tenancies rule of 3 years.
Held
Authority stems from Bahr v Nicolay Wilson?Brennan/Toohey judgment. The
purchaser agreed to be subject to the lease when purchasing.

If he formed the intent to break the agreement before registration, it is


fraudulent
If he formed the intent after, he is subject to a claim of personal equity

Exception to Indefeasibility - Overriding Statutes


EDIT

Overriding statutes/Inconsistent legislations


Newer legislations that affect property rights will prevail over the power
of indefeasibility given by the Real Property Act. I.e. Council powers given
under a new Environmental act
Other acts include:
-E P & A Act, 1979, (NSW)
-Family Law Act, 1975, (Cth)
-Bankruptcy Act, 1966, (Cth)
Possessory title

If you are registered but do not have possession of property and another
person resides on your property for 12 years, on the 12th year, they may
register and may have a better claim to the property. S.45(d)

TORRENS TITLE UNREGISTERED INTEREST


Only one person has legal interest under Old System Title:
o
o
o
o

A conveyance by Deed at settlement


A first mortgage by Deed at settlement
Other deeds eg Deed of easement, Deed of lease
S23D Conveyancing Act provides that whether oral or in writing, is a
legal interest if satisfies:
1) 3 years or less
2) Best rent reasonably obtainable
3) Immediate right to possession

Equitable Interest under OTS and Torrens Title if:


o
o
o
o
o
o

Purchaser who exchanged contracts


Beneficiary under a trust
Mortgagors (borrower) equity of redemption: equity right to repay debt to
reclaim property
Mortgages other than a first mortgage by Deed
Leases which are in writing but do not satisfy s23D Conveyancing Act
Restrictive covenants

Equitable mortgage interests under Old System Title and Torrens


Title
o
o
o

An equitable mortgage by conduct of depositing of title deeds. Cooney v


Burns (1922)
An agreement to grant a mortgage ANZ Banking Group v Widin (1990)
An unregistered mortgage

CAVEAT
a) Right to Caveat (Real Property Act, s. 74F)
A person who has an interest in Torrens Title land can put a caveat on the
property they may have an interest in. It is a claim that there is a possible
interest in the land. Once a caveat is lodged, blocks anyone else from
registering their interest. Particularly helpful if cannot be registered.
Sinclair v Hope Investments (1982) 2 NSWLR 870

Registered owner put caveat on own property to claim additional right to


challenge a mortgagee exercising their power of sale. Held: Right to caveat if
claiming a different interest
b)
o
o
c)

Withdrawal of Caveats (Real Property Act, ss. 74M, 74MA)


Can remove own caveat under s74M
Can obtain court order to remove caveat under s74MA
Lapsing notices ss74J and 74I

The cheapest and most effective way to challenge ones caveat is to serve a
lapsing notice. Unless there is a Supreme Court Order to extend the caveat
within 21 days, it will lapse.
d) Formal Requirements ss74F(5)
-

Needs the date


Needs the price
Needs to be an equitable interest/mortgage

e) Effect of lodging caveat


74H blocks the right to anyone to register. If it has been registered already,
caveats are useless.
Re Rush and the RP Act (1963) NSW 78 - Rush had a caveatable interest but
lodged it in bad form. Another party lodged a mortgage after this registered
dealing has been lodged. The owner served a lapsing notice of Caveat A and
Rush was advised by lawyer to let is lapse and relodge better Caveat B. Once
Caveat A lapsed, lost interest and Caveat B goes to top of the queue. Setting a
2nd caveat after the 1st lapses is insufficient if registration of another
party occurs in the meantime. Only had the effect of later interests
being registered.
Godfrey Constructions v Kanangra (1972) 128 CLR 529 - Vendor
exchanges with P1, dispute arises and vendor terminated contract claiming
breach of contract. V proceeds to sell to P2, but P1 lodges caveat as he did not
breach contract and termination is void.
Held: Obligation on removing the caveat was on V and not on P2. P2 not obliged
to settle until caveat is removed. Once a caveat is lodged it is the vendors
obligation to remove it.
f) Caveats by Registar General Real Property Act, 82(1)
g) Caveats lodged without a reasonable cause, Real Property Act s74P
Hillpam (2009) NSWSC 362
Hillpalm was a company that owned various land properties. Wilson put on
various caveats on all over Hillpalms properties that would force her to
continuously lapse his notice. It was found that 74P said that caveats need
reasonable cause or need to be compensated.
h) Injunctions to restrain further caveats if served lapsing notice on earlier
caveat, Real Property Act, s70
o

PRIORITY between Unregistered Interests


Who has the better equity - which party is more innocent?
Rules of Priority, assuming no postponing conduct and no notice.
a) Successive legal interests: An earlier legal interest wins over
later legal interest
b) Prior LEGAL interest, subsequent equitable interest

The legal interest needs to be taken WITHOUT notice of earlier


interest, consideration, paid and taken in good faith will prevail over
later equitable interest
Unless the legal owner is fraudulent or arms another with the authority
to create an equitable interest, a PRIOR legal interest will be preferred
to that of a subsequent equitable interest. Refer to personal equities
exception*
Northern Counties v Whipp (1884) 26 Ch D 482

c) Prior EQUITABLE interest, subsequent legal interest

A subsequent legal interest has priority over an earlier equitable interest


unless the legal title holder has notice (actual, imputed or constructive) off
the prior interest or was a volunteer/received (ie, provided no
consideration):
Wilkes v Spooner [1911] 2 KB 473

d) Successive equitable interests:


Where the equitable interests are equal, the first interest in time prevails
unless there is postponing conduct.

Postponing Conduct
a) Failure to take possession of title deeds. OST case held that
purchaser/first mortgagee at settlement, need to take title deeds. If title deeds
arent taken, constitutes postponing conduct.
Walker v Linom (1907) - P1 failed to take title deeds. P2 had never taken
possession of title deeds and was not aware of P1s interest. Since the earlier
interest was guilty of postponing conduct, P2 will prevail.
b) Failure to retain possession of title deeds by an act of gross
negligence. Employee stole companys title deeds and Northern Counties v
Whipp (1884)

c) Premature release of title deeds


To hand over title deeds before being fully paid is a premature release and
constitutes postponing conduct.
d) Receipt clause where money not received. Signing that payment has
been received is also postponing conduct.
Reliance Finance v Heid [1982] 1 NSWLR 466
Heid and Reliance were both unregistered. Previously, H had been registered and
agreed to sell to Connell Investments for 15k deposit and 100k balance, with H
lending it back for 50k. H only receives 15k deposit yet signs transfer and title
deeds to his solicitor (employee of C). H is no longer registered and is still owed
150k by C. C loans from all parties but all other parties drop their case, is now R
v H. Since H had premature release of title deeds AND signed receipt of money
when not actually received should be postponing conduct.
Heid v Reliance
Deposit

$15K

Vendor finance

$50K

Balance to Heid

$100K

$165K
Heid Tfr

Connell Investments $80K

Reliance

$12K

Stormar

$40K

Alexander

$20K

Reliance

$45K

Irving

$50K

Heid (vendor finance)

$100K

Heid (vendors lien)

Heid v Reliance Finance (1983) 154 CLR 326


HC found the deed was given to the other side, the solicitor is acting for Connell
as an employee. Heid loses priority and is disentitled against more innocent
party (better equity). Heid is postponed to Reliance.
1

Gibbs and Wilson JJ said it was a question of estoppel. Made a representation and
other party relied on it. Would be unconscionable to depart from this
representation.

Lloyds Bank v Bullock (OST)


Write this case from textbook

Lloyds Bank v Bullock (OST)


H

Deed of Mortgage

Building Society (L)


Deed of re conveyance

Will

(in escrow)
N (trustee for siblings,
including Bullock) (E)

Deed of conveyance

C (dishonest solicitor)

By N
Deed of
Mortgage
Lloyds Bank
BuildingSoc.

v.
Bullockv Bullock (OST)
Lloyds
Bank

v.

Bullock

v.

H dies and N is trustee for his siblings including Bullock. C, Bs own solicitor is
H wishes to buy property
Deed of Mortgage
Building Society
(L)N signed
dishonest and
from
N. Deed of conveyance
to C,
Building Soc.
v.
Lloyds
Bank
receipt of payment despite
L not receiving
v.
Eany. C went to the Building Society to
re-convey. Then goes to Lloyds Bank to borrow money.
Lloyds Bank

Building Society v Bullock -Deed


Court
Building Society
not aware of Cs
of held:
re conveyance
(in was
escrow)
E
v.
E
dishonesty and did not do any postponing conduct and signed deed of re
conveyance in escrow (upon the condition) that payment will be collected
from Hs family.
1

Will
N (who
(trusteewas
for siblings,
Trustee signs receipt clause without payment,
to solicitor
acting as
purchaser, not as solicitor role) and knows he is handing it to other side. Bullock
including Bullock) (E)
is postponed as B is more innocent of the two.
Deed of
conveyance
Building Soc.
L

v.

Bullock

v.

C (dishonest solicitor)
Deed of
Mortgage

Building Soc.
L
Bullock
E

v.
v.
v.
v.

Lloyds Bank
E

Lloyds Bank

Lloyds Bank
E

Shropshire Union Railways v R (1857) LR 7 HL 496

A trustees imputing conduct will not disentitle beneficiary if fraudulent.


Cave v Cave (1880) 15 Ch D 639
Is postponing if trustee acted outside power.
Breskvar v WalI (1971) 126 CLR 376
Facts from earlier, guilty of postponing conduct if holding out.

Failure to Caveat
Failure to register and caveat to protect interest constitutes postponing conduct.
Butler v Fairclough
Good was registered, created mortage subject to M1. Good created second
mortgage to Butler, who lodged caveat. Good sells to Fairclough who is
unregistered but lodges transfer after Butler. Fairclough has later equity interest.
HC held second mortagee who fails to register or caveat immediately after
getting mortgage, will be guilty of postponing conduct against purchaser (who
has no knowledge of second mortgage).
*Read this in his textbook, he expands on postponing conduct
J & H Just ( Holdings) v Bank of NSW (1971) 125 CLR 546
Josephson borrowed money for mortgage with Bank of NSW. Bank was first
mortgagee who had neither registered or caveated, but had taken possession of
CT. J went to to borrow money from J & H and advised his CT was with the bank.
HC rejected Butler v Fairclough that failure to register or caveat as mortgagee is
postponing conduct, different facts as Bank was first mortgagee and had CT.
Second or third mortgagee cannot have possession of CT as it stays with first
mortgagee and must caveat.
Person-to-Person v Sharari [1984] 1 NSWLR 745
There were 3 mortgagees - second mortgagee was postponed for failure to
caveat so lost priority and third mortgagee takes place in priority.

Osmanoski v Rose [1974] VR 523


P1 had just exchanged contracts without caveating, P2 had exchanged and
settled. P1 held to be postponing. Purchaser who exchanged contracts
should caveat. Failure to caveat will result in postponing and loses
priority.
Jacobs v Platt Nominees [1990] VR 146
Jacobs as P1 purchased property from parents company but breached contract.
The company was sold to P2 who had no knowledge of P1. Osmanoski decision

was rejected, Victorian courts no longer required caveat after


exchanging contracts.
Black v Garnock [2007] HCA 31
Gleeson & Crennan JJ held did not have to caveating after exchanging contracts,
two other judges were undecided and Callum J agreed that caveating is required
after exchanging.
-It is recommended to caveat after paying the deposit to protect interest
Beneficiary under a trust should caveat can ask for 74F and 82. Check this

UNREGISTERED LEGAL INTEREST


Transferee or first mortgagee with a dealing registrable has legal interest
under Real Property Act ss36, 43A. Only the purchaser and first mortgagee can
obtain the CT will have a dealing registrable.

Dealing Registrable s43A to create unregistered legal


interest
1.
2.
3.
4.
5.

Accompanied by the CT: s. 36 (6) of the RPA


Purchaser or first Mortgagee
Post settlement and pre registration
Dealing must be stamped: Stamp Duties Act
No formal defect: - Different name of vendor; or Error re prior
encumbrances
6. NOT void, cannot be FORGED: Mayer v Coe; Jonray v Partridge Bros
7. Next dealing to be registered needs to be next dealing to be registered:
IAC v Courtenay -The dealing between a vendor and a purchaser can only
be achieved once the title is discharged by the first mortgagee
8. No notice of any other interests at settlement: IAC v Courtenay

What is thenext dealingto beregistered?


(a)

(c)

Vendor

Vendor

Tfr

Tfr
Purchaser

Mortgagee P
Purchaser 1

(b)

Vendor

Mortgagee V
Tfr

Tfr
Purchaser

Mortgagee P

Purchaser 2

IAC v Courtenay

Austin
regd

Tfr

Courtenay
unregd

1
Mortgage
Tfr
C/S
(abandoned)

Denton
Sub-D
unregd

Courtenay
unregd
E

M1

Hermes Finance unregd

M2

IAC unregd

Hermes / IAC
unregd
E

43A protection to deem legal interest goes to next dealing to be registered.


Denton had imputed notice and did not satisfy last requirement of no notice at
settlement. Write notes on this case

Successive Effect Doctrine


If there was a legal interest created by s. 43A dealing registrable, its benefit can
be PASSED onto another party that HOLDS a mortgage or lease with the
successful applicant because they can stand in the shoes of the person that has
the legal estate. (Jonray v Patridge)

LECTURE 9: MORTGAGES
Unregistered mortgages enforceable by equity
They are either unregistered or unregistrable.

Equitable mortgage by deposit of title deeds

When a mortgage not signed but it is accepted and the title deeds have been
deposited. (Cooney v Burns 1922)

Agreement to grant a mortgage

(Banking group v Widin 1990)

The equity of redemption

Under OST, a first mortgage by deed passes legal estate to the first
mortgagee
The mortgagor (borrower) retains an equity of redemption which
suggests that once the debt is paid in full, the mortgage is entitled to be
discharged so that the mortgagor can have their property reconveyed/title
returned.
Under Torrens title, a mortgage does not convey the title of the property
but merely changes under a statute of charge

Equitable principles

There is a contractual duration period under common law to repay debts


but under equity, a further extension on that period is allowed.
The equitable right to redeem ends when the mortgagee sells the debt or
forecloses.
In a breach of a mortgage contract, the mortgagee usually has the right to
demand full payment.

Foreclosure

The mortgagee is entitled to foreclose and become the owner of the


mortgaged property after satisfying certain steps. Foreclosure is
basically the mortgagee exchanging the owed debt for ownership.

OST or unregistered Torrens mortgages (Conveyancing Act ss. 99A,


100)
Registered Torrens mortgages (RPA ss. 61, 62)

Kreglinger v New Patagonia Meat [1954]


There are further equitable periods in which borrowers can repay a debt.
However, after this there is an eligibility of foreclosure.

A court order for repossession is not foreclosure because the


mortgagor still owns the property this merely highlights the importance
of repaying the debt.
In the American perspective, a person unable to repay a debt is simply
able to discharge their debt by giving the property to the mortgagee
through a foreclosure.
This is not a popular in Australia due to to policy considerations on banks
owning the houses of clients they finance.

Steps in order to obtain a foreclosure (RPA s. 57/Conv s.11)


1. Default of any kind needs to occur
2. Notice to remedy the default within a further month (RPA s. 57/Conv s.11)
3. Non compliance with the notice
(At this point, there is the preferable option to sell the property)
4. There is an obligation to hold a properly conducted auction in order to
get the best value of the property on the given day
5. The highest bid in the auction must be less than the value of the debt.
Policy will not allow banks to profit from repossessing property of a greater
value than the value of the debt they loaned.
6. Application of foreclosure to the Registrar General (under RPA) or the
Supreme Court (Under Conveyancing Act)
7. Further period must be given to mortgagor to repay
8. Order for foreclosure is made absolute and the debt is exchanged for
ownership.

Mortgagee powers arising from default

Foreclosure

Personal covenant The contractual obligation to be bound

Repossession An order from the Supreme court for possession under a


default. Remember that ownership is still intact (RPA s. 60)

Appoint a receiver to collect rent Collecting rent from renters in order to


repay the debt (Conveyancing Act 100)

Improvement of property Entitlement to potentially reduce debt by the


value of certain improvements on property (Southwell v Roberts 1940)

Mortgagee obligations when selling


s. 111A which also applies to RPA mortgages, requires that a mortgagee must
take reasonable care to ensure... the best price that may be reasonably
obtained in the circumstances.
Duty to take reasonable care to ensure the best possible price
When selling to a related entity, must prove a truly independent bargain (ANZ v
Bangadilly Pastoral 1978)
CAGA v Nixon (1981) Qld appeal case to HC. CAGA as mortgagee, requested
real estate agent to advertise property in newspaper but was only advertised
once in weekday edition rather than weekend and did not attract many buyers to
obtain reasonable price. HC HELD authority that if mortgagee agents when
selling, falls short of ensuring best price, is imputed and mortgagee is held
responsible.

Mortgagee sales

A sale is necessary and mortgage cannot sell to themselves (Farrar v


Farrars Ltd)
A truly independent bargain (ANZ v Bangadilly Pastoral 1978)
Although you cant sell to yourself, it could be to a related entity. However,
it must satisfy this difficult onus.

Prerequisites
1.
2.
3.

Default
Statutory notice of one month (RPA s57)
Non compliance with notice
It is the mortgagees option as to when they will sell the property. They
can sell immediately after the notice or delay the sale in order to satisfy
the obligation of finding the best reasonable price under s.111A. (Belton v
Bass, Ratclifee [1922]

Remedies to improper sales


If all the perquisites have been met and a sale is to come through but you
believe it will be an improper sale because for example, the sale will happen
immediately and it wont be at the best value:

Pre-exchange, full payment of the debt to restrain the sale (Inglis v Cth
1972)
Between an exchange and settlement, there are certain terms in which a
court may restrain a mortgagee sale:
Expert evidence of improper valuation due to improper marketing,
improper valuations,
Court can make an order to make an early hearing. However, the
mortgagor must satisfy that they can pay enough as to compensate
the mortgagee if the re-evaluation does not change the value of the
property, so that the borrower must not be out of pocket for their reevaluation.

For example, If the value of the house is more than the owed debt,
the lender will not be out of pocket and there is no issue but if the
value of the house is less than the amount owed I.e. if the debt is
$1M and the house is to be sold at $800,000. Since the lender will
already lose out, the court will require that the mortgagor can pay
enough to compensate the bank if there was no interference.

Penalties

Early payment penalty


Agreement to pay the total sum early in order to stop interest
accumulation is usually acceptable upon notice. However, there are
certain mortgages where early payment does not discharge the agreed
total interest sum.

Conveyancing Act s.93


Regardless of the terms of the mortgage, it can be paid and discharged
early. However, the party initiating the early discharge must pay the
interest stated including the total interest for the full term if it is stated.

Strode v Parker (1694) 32 ER 804


It is unenforceable to increase interest rates upon default. Therefore,
banks tend to work backwards and apply a reduced interest rate for ontime payment.

Wanner v Caruana [1974] 2 NSWLR 301


It was a mortgage for full payment of interest regardless of early payment.
The borrower was consistently behind on payments for 18 months on a 16
month loan. Lender upon frustration then demands payment of immediate
debt. Found that the mortgagee can initiate notice for an early
payment but upon doing so, they cannot demand interest
payment beyond the date of actual payment.

ODea v All States Finance (1983) 152 CLR 359

Tacking
Cases under OST
Taylor v Russell [1892] AC 244
Mortgagor borrowed from M1, M2 and M3. Questions posed to House of Lords:
1. Issue of whether M3 not aware of mortgage to M2, only first mortgage.
2. If M3 took assignment of first mortgage (paid off and transferred
mortgage), what was the effect of M3 becoming first mortgagee?
Held: Tabula in naufragio M3 gets priority over M2 as they are now the first
mortgagee from acquiring first mortgage and lack of notice of M2 at the time
of mortgage.

Tabula in naufragio
Mortgagor

Mortgagee 1
Mortgagee 2
Mortgagee 3

Further Advances by First Mortgagee

Hopkinson
v Rolt (1861) 11 ER 829
Mortgagor
Mortgagee 1
English OST authority followed inMortgagee
Australia
for when M1 and M2 made further
2
advances (increase borrowing). M1s further advance will only prevail over M2, if
Mortgagee 1
at the time of the further advance, had no notice of M2.
Tacking on further advances arise where:
can Mortgageeprovision
1 tack?
a) Whe
Asnmortgage
states that the mortgagee will make further
advances,
up to a specified sum, on the security of the mortgaged
Unde
r OST
property.
(a)
When Mortgagee 1 had no actual or constructive notice
b) (b)
As mortgage
does
provide
forthere
further
specific
advances being made,
When Mortgagee
1 had not
no actual
notice and
was an initial
provision
but for
does
provide
more
generally
that
the
security
secures
both the initial
further advances
advance
and
any
further
advances.
(c)
When it is against conscience for Mortgagee 2 to deny that Mortgagee 1 is
entitled (say the facts of Matzner)

In either
these
Unde
r TT two situations, if X subsequently grants a mortgage to B, and then
A makes
a
further advance, A is entitled priority over B and may tack on the
(a)
as above
further advance to the original UNLESS A had actual notice of Bs mortgage.
(b)
as above
West v Williams [1899] 1 Ch 132
(c)
as above
Re OByrnes
Estate (1885) 15 LR (Ir) 189
(d)
Arguably
also where
Mortgagee mortgage
1 is registered and
an indefeasible
right
If there is provisions
in original
forhasfurther
advances,
only actual
to all money, whenever lent
notice of M2 that will defeat M1s further advances. Thus, preferable to include
P.S as it will be easier to be tack further advance onto original mortgage.
provisions
MightvbePotter
able to (1894)
classify further
advance
a reasonable
improvement to the
Credland
LR 10
Ch as
App
8
property (C.f. Southwell v Roberts)
M1 lent
some money, M2 lent some money. M1 was prevailed upon to make
further advances. Where there is no provisions for further advances in original
mortgage, any kind of notice (actual or constructive) that M1 has of M2 will
defeat further advances of M2.
Cases under Torrens
Matzner v Clyde [1975] 2 NSWLR 293
Owner (mortgagor) borrowed money from first mortgagee to develop property
and subsequently borrows money from second mortgagee. Both mortgagees
were aware of each other so M1 had notice. The mortgagor went broke and
property was not completed. M1 got property surveyed which came back less
than half of mortgage lent so was not worthwhile selling. M1 made a further
advance and lent the mortgagor money to finish developing the property. Sale:
M1 is fully paid out and M2 gets a small amount.
Issue: Should M2s interest be paid out before M1s improvements, since M1 had
notice and thus could not tack his increased mortgage amount onto M1?
Held: OST authority that if M1 improves property reasonably, the cost could be
added(tacked) into original mortgage. (Southwall v Roberts)
Judge created equitable Matszner Exception - It is against conscience for M2 to
prevail over M1s further advance since, without M1s further advance, M2 would
not have gotten any money. However, is just a supreme court decision and may
not be binding on Westpac v Adelaide Bank case.

Mortgagee 2
Mortgagee 1

When can Mortgagee1 tack?


Under OST
(a)

When Mortgagee 1 had no actual or constructive notice

(b)

When Mortgagee 1 had no actual notice and there was an initial provision
for further advances

(c)

When it is against conscience for Mortgagee 2 to deny that Mortgagee 1 is


entitled (say the facts of Matzner)

Under TT
(a)

as above

(b)

as above

(c)

as above

(d)

Arguably also where Mortgagee 1 is registered and has an indefeasible right


to all money, whenever lent

P.S
Might be able to classify further advance as a reasonable improvement to the
property (C.f. Southwell v Roberts)

Westpac v Adelaide Bank [2005] NSWSC 517


Refer to assignment

Possessory Title
Governed by Pt VI A esp. s. 45 D
Limitation Act 1969 (N.S.W.) ss. 27, 38 requires 12 years of presence for a
squatter or trespasser (unlawfully) to be able to register for title of the property.
Possessory title under Torrens allowed for the whole block of land or none.
Contrasts to OST title of adverse possession which allowed for a strip of land.
Mulcahy v Curramore [1974] 2 NSWLR 464
1. The true owner of property(registered) must not be present for 12 years,
they will not be able to sue the trespasser after this period and loses
possession of property.
2. Possession must be open, not in secret
3. Must be peaceful, not by force
4. Must be adverse, not by agreement or consent

Lecture 10 Old System Title and Qualified Title


184G Conveyancing Act for priority under Old System Title
1. Under OST, fraud and forgery will always be void and ineffective re
Cooper: Cooper v Vesey (1882)
2. Instrument is competing with another interest created by
instrument(writing) eg. Oral leases, beneficial interest under trust with
no writing, mortgage by deposit of title deeds, omitted easements wont
satisfy this
3. Must have valuable consideration Bullen v ABeck
4. Bona Fides
Marsden v Campbell (1897)
Under OST, a person is bona fide when they take their interest with no
actual, constructive or imputed notice
Constructive notice is what a person should have known if they made all
the enquiries that a prudent person in their position should have made.
Scholes v Blunt (1917) SR NSW 36
1.
2.
3.
4.

Purchaser exchanges
Purchaser acquired notice of an inconsistent interest
Purchaser settled
Purchaser registered
This purchaser was not bona fide, had notice before settlement.
Contrasts to Burrows v Crimp (1887) 8LR NSW 198

1.
2.
3.
4.

Purchaser exchanges
Purchaser settled
Purchaser acquired notice of an inconsistent interest
Purchaser registered
This purchaser was bona fide, had notice after settlement

Moonking Gee v Tahos (1960) 80 WN (NSW) 1612


1. Purchaser exchanges
2. Purchaser acquired notice of an inconsistent interest
3. Purchaser did not settle but registered contract for sale
Under OST, can register these contract for sale of land
Purchaser was bona fide by not settling and received protection under
s184G Conveyancing Act

The effect of registration


If the holder of an equitable interest obtains priority pursuant to s. 184G of the
Conveyancing Act, the holder is entitled to obtain the legal estate.

Qualified Title
As a mechanism to convert OST to Torrens from remaining land, there is a
conversion process under qualified title to protect interests under OST. Torrens
title is subject to OSTs existing interest before being absolute Torrens title after
6-12 year period.

When caution lapses, qualified title becomes absolute Torrens title when:

On the 6th anniversary, where a dealing for value (absent fraud) was
registered within the first 6 years of qualified title

On the 12th anniversary, where no dealing for value (absent fraud) was
registered within the first 12 years of qualified title

Between the 6th and 12th anniversary, where a dealing for value absent
fraud was registered between the 6th and 12th anniversary

Lecture 11 Co-ownership Conveyancing Act


Joint Tenancy
Is a more traditional form of co-ownership and typically used in closer
relationship. Characterised by the FOUR unities:
1. Unity of Possession - Each person is entitled to the whole of the land
subject to the other co-owners equal entitlements.
2. Unity of Interest all the joint tenants must have a share in the same
interest eg. Estate in fee simple
3. Unity of Title all joint tenants must have the SAME instrument
(document) eg. One contract for sale, one will, one transfer form
4. Time acquisition of title in instrument must be at the same time
Characteristics of joint tenancy:
Potential or aliquot shares eg if between 2 joint tenants of share, if 3
joint tenants 1/3 of share, CANNOT have different share of interests
Right of survivorship NOT characteristic of tenants in common
Presumption of survivorship under s35 Conveyancing Act

*Time of death is very critical. When one joint tenant passes, other tenant will
have sole interest and have full ownership and their heir will inherit the property.
The deceaseds heirs will not have priority.
*In death, presumption that older person will have passed first.
*If not stated on will, there is presumption that beneficiaries will be tenants in
common

Tenancy in Common
In absence of clear words, there is a statutory presumption in favour of tenancy
in common.

Characteristics of tenancy in common


Main difference is that there is no right of survivorship. If one tenant dies, that
portion of his/her interest is passed onto his/her heirs.
1.
2.
3.
4.

Unity of possession
Undivided shares interest can be different eg 60/40
No right of survivorship property will pass according to the will
Alienable

Scenarios:
A, B and C as joint tenants would originally have 1/3 shares, interest gets
enlarged and each will have shares
A and B are joint tenants (2/3 share), in tenancy in common with C (1/3 share).
When A dies, Bs interest is enlarged to 2/3 and C remains at 1/3. If C dies, will go
to heir D with 1/3 share.
Always look first if joint tenancy is affected, then tenancy in common.

Creation of Co-ownership
S26(1) In the construction of any instrument a disposition of the beneficial
interest in any property whether with or without the legal estate to or for two or
more persons together beneficially shall be deemed to be made to or for then as
tenants in common, and not as joint tenants.
S 26(2): default rule in s 26(1) does not apply where the instrument expressly
provides they are to take as joint tenants (as long as they are joint tenants
ie four unities are present)
S 100 Real Property Act to be interpreted in light of s 26(1) Is a language
provision where joint proprietors = joint tenants so will not change that.
Under Torrens, the Registrar will not accept registration without specification of
joint tenancy and percentage of shares of interest.

Creation in Equity
1. Unequal contribution to purchase price/deposit

Eg A contributes 70%, B contributes 30% and elect for joint tenancy. At law, will
be joint tenants with share each in interest (registered as joint proprietors). In
equity, will be tenants in common in 70/30 shares.
2. Partnership Assets
A and B go into business. They purchase premises from which to run their
business. They are registered as joint proprietors. At law they are joint tenants
(proprietors). In equity they are tenants in common in proportion to their
contributions to the purchase price.
Note: this assumes they have entered into a partnership as legally defined.
3. Advance money on a mortgage
A borrows money from B and C, secured by mortgage. B and C are registered as
joint proprietors of a mortgage. At law B and C are joint tenants. In equity B
and C are tenants in common in proportion to their contributions to the
money lent.

How to work out co-ownership


1. Work out the legal interest first joint tenancy or tenancy in common
Presumption of tenancy in common (s 26(1) unless expressly joint tenants (s
26(2)).
2. Work out the equitable interest. Equity follows the law. So whatever the
tenancy is at law, it will also be in equity UNLESS:
3. One of the three exceptions above applies on the facts: unequal
contribution; advance on a mortgage; partnership assets.
Delehunt v Carmody 1986
Miss Delehunt contributed equally to purchase price with Mr Carmody. For
various cultural reasons, this property is registered solely in the name of Mr
Carmody. Sometime later, he dies. As he hasnt written another will, his ex-wife
Mrs. Carmody becomes the registered owner. Miss Delahunt wants a
coownership claim under equity because she has contributed an equal amount to
the property. Although equitable interest via s. 26(1) does not apply due
to lack of construction of an instrument, it is determined that it applies
by analogy to interests in equity.

Severance
Conversion of joint tenancy to tenancy in common. Ends the right of
survivorship to allow for any interest of heirs. It does so by destroying one or
more of the 4 unities (except possession).
Eg. A and B are joint tenants. A transfers to C later one. This destroys the unity of
title as they do not share one same instrument, there is two there is a contract
for sale of land between A and B and a transfer from A to C.

1. Severance through unilateral act alienation/s97 RPA


mortgage/lease
The most common form of alienation is through transfers.
Alienation severs the joint tenancy
In order to be effective at law the transfer must be registered
If the transfer is not registered the alienation may still be effective in equity
Key cases: Wright v Gibbons
Facts: 3 sisters were joint-tenants. Two of them attempted to sever by
registering a document where each transfers their interest to the other.
Held: the registration of the transfer was effective to bring about severance.
They all became tenants in common. A transfer of one's interest severs jointtenancy.
If there there were more than two joint-tenants, than only the severed tenant
becomes a tenant in common, with the others continuing to be joint-tenants with
regards to their share of the property (ie, the property minus the tenant in
common's share).
Obviously if there are only two joint-tenants and one severs than they must both
become tenant in common since the non-severing party has no one to be jointtenant with.
Corin v Patton

Mr Patton [Respondent] and Mrs Patton were joint proprietors of land

Mrs Patton did not want the interest to transfer to her husband after her
death, Mrs Patton executed a transfer of her interest in the land 5 days before
her death to Corin [Appellant], her brother.

The transfer & deed were handed to Mrs Pattons solicitor.

To register the transfer, Mrs Patton had to obtain a duplicate copy of the
certificate of title from the Bank of NSW. She took no steps to do so before
dying.
Issue: Whether Mrs Patton had effectively disposed of her interest in the land
prior to her death, thus severing the joint tenancy and defeating her husbands
right of survivorship.
Equitys rule of gifts:
If an intending donor of property has done everything which is necessary for him
to have done to effect a transfer of legal title, then equity will recognise the gift.
1. Signing and executing memorandum
2. Producing CT for registration can only be done by the individual, was
not done here
3. Register the transfer (can be done by solicitor)
Therefore, Mr. Corin failed as gift was not recognised by equity.

Alienation s97 RPA


Designed to freely alienate own interest to facilitate severance. 4 weeks notice is
given to other tenants who may be affected if there is a trust. Production of the
CT is not required.

McCoy v Caelli

The son attempted to transfer his interest in the joint tenancy to himself. The
transfer was not registered before the son died. Mother lodged notice of death at
the Department of Lands to be registered as the sole proprietor of the property.
Court held equity rule under Corin v Patton does not apply for transfer to self.
There is no second chance so if there is no registration, severance will FAIL. Since
the transfer was not registered before the son died, therefore the joint tenancy
was NOT severed at law.
2. Severance by Mutual Agreement
Agreement by every tenant and needs to be in writing (only in equity). Need to
change at Registrar to reflect at law.
3. Court Order
Court can order severance of joint tenancy eg. Family Court
4. Bankruptcy
Bankruptcy will be an involuntary alienation which will sever joint tenancy.
5. Course of conduct/dealing
When tenants through act of conduct, show intention to sever joint tenancy. Is
only applicable in equity and a very weak argument.
6. Homicide
When there is a joint tenancy and one party kills the other, the right of
survivorship allows that party to enlarge their interest and gain ownership.
However, equity will not allow for the party to profit from their crime and the
perpetrator holds on trust for victims next of kin to be a tenant in common. Read
in geoffs book

Ending Co-ownership
Action of the parties

One acquires shares of other

Operation of right of survivorship

All transfer their interests to the same person

Sale
Under s66G of Conveyancing Act, can request court for an Order of Sale to sell
own interest of co-ownership. Read geoffs book on this part

Partition
Can subdivide property and request court for an Order of Partition. More common
on commercial blocks or larger land.

Rights during ownership

Everyone has possession of the whole


No one can exclude anyone else
No one can charge another co-owner rent

Accounting in Equity
Accounting needs to be sorted out which takes into account financial things that
happen during the ownership in relation to improvements: Types of accounting
include:

Ousters: An unlawful act that excludes one or more parties from


possession to the party. For the period of the ouster that you are excluded,
you can claim occupation rent from the person that was in possession. You
may claim market rate of rent proportionate to your co-ownership.

Improvement offsets: A co-owner that improves the house with their


own money. They will receive their proportion of the property plus the
lower of either:
i. Cost of improvement at the date of the work, or
ii. Increase in the market value attributable to the improvement

Allowances are only given to improvements and NOT MAINTENANCE


Entitlement to collect rent: If one co-owner collects rent, they are seen as
acting as an agent for collecting rent for the other co-owners. If renting part of
property out to third party, the co-owner acts as principle to other co-owner and
need to share it (equity) (Ryan v Dries)

Obligation to pay profits: There are two questions (Squire v Rogers):


1. Was the business personal or on behalf of the co-owners?
2. Were profits derived from the personal skills of the co-owner or from the
nature of the property?

Occupation rent Possible rent paid by owner for no presence to co-owner.

Brickwood v Young
Lesser of the value added or the cost
Forgeard v Shanahan (1994) 35 NSWLR 206 *
Allowances
Squire v Rogers
One party built units for a caravan park on the property. Was this business
personal or on behalf of the co-owners? Does this income represent profits on
from the skills of the party or from the nature of the property? So were the
profits from the property per se or from services of the individual co-owner?
Argue the facts. If nature of the property, then they are liable to share profits.

Steps
First look at the joint tenancy problems
Then look at the tenancy in common issues
Apply creation of ownership tests for equity

Look to see if there are equity exceptions


Always do the interest at law first then the equity interest and distinguish
the proportion of interests at equity.

LEASES
Different Regimes
A lease is an interest in land granted. Confers exclusive possession for a fixed
period of certain duration.

General law of leasing


Is based on common law, equity and Conveyancing Act + registration RPA.
Applies to commercial, non-retail leases.

Other types of Interests


Bare Licence Bare permission/privilege granted by one to another to do
something which would otherwise be unlawful. Less than a contract - purely
personal interests and create no interest in land Eg. Knocking at the door. Right
revoked at any time. Cannot be assigned or bind third parties.
Contractual Licence Needs consideration, cannot be assigned or bind third
parties. Revocable on terms of contract or reasonable notice. Eg. Hiring a hotel
room, revoked by check out time, going cinemas, parking spot
Easement A right annexed to land to utilise the land of another in a particular
manner, or to prevent another using his or her land in a particular manner. It is a
property interest so is irrevocable and permanent. Incorporeal hereditament.
Can be registered under RPA.
Profit a prendre - A right to sever and take some part of the realty to the
grantees own use (something capable of ownership), of some part of the soil or
minerals, some natural produce or some animals (ferae naturae) existing upon it,
incorporeal hereditament, proprietary right and can be registered under RPA.
**Refer to notes after easement

Leases Contract and Demise (granting of a leasehold


estate)
o
o
o
o
o

Proprietary rights, distinction between licence


Capable of assignment
Can bind third parties in certain circumstances
Range of protections, terms (rights) and remedies far more extensive
Exclusive possession

When two parties enter into a lease or agreement for lease, there are two
interests and consequences/remedies created:
1. Contract: Lease or agreement for lease operates as a contract

2. Property: A lease complying with relevant formalities create a legal


leasehold estate. An agreement for lease will affect the terms of a lease
implied at law. An agreement for lease may be enforceable in equity.

Types of leases:
1. Fixed term:
- Standard leases, for a specific certain period eg. 6 months, 5 years, 99
years
- Can have an option to renew
2. Periodic Tenancy
- Rolls over from period to period. Determined by reference to the rental
period. If rent is paid every 2 weeks, the periodic tenancy is 2 weeks.
- Is of certain duration as new lease is created from payment for next period.
- The notice period is also equivalent to the period with reference to which
rent is paid
- Can be both express and implied. Express agreement is written and
enforceable. Any situation where money is paid for exclusive possession of
property, is implied period tenancy
s127 of RPA

3. Tenancy at Will
o
o
o
o
o

Arises whenever a person occupies land as tenant (and not merely as


servant or agent) with the consent of the owner on the terms that either
party may determine the tenancy at any time
Occupation fee not rent
Eg where you enter into possession but have not yet commenced the
lease
Is revocable at any time until there is an implied periodic tenancy when
there is periodic payment.
Does not really match the characteristics of other leases, more similar to
contractual licences.

5. Tenancy at Sufferance
o
o
o

At the end of the duration of the period and lessor is hold over after the
leases had ended, without the consent of the landlord.
Not a trespasser and can be asked to leave at any time
Payment given is occupation fee, not rent. If payment is continued
periodically, an implied periodic tenancy will arise.

Is it a Lease? Essential Characteristics of Leases


Need to first determine if it is a lease or licence. Look into the substance, not the
form of the relationship even if it states licence or lease. Radiach v Smith
1. Right of exclusive possession of the premises; and
2. The term must be for a definite period in the sense that it must have a
certain time for commencement and a certain time for ending; and
3. The lease must be created in the appropriate form.

The Premises

Not uncommon to lease part of a building eg office block. The premises have to
be identified, by including a plan of the building with identified individual offices.

1. Exclusive Possession:

The key to a lease is whether or not the grant confers exclusive


possession. Exclusive possession gives the right to exclude others from
the land, even the landlord

Exclusive possession is a question of fact


If there is not exclusive possession what, if any, interest has been created?
Radaich v Smith
Issue of whether it was a lease and covered by Rent Control or a contract and not
covered. Was determined to be a lease as there was exclusive possession. The
test Substance over form did it give the so called licensee a legal right to
the exclusive possession of the premises during the term? The lessee has a
right to exclude all others from the land, including the lessor.
Principle: If exclusive possession is conferred, a lease is created regardless of
intention
Taylor J. These obligations to occupy a shop, to carry on a business there that
needs plant and stock, and to give up possession at the end of the term, taken
together, seem to me to require the conclusion that the occupier has, during the
term, the right of exclusive possession.
The level of restriction is the important fact.
The facts (does the landlord have a key; can the landlord use this key to enter;
what are the conditions that must be fulfilled before the landlord can enter; are
there other restrictions governing the landlords right to enter, etc) must be
balanced to determine whether or not exclusive possession has been conferred.
Held: It was a lease. She couldnt carry on a business unless she had exclusive
possession of a definable area.
What then is the fundamental right which a tenant has that distinguishes his
position from that of a licensee? It is an interest in land as distinct from a
personal permission to enter the land and use it for some stipulated purpose or
purposes. And how is it to be ascertained whether such an interest in land has
been given? By seeing whether the grantee was given a legal right of exclusive
possession of the land for a term or from year to year or for a life or lives. If he
was, he is a tenant.
Exceptions:
o
o

No intent to contract a tenancy at all (Taylor)


Exclusive possession attributable to another legal relationship between
the parties (eg. employee, purchaser under a contract for sale or,
beneficiary and trustee).

2. Definite Period
o
o
o
o

The lease must be for a definite period.


Both the date of commencement and the date of conclusion must at least
be capable of being rendered certain. If not, is VOID at common law.
If maximum duration is certain, the possibility that the lease may end at
an earlier date does not render it void
In commercial leases often called the commencement date and the
termination date or expiry date

3. Appropriate form: Formalities - Torrens


o
o
o

Needs writing, execute a lease in the approved form and must be


registered for leases of three years or more. s53 RPA
Leases of less than 3 years can be registered, if not, will be an equitable
lease. If registered, will have benefit of indefeasibility s42 (Parkinson v
Braham 1962).
Exception to indefeasibility for lease of under 3 years s42(1)(d)
registered interest will be subjected to short-term oral or written lease if:

o
o
o
o

Term (plus option to renew) does not exceed three years


Best rent reasonably obtained (market)
Tenant must be in possession or has right to immediate possession
to the property
The holder of the registered interest had notice of the tenancy
before he became registered. Notice is actual knowledge,
constructive or imputed. (Refer to exceptions to indefeasibility
short term tenancies) **

Unregistered Legal Interests under Torrens through two ways:


1. S23D(2) of Conveyancing Act compliance with this provision will
create a legal unregistered interest: Need to be Oral/deed/writing, lump
sum, taking effect in possession

2. Implied Legal Lease - Yearly Tenancies


Implied yearly tenancy at common law, implied through the paying of
annual rent. (Can be paid monthly but CANNOT be a periodic tenancy).
Usually longer term tenants.
S 127 - No implied legal interest for year to year tenancies.
o A year to year tenancy cannot be implied by the payment of rent.
o If there is no agreement as to duration, it is a periodic tenancy at
will.
Can be implied by paying of annual rent (just like regular implied
tenancies). This can include payment by reference to part of a year.
So $300 per month as part of $3600 annual rent = implied yearly tenancy
BUT
$300 per month = monthly periodic tenancy and wont qualify

Torrens Unregistered Equitable


Leases which are not created by a deed and do not fall within the oral leases
exception of s23D CA will not be enforceable at law. However, can be
enforceable in equity provided:
Complies with s 23C(1) writing + consideration:
s. 23C(1)(a): no interest in land can be created/disposed of except by
writing signed by the person creating or conveying the same, or by the
persons agent lawfully authorized in writing, or by will, or by operation of
law
s. 23C(1)(b): a declaration of trust relating to land/interest in land must
be in writing signed by some person who is able to declare such trust or
by the persons will
s. 23C(1)(c): a disposition of an equitable interest or trust subsisting at
time of disposition, must be in writing signed by the person disposing the
same or by the persons will, or by agent lawfully authorized in writing [cf
s54A CA agent does not need to be authorised in writing]
Or

Walsh v Lonsdale (Sufficient writing)

The parties entered into an agreement to grant a lease for seven years.
The agreement stated an intention to enter into a formal lease, which was to
contain a provision that the landlord could demand a years rent in advance.
The lessee entered into position and started paying rent quarterly in arrears.
No formal lease eventuated.

The lessor sought a years rent in advance. The lessee argued that since
there was no formal lease, the agreement for lease was unenforceable at law.
Held: The lessees contention was rejected. The court held that the parties
had entered into a binding contract to enter into a lease, and that equity
could enforce this agreement.
It will be an equitable unregistered lease if:
Contract is final/enforceable (consideration) AND
Contract is sufficiently certain AND
In writing (s54A) OR part performance (s 23E) AND
Equity would grant specific performance (discretionary)

o
o
o
o

Or
Equitable estoppel can create proprietary interest - Waltons Stores
If you have an equitable lease, equity will:

To

Treat the parties as if they have a lease


Order the parties to enter into a legal lease
Restrain landlord from exercising right to terminate an implied legal lease
enforce equitable lease, must approach court with equitable jurisdiction

Covenants Rights and Obligations in a Lease:


Express clauses in the lease which confer the rights and obligations on
both landlord and tenant
Implied by common law (ie inherent in the landlord/tenant relationship)
Implied by statute
By necessary implication
Where there is an express covenant in a lease this will preclude the operation
of an implied covenant relating to the same subject-matter

Express Covenants need to include:


The identification of the lessor and lessee;
The identification of the premises to be leased;
The commencement and duration of the term; and
The rent or other consideration to be paid;
Repair who is responsible for repairs

Covenants by Implication by Common Law:


There are six covenants implied at common law, three on landlords:
1. The covenant for quiet enjoyment
2. The covenant not to derogate from the grant
3. In the case of furnished dwellings, to provide the premises in a state fit for
habitation at the commencement of the term.
Three on tenants:
1. To use the premises in a tenant-like manner
2. To yield up the premises at the expiry of the lease
3. In the case of tenancy of agricultural land, obligation not to commit waste

When the lease does not expressly contain either or both of these covenants,
they will be implied into the lease Budd Scott v Daniel (1902)
The Covenant for Quiet Enjoyment
It is a question of fact in each case as to whether or not there has been a
denial of quiet enjoyment (Todburn Pty Ltd v Taormina International Pty Ltd).

Martins Camera Corner PO Ltd v Hotel Mayfair Ltd

Damage was caused to goods situated in the lessees premises by water,


which overflowed from the lessors blocked down pipes.
The overflow was the result of poor maintenance on the part of the lessor.
Held: There had been a breach of covenant.
Other cases where breach of covenant for quiet enjoyment has been found:
the removal of the doors and windows (Lavender v Betts); obstructions and
repeated knocking and shouting (Kenny v Preen); the carrying out of
structural repairs (Dowse v Wynyard Holdings Pty Ltd); the disconnection of
electricity supplies (Perera v Vaniyar).

CONVERSELY: Southwark London Borough Council v Mills

Lessees complained about noise levels emanating from other apartments in a


residential complex.
Although the noise levels were the result of ordinary and reasonable use of
the premises, there was inadequate noise insulation due to the age of the
premises.
The problem existed when the lessees entered into possession.
Held:
o Regular excessive noise could amount to a substantial interference with
the enjoyment of the premises.
o Because the covenant for quiet enjoyment was prospective in operation, it
did not extend to interference arising from factors which related to the
condition of the property before the grant of the lease.
o Accordingly, there will not be breach where the interference arose from a
contemplated use of premises retained by the lessor where all parties
contemplated such use.
o Because the disturbance was the result of inherent structural defects in
the premises, which existed at the convenience of the lease, and such
disturbances were within the contemplation of the parties, there was no
breach of covenant.

The Covenant To Not Derogate From The Grant


A lessor must not do anything, which is inconsistent with the purposes for which
the property is leased, unless the parties have agreed otherwise. Derogation

from the grant occurs if a lessor interferes substantially with premises that
it leased The test is whether the premises have been rendered unfit or
materially unfit for the purpose for which they were granted (Gordon v Lidcombe
Developments Pty Ltd).

The rationale of this covenant is that the lessor cannot give possession with
the one hand and then take away the benefit of the possession with the other
hand.
Cases where breach of covenant not to derogate from the grant has been
found include:

o
o

The lessor was found to have interfered with the access to a restaurant
business conducted by the lessee on the sixth floor of a building, by
allowing the lift to the restaurant to remain out of operation for several
months (Karaggianis v Malltown Pty Ltd). Removing a lift and obstructing a
corridor needed to bring goods to the lessees business premises is also a
breach of covenant (Edward Kazas & Associates v Multiplex)
A lessor will be in breach if uses premises in a way that blocks the flow of
air to the adjacent tenants premise if the tenant requires ventilation for
ordinary conduct of business (Aldin v Latimer Clark, Muirhead & Co 1894)
The plaintiffs business was adversely affected by sawdust and loud
industrial noise from the neighbouring premises leased from the same
lessor. Both leases contained an undertaking by the lessee not to cause a
nuisance to any other lessee. The lessor could have enforced the
covenant, but did not do so (Aussie Traveller Pty Ltd v Marklea Pty Ltd).
As a result of demolition works close to the leased property, thieves were
able to enter the leased property and steal a large amount of stock
because the work rendered tenants vulnerable to burglary (Len Lease
Development Pty Ltd v Zemlicka).

Norden v Blueport Enterprises (Third Party)

In a four-storey building, the landlord of the building leases third floor to


Panda Electronics.
The business on the top floor want to assign their lease to an escort agency.
The lessor consents to this assignment.
Panda Electronics makes complaints about unsavoury smells, unsavoury
substances, whips and moaning.
Issue: Is this a breach of covenant? Is Panda Electronics premises materially
unfit for their purposes?
Held: The interference must be material and substantial. On the facts, a
material and substantial interference was found.
However, the third party caused the interference, not the lessor. Generally,
courts reluctant to make landlords liable for the action of other tenants for
policy reasons. Prima facie, the lessor is not liable, however, the court makes
clear that landlord can be liable where in some ways they
authorized/adopted/consented to activities which found the breach.

Covenants Implied by Statute


Covenant to Repair
Tenant: S84(1)(b) of Conveyancing Act implies covenant for tenant to yield the
premise in good and tenantable repair.
It is a prospective covenant: tenant is immediately in breach, very important to
inspect and understand conditions. If repairs are the tenants obligation, need to
repair and not renew or improve. No duty to repair an inherent defect eg faulty
wiring. Accidents held to be unintentional and unexpected damage which could
not be reasonably foreseen by tenant (Saviane v Stauffer Chemical Co). If
premises are in disrepair at the commencement of tenancy, no duty to repair
this condition reduces tenants obligations.
Landlord: s85 Covenant to allow landlord to inspect and repair

In the absence of agreement, landlord has the right to enter premises to inspect
state of repair but is very strictly limited. Can only enter twice a year at a
reasonable time of day upon giving lessee two days notice.
The landlord can also serve notice in writing on tenant requiring any repairs to be
carried out a reasonable time. If the tenant fails to repair, landlord has implied
right to enter and repaid under s85(1)(b). If repairs are structural in nature or
required by statutory authorities. Landlord can enter and carry out repairs at any
time s75(1)(c).
Requires notice to the landlord, if tenants dont give notice there will be no
liability for the landlord. Not a breach until notice received.
Remedies: Preferred remedy is damages for breach of the covenant, but there is
the power to order specific performance, where damage not an adequate
remedy. Where breach right of repair, there exists an implied right to forfeit the
lease, and if serious, terminate the lease for breach. If tenant expends money on
repairs the landlord should have, they may recoup expenditure from future
tenant or another equitable set-off

Landlords Duty of Care


Another source of implied obligation is under the tort of negligence. Landlord is
under a duty to take reasonable care to avoid foreseeable risk of injury to the
tenant and members of the household (Northern Sandblasting and Jones v
Bartlett).
In Sakoua v Williams, upheld the principle found by the majority in Jones v
Bartlett that the common law does not impose on a landlord an affirmative duty
to conduct or procure a detailed inspection of every possible source of danger in
the premises. Must demonstrate that there was some actual defect in the
premises causative of the loss being claimed for, and that the duty is to ensure,
at the time of the commencement of the tenancy, that the premises are as safe
as reasonable care can make them. In order to succeed a plaintiff must prove
unreasonable want of care with respect to defects at the inception of letting.

A commercial lease might include:

Incentives (eg free rent periods etc)


Rent? gross/separate or eg inclusive of outgoings such as
water/electricity?
Options to renew and when this clause must be exercised
Access allowed to who?
Air-conditioner who pays and repairs?
Landlords works and tenants fit out
Fittings (does the fit out remain or go) cf tenants fixtures
Security
Refurbishment date where landlord will refurbish to standard of lease
when commenced.

ASSIGNMENT of Leasehold Covenants


o
o
o
o
o
o
o

Assignment is disposing of interest to another. The assignor assigns the


lease to the assignee.
Transfer of the whole of the interest
Assignor replaces tenant (puts themselves in their shoes)
If landlord assigns, it is the reversion being transferred
Assignee obtains al the benefits under the lease including exclusive
possession
Assignee is also required to fulfil all obligations under lease, such as
payment of rent
The assignor (lessee in original lease) is LIABLE to the lessor to perform all
obligations under the lease, even though the assignee is obliged to
indemnify/compensate the assignor for any continuing liability to the
lessor.

Sublease

Taking a leasehold estate and carving out lessor estate to third party as
opposed to an assignment which disposes ALL interests.
Period will always be duration or lesser than head lease Example of a
sublease is the lessee transferring the exclusive right to possess all of a
three-storey building for LESS than the remaining four years on the lease.
OR is a sublease if the lessee transfers the exclusive right to possess only
PART of the three-storey building for ALL of the remaining four years on
the lease.
Tenant remains a tenant but has dual roles, tenant also becomes a sublessor ie. sub-landlord and there is now a sub-lessee.

Formalities for a Sublease

Torrens land registered lease is assigned by the registration of a


memorandum of transfer
Unregistered lease evidence in writing should be a Deed of Assignment
Otherwise in equity (sufficient writing and performance to enable orders
for specific performance eg. agreement to assign)

Covenants Against Assigning


A lease may:
o Prohibit assignment or subleasing.
o Permit assignment or subleasing provided that consent is sought.
o Be silent on whether or not assignment or subleasing is permitted the
lessee may assign or sublease without obtaining consent of the lessor
(American Dairy Queen QLD v Blue Rio 1981)
Absolute covenants are strictly construed. Does NOT allow for any assignment
or subletting, as it prohibits the tenant from any dealings with the lease.
o
o

Courts tend to construe covenants strictly AGAINST landlords (Field v


Barkworth 1986)
A covenant not to assign does NOT restrict the tenants right to SUBLET
(Sweet & Maxwell v Universal News Service 1964)

However, a covenant AGAINST subletting or parting with possession will be


breached if tenant assigns (Mark v Warrens 1979)

Qualified covenants seek to limit, rather than prohibit the tenants rights
(requires landlord consent to assign)
o

If its a qualified clause, consent CANNOT be unreasonably withheld by


landlord ss 133B(1) CA and s 132 CA. The test applied is found in J A
McBeath Nominees v Jenkins Development Corp: Need to refuse on
reasonable grounds that there will be an adverse effect on property
interest adverse affect on future letting.
The lessors refusal may be reasonable where the assignment would cause
the lessor financial detriment. The lessor is entitled to consider the
proposed assignees or sublessees financial capacity and willingness to
challenge the withholding of covenant.
The consequence of breaching this covenant is not that the
lease/assignment is void rather, it remains valid unless and until the
landlord makes an election to end the lease

Enforceability of Covenants - Privity of Contracts


INTERESTS: Landlord holds the reversion. Tenant holds the leasehold estate
o
o
o
o
o

o
o

Lease is a contract and an estate


Covenants are enforceable between original parties as a matter of
contract law (Privity of contract)
Privity survives disposal by assignment and still remain enforceable
between parties (Ahern v L A Wilkinson(Northern) Ltd).
There is a presumption in favour of continued liability, still bound by
express but not implied covenants of common law and s70 Conveyancing
Act unless displaced by a clear contrary intention.
Thus, parties cannot escape their contractual obligations by assigning
their interest If a lessee assigns the lease and assignee breaches the
covenant to pay rent, lessor can sue ORIGINAL LESSEE for the arrears (195
Crown Street Pty Ltd v Hoare)
If the lessor assigns the reversion and assignee breaches lessors
covenants, the lessee can sue ORIGNAL LESSOR for breach of contractual
relationship.
There is NOT contract between L and T1, only contract between landlord
and tenant and assignment between tenant and T1. Contractual rights are
no assistance to or against assignees because under contract law,
CANNOT BIND third party, only under property law (Privity of estate)
L + T, A + ST

Privity of Estate
o
o
o

Derives from landlord /tenant relationship


Note: assignment versus sublease (one replaces tenant, one creates a new
tenancy)
In absence of Privity of Contract, covenants are enforceable where there is
Privity of Estate AND the covenants touches and concerns the land (Rule
in Spencers Case)

Common law concept, does not apply to equitable leases


L + T, L + A, L + T, R + T, R + A
Covenants which touch and concern
Covenant must be about the land as such
Swift Investments: A covenant will touch and concern where:
The covenant affects the nature, quality, value or use of the
land/premise
b) Benefits the lessee or reversioner for the time being
c) Not of a personal nature to the parties or other premises
o
o
o
o
o
a)

o
o

Tenants covenant to pay rent, covenant to repair, and covenant against


assigning, for use of premises and insurance of premises all effectively
touch and concern.
Covenants that DO NOT touch and concern land include payment of rates
other than concerning the land, option to purchase contained in the lease.
See also Gumland Property Holdings (read this, more modern principle)
More examples on page 516 of Real Property textbook (not Geoffs one)

Assignment of Leasehold Estate - Benefit vs Burden of


Covenants
o
o
o

Eg. rental clause:


Landlord has the benefit (receives the rent), tenant has burden (pays rent)
Eg repair clause requiring the tenant to repair:
Landlord has the benefit (tenant must repair)
Tenant has the burden (required to repair) and vice versa
Need to determine benefit or burden to sue
The benefit: the assignee of the tenant has the benefit of covenants that
touch and concern. The assignee of the tenant can sue the landlord for
breaches because there is privity of estate
The burden: the landlord can sue the assignee of the tenant where the
covenant touches and concerns as there is privity of estate. The assignee
will be liable for breaches he/she commits such as default in rent payment
but not for breaches committed by LATER assignees.
The landlord can ALSO sue the original tenant when the tenants assignee
breaches a covenant because there is privity of contract so tenant is
bounded by duration of term under s 70A(1) Conveyancing Act, even if
there is no express agreement.
If the landlord sues the original tenant, tenant has an implied right of
indemnity against the assignee who breached and can claim
damages/compensation from A.
Note there is no ability to sue on the lease where the original lease is
equitable or the assignment is enforceable in equity only (English
authority to the contrary), cite Spencers case

Assignment of the Reversion


When a lessor transfers the freehold to a purchaser, this is an assignment of
reversion. On settlement of the sale from lessor to purchaser, the lessor
TRANSFERS purchaser all BENEFITS including outstanding rent owed by lessee to
lessor at settlement date.

S117 of CA assignment of the benefit


S118 of CA assignment of the burden
Rule allows to assign for subject matter of the lease = touch and concern
test to see if can enforce between L and R.
After assignment of the reversion, the original lessor cannot sue for
breaches which have occurred before/after assignment Right to sue
passes to assignee who is the only one who can sue for breaches BEFORE
and AFTER assignment (Re King 1963).
Applies to both legal and equitable leases as the rights rely on statute and
not privity of estate
Do not use this for tenants

S51 EXCEPTION to Touch and Concern: LEASEHOLD


(Benefit)

S51 Upon REGISTRATION of any transfer of estate or interest, the


rights, powers and privileges of original holder of interest or estate, will
pass to transferee (receives transfer of property). Will be subjected to
and liable for all obligations and liabilities. Therefore, all express clauses
between L and T will be binding upon registration to respecting parties.
If transfer is registered the assignee of lessee is liable for ALL covenants
in original lease for so long as she remains the tenant, not merely those
covenants that touch and concern the land: Karacominakis v Big
Country Developments Pty Ltd
But is this limited to covenants which are essential elements of the
lease?
Big Country suggests that s 51 creates a kind of statutory privity of
contract between the assignee and the landlord.
s3(1)(a) transfer includes lease so s51 applies.
Most 3 year or less leases are not registered so s51 wont apply to
unregistered interests
By S52 burden, assignee has the right to sue by virtue of registration of
transfer

S51 and Touch and Concern: REVERSION

S117 words include subject matter of the lease. S51 includes all
powers, privileges and rights.
However, s117 and s118 were enacted after s51 RPA so should be
repealed where there are inconsistencies. Do not need touch and concern
for reversion
Gumland Property Holdings suggests that subject-matter of the lease is
required for s 117. Big Country does not seem to suggest this limitation.
But, the reversion was not directly at issue in Big Country. It is an open
interpretation.

BREACHES
Past Breaches

Completed or past breach eg. failure to pay rent


General rule is that the new assignee does NOT have liability for complete
breaches, but they do for new breaches and continuing breaches
ie. you only have liability when you have the estate
Eg. T assigns to A. T fails to pay rent and damaged kitchen with the obligation
of tenant to repair. L should proceed against T as it is a past breach.

Continuing Breach

If something needs repair, tenant remains in breach until fixed


T will not be in breach, A will be primarily liable so L should proceed
against A.
There is an implied right of indemnity against A and L so should seek
indemnity against T as problem was not created by A.

S51 and Liability for Past Breaches

Section 51 does not affect the general rules on past breaches.


It does not have the effect of meaning that the new assignee is liable for
complete breaches after transfer. The new tenant will not be liable for past
breaches
Neither does s 52.
See Griffith CJ in Measures v McFadyen; Gillies J in Big Country.
These sections do not transfer personal obligations. The sections
are contained to matters to do with the transfer of the estate.

Who is liable for what?


Tenant breaches and assigns:
o
o
o

If breaches by tenant are continuing, such breaches of a repair covenant,


the assignee will be liable (Granda Theatres Ltd v Freehold Investment
(Leytonstone) Ltd 1959)
However, if breach is complete at time of assignment, the assignor will
remain liable and assignee escapes liability.
If the assignee then assigns, the assignes continues to be liable for
breaches but not future breaches.

Tenant breaches and then landlord assigns:


o
o

The reversioner, NOT the former landlord can sue tenant (Ashmore
Developments; Measures v McFadyen; Big Country)
So if the landlord was entitles to sue for rent arrears and re-enter at time
of assignment, these rights will PASS to assignee.

Landlord breaches then assigns:


o

By s118, the burden of any covenant with reference to subject-matter of


lease/touch and concern is annexed and runs with reversion. However, in
Duncliffe v Caerfelin Properties Ltd, held that s118 did NOT make assignee
of reversion liable for complete pre-assignment breaches.
If continuing breach, assignee is liable.

Landlord breaches, then tenants assigns:

o
o

The assignment does not affect tenants right to sue for complete
breaches eg. damaged caused by breach of repair covenant (Shevill v
Builders Licensing Board 1989)
The assignee, not the tenant, can sue for continuing breaches such as
when assignee receives premises in a state of disrepair.

EASEMENTS
An easement is a right of definite and limited character annexed to land. The
right is annexed to the enjoyment of the corporeal hereditament (dominant
tenement) where the occupier of another corporeal hereditament (servient
tenement) is bound to:
o
o

Permit the person of whom the right is vested, to do something on, in or


over the servient tenement
Abstain from exercising one or more of the ordinary rights of ownership or
occupation

An easement must operate for the advantage of one property to the


disadvantage of another. The advantaged property is the dominant tenement
and receives benefit of easement. The disadvantaged property is the servient
tenement and has its right diminished by the easement.

Four Requirements of Easements


Re Ellenborough Park (1956)
i.
ii.

Must be a dominant and a servient tenement


Easement must accommodate the dominant land it must make the
dominant land a better and more convenient property. If the rights include
both benefits for the dominant tenement and also rights unconnected to
the DT, eg. rights to pass along a road for all purposes there is no
easement.

In Re Ellenborough Park, held it did not need to be adjoining land but needs to be
close to receive benefit. To show accommodation, it is not sufficient to show that
right increased value of property conveyed unless also shown that is is
connected to the normal enjoyment of that property. In this case, court found the
park was intended to be a garden that enhances and is connected to normal use
and enjoyment of land, therefore formed an easement.
The effect of the easement must be to give some advantage to the DT, which it
otherwise would not have. Bailey v Stephens (1862)
There must be a sufficient connection that accrues a real benefit to the DT. Does
NOT need to physically adjoin. Todrick v Weestern National Omnibus (1934)
A right will not amount to an easement if the DT has exclusive use of the ST land.
A right to store vehicles on the ST was held to not be an easement but akin to
right of possession. Copeland v Greenhalf (1952)
In Bursill Enterprises (1971), the HC held an effect amounting to transfer of
proprietary rights in a column of airspace by giving unrestricted rights did not
create an easement.
It is sufficient for accommodating a DT if the easement benefits the business
conducted on the land. Moody v Steggles (1879)
iii.

DT and ST must not be owned and occupied by the same person

iv.

Must be capable of forming the subject matter of a grant. The right must
be within the general nature of rights capable of being created as
easements. The right must be sufficiently definite and not too wide or
vague, must be able to define the right. It is necessary to assess the
degree to which the rights interfere with the ST exclusive possession of
the land.

Degree of Interference: Test


An easement cannot amount to ownership or possession of the servient land. But
the ambit of this is unclear. There are two streams of thought here on how to
determine whether the right is too extensive:

1. Reasonable use degree or proportionality. Assessment of how much of


the land is subject to the easement and for what periods of time. Clos
Farms, Batchelor v Marlow
In Clos Farms (2002), held there needs to be a natural connection to the land.
The case concerned an easement for a vineyard where the DT could enter the
land and control it by means of planting, maintenance, harvesting, selling. Was
rejected as a valid easement as it was held to be so extensive that the servient
owner lacked exclusive possession. Degree of interference must not affect it to
be joint possession.
Or
2. Right of possession in law distinguished from a right that confers sole use
or occupation. This may still require some question of degree or
proportionality but as long as there is exclusive possession.
Key cases: Clos Farms; Batchelor v Marlow; JEA Holdings;
Moncrieff v Jamieson (2007) is a recent case where the House of Lords drew
distinction between the grant of a right of sole use and right of possession in law.
If the test is accepted, the ST would still retain possession and control of property
even though the sole use and enjoyment has been granted to DT. This may still
require some question of degree or proportionality but as long as exclusive
possession is still retained. Need to look at the area subject to the easement
itself rather than the whole of the ST.

JEA Holdings - Issue of the instrument not being clear as an easement for
parking spaces but rather a covenant. Second issue of omitted/misdescribed
easement. Used the proportionality test to look at whole of servient tenement
not Moncrieff v Jamieson but still pay particular attention where area covered by
easement.

Creation of Easement
Express Grant: Torrens at Law
o

a)
b)
c)
d)

o
o

Must comply with s88(1) Conveyancing Act when creating an instrument


(after 1 Jan 1931). Non-compliance with with this provision makes the
easement not enforceable despite registration and s42 indefeasibility
against the ST unless the instrument clearly indicates:
The land to which the benefit of the easement is appurtenant,
The land which is subjected to the burden of the easement,
The persons (if any) having the rights to release, vary or modify the
restriction,
The persons (if any) whose consent to release, vary or modify the
easement is stipulated.
Torrens: Registration of a dealing in the approved form: s 46 RPA
Under s47(1) RPA, the Registrar-General shall record particulars of the
dealing in the folio for both dominant and servient tenements.

Torrens in Equity
S23C writing and consideration OR agreement s54A and consideration/part
performance

Express Reservation
o

o
o

Where A owns land, conveys or transfers to B, reserving an easement over


it or part of it for the benefit of the land retained by the owner see s 45A
CA. grantee does not need to execute the conveyance.
If its Torrens land put it in the memorandum of transfer.
Same principles as express grants above, dealing must comply with s
88(1)

Implied under Wheeldon v Burrows Rule


If there is no express agreement for an easement, can argue implied by
necessity or prescription. There are four requirements:
1. Needs to be a severance or grant of a larger property. A severance is the
act of severing a piece of land from a larger tract of land. The severed
parcel of land becomes a separate lot. If title passes other ways such as
by adverse possession, there is no such implication (Wilkes v Greenway
1890)
2. Needs to be visible, continuous and apparent (Do you have notice of it?) Apparent means capable of discovery from a careful inspection of the
servient land.
3. Does the easement benefit?
4. At the time of the severance, was it in fact benefiting the land?
Mere inconvenience will not do, needs to be essential for use of dominant land.
(Union Lighterage Co v London Graving Dock Co 1902)
Implied Easement by Prescription under Common Law - If an action is done
openly without consent for 20 years, will become easement. Has to have been in
open, not secret, peaceful, without force and without consent.

Statute
S88K of CA provides power of court to create easement if reasonably necessary
for the effective use or development of other land that will have benefit of
easement. An order may be made only if the court is satisfied that:
a) Use of land having benefit of easement will not be inconsistent with the
public interest
b) The owner of the land to be burdened by easement and those with
registered interests in the burdened land can be adequately compensated.
c) The applicant has made all reasonable attempts to obtain an easement by
negotiation, without success.
Reasonably necessary asks whether the use and development of the putative
dominant tenement that would be possible WITH the easement is substantially
preferable to the use and development of something WITHOUT the easement
(Gittany v McDowell 2009). What is reasonably necessary should be
determined objectively (Re Seaforth Land Sales Pty Ltd (No 2)). It does not
require absolute necessity. Something less will suffice (Durack v De Winton).

The easement must be reasonably necessary for the use of the dominant land,
not merely for the convenience of a particular proprietor of that lands (Hanny v
Lewis). The court has no power to impose an easement unless it is satisfied that
the servient land can be adequately compensated for any loss - s88K(2), OMara
v Gascoigne (1996).
Refer to page 250 of Geoffs textbook.
Examples of use: can be used for access to roads or for construction work where
cranes overlap into airspace of other properties court can create temporary
easement

Indefeasibility Exception Omitted or Misdescribed


Easements
Statutory exception to indefeasibility is omitted or misdescribed easements
under s42(1)(a1) - Omitted and misdescribed easements existing at the time of
the land was brought under RPA but not recorded.
Omitted refers to status of the Register where it was left off or not there.
Easements can be omitted or misdescribed in two ways:
1. When old system title is converted to Torrens and an easement subsisting
immediately before is not recorded.
2. Where an easement is validly created over land already Torrens but not
registered got left off. It is an administrative issue and is a narrow
exception. Valid = writing, form and registration. Implied and prescriptive
easements will NOT come into this exception, as they are unregistered and
invalidly created.

Personal Equities Exception


Looks at the conduct, not the interest. Conduct needs to amount to breach of an
independent cause of action.
McGrath v Campbell 2006 Argument of Wheeldon v Burrows easement.
However, is now not between original parties and land was sold to subsequent
purchaser who has indefeasibility. Court held: An implied Wheeldon v Burrows
easement can be saved by a personal equities exception. In this case, exception
did not apply but acknowledged that it could be raised through conduct of
registered proprietor.
Williams v State Transit Authority concerned prescriptive easements. Supreme
court held personal equities exception did NOT apply as prescription is created
through common law. This reasoning is incorrect as it looks at the easement and
not through conduct. However, is authority and prescriptive easements will not
be covered under exception.

Easement arising from the description of land


This is a special exception for easements over Torrens land where the land is
described as bordering a road, street or lane owned by vendor. In Dabbs v
Seaman, the specific fact situation needs to apply. Where A (private
individual/Crown/local government) owns the road and lot of land to the road,
when the land is sold and includes the term: abutting the road/next to the road

or has a map, an easement will be implied in favour of the purchaser, even


though it is not registered.
Westfield Management Limited v Perpetual Trustee Company Limited [2007]
Westfield argued the easement allowed for the right of way for car parking which
went across to other land. HC held it was outside the scope of the easement.
Must look at the terms of the easement and not for look for intention or
contemplation of the parties to the grant outside what is manifested by terms of
grant go, pass and repass at all times and for all purposes. If it had been
intended that the grant extend to authorisation of others to go across the
dominant tenement to further properties the words "and across" could readily
have been added."
The words "for all purposes" extensive as they may be, must confer what the law
regards as a benefit on the land benefited by making it a better and more
convenient property. There must be some limit therefore to what "for all
purposes" means.

Changing/Modifying/Extending Easements
The user under a registered easement may change with the nature of the
benefited land, so long as the terms of the grant are sufficiently broad, does not
violence to the principles of the Torrens system.
Need to look at reasonable contemplation of the parties at the time and degree
of interference.

Extinguishment
o
o

Express release by the owner of DT


Abandonment will extinguish easement at common law.

Test: i) The owner must have ceased to use the easement


ii) He/she must have positively intended to abandon the easement
o
o

Unity eg same owner for DT and ST will break unity


Obsolesence under s89(1) CA is established if original purpose of
easement can no longer be served or right of way currently serves no
purpose (Durian(Holdings) Pty Ltd v Cavacourt Pty Ltd. It very difficult to
show.

Remedies
There are two remedies available to owner of DT for infringement of an
easement.
Abatement: is the remedy of self-help to prevent an infringement of an
easement. The owner of easement has general right to abate the interference
provided that no force is used than reasonably necessary, not likely to be breach
of the peace and no injury to third parties or the public.
Action: Can sue for damages, declaration of injunction. Can bring an action of
nuisance which requires substantial interference of rights by ST.

PROFITS A PENDRE

Right to go onto someone elses land and take the natural products of the
land
Key distinction with easements: always in gross
Can be registered and receive indefeasibility under s 42(1)
Exception to indefeasibility s 42(1)(b)
Basically same law as for easements and same formalities
Can argue extinguishment through the resources being depleted.
However, under Torrens, if registered it needs to be removed off Register.
Very difficult like easements
Is still a property right even though there is no dominant tenement, will be
on the second schedule of the folio of the servient tenement
Clos Farms found not to be profits a prendre

Restrictive Covenants
A covenant is an express or implied promise contained in an instrument.
Freehold Covenant is a covenant entered into respect to freehold land. Do NOT
confuse with leasehold covenant which is an obligation contained in a leasehold
agreement. Contract entered which restricts neighbours use of property. Usually
to achieve the same effect as negative easement

Covenantee reaps the benefit and enforces the covenant


Covenantor Bears the burden and has the obligation to fulfill the covenant.
Eg. agreement to not build above one storey to preserve the view
As between the original covenantor and covenantee, remedies for breaches of
covenant can be enforced simply as a matter of contract law. The covenantee
also has a right to sue the original covenantor for breaches of covenant even
after he or she parts with the land (London County Council v Allen 1914 3KB 362)

Cases of covenants - Ferella v Otvosi 2005, Hosking v Haas 2009

Formalities Creation
Freehold covenants are not registrable
OST s 23B, s 23C, s 23E
Torrens s23B deed, 23C in writing, incorporate in memorandum of
transfer
OST and Torrens: s 88(1), like easements, needs to comply with this
provision or will not be enforceable with subsequent purchasers.
S88(1) Conveyancing Act provides that a covenant will not be enforceable
unless the instrument clearly indicates:
a) There is a benefit of the restriction pertinent to the land
b) There is a burden of the restriction on the land
c) Provides additional persons who has the right to release, vary, modify the
restriction besides the right of law
d) Provides persons who consent is necessary for a release, variation or
modification of restriction

OST and Torrens: s 88B and Part 23, div 3


s88(3) CA Registrar can record, however it is not registration
s47(1) RPA Registrar must record details on folio of burdened land

s88(3) where recorded, creates interest/estate under s 42 RPA so noting


binds successors in title. Recording creates NOTICE which is necessary but
is not sufficient
Noting does NOT confer full benefits of indefeasibility so if
forged/fraudulent, will not have indefeasibility which kills the defect
If the instrument of covenant does not comply with s 88(1) it will not bind
the new registered proprietor

Running the Burden


In looking at whether the burden of the covenant can be enforced by the parties,
need to look at whether the benefit or burden runs with the land of either
the covenantee or covenantee. Runs with the land means annexed to the land.

The Law:

The burden cannot run at common law. There is only a contractual interest
This is the rule in Austerberry only enforceable as a matter of contract
where there is privity.
Original covenantor remains liable contractually s 70A Conveyancing Act.
This section (despite wording) does not annex at common law. The
covenant cannot bind successors in title even if expresses to do so. It only
affirms that the original covenantee and covenantor remain contractually
liable, even after disposing of the interest in land.

In Equity:
1. The covenant must be negative(restrictive) the burden of a positive
covenant cannot run with the land. (Tulk v Moxhay). Question: On the
facts, is the covenant negative and why? This is a question of
substance, not form Apply the facts.
2. The purchaser (successor in title to the covenantor) must take with
notice. Question: Has the covenant been noted on the register? S 88(3)
CA, S 47(1) RPA, S 42 RPA
Is there actual, constructive or imputive notice? Look at the new party.
Where a purchaser buys the burdened land without notice of a restrictive
covenant but sells land on to purchaser who does have notice, the second
purchaser will take free of the covenant (prevents revival of covenant to
preserve first purchasers interest)
3. The covenant must be intended to run with the land of the
covenantor - look at the original party for intention and new party for
notice (step 2). Under s70A(1) Conveyancing Act assumes A covenant
relating to any land of a covenantor ... shall, unless a contrary
intention is expressed, be deemed to be made by the covenantor on
behalf of himself or herself and the covenantors successors in
title ... and ... shall have effect as if such successors ... were
expressed shows intention to run with land through heirs and
successors.
4. The covenant must BENEFIT the land of the covenantee at the date of
creation. This has these subparts:

i) The covenant must touch and concern the land: Rogers v Hosegood
- Does the covenant affect the mode of use or occupation of the land or
must of itself affect the value
iii) A covenant CANNOT touch and concern the land if the land to be
benefitted is SO LARGE that it cannot be benefitted as a matter of fact
Re Ballards Conveyance
UNLESS
The covenant expresses an intention to annex the covenant to each and every
part of the covenantees land (or some equivalent words) Marquess of Zetland
The covenant must benefit the land of the covenantee at the date of creation.
The covenantee must own the land to be benefited at the time the covenant is
created. This is known in NSW as the rule in Kerridge v Foley. Rationale: the
covenant must have been made for the protection of the land of the covenantee

How to do Kerridge v Foley:


Work out the following and insert in a diagram:
Who is the covenantee (who is enforcing the covenant)?
Who is the covenantor (who has the burden)?
Who is the original covenantee?
What order did the lots sell in?
Ask this question:
Did the original covenantee (insert name) own the land to be benefitted
(insert lot number) at the date of entering into the covenant with the
covenantor (insert name of owner of burdened lot).

So did the original covenantee (Dennis) own the land to be benefitted (lot 1) at
the date of entering into the covenant with the covenantor (Harold - lot 2).
NO, as Dennis is no longer the own at the time since it was sold in the order of 1,
2 and 3.
5. If the land of the covenantee is not benefitted ie for example because there
is no compliance with the rule in Kerridge v Foley, then the covenant may still be
enforceable if there is a building scheme / scheme of development.

Note also s 88B

EXCEPTION to Benefit in Kerridge v Foley - Building Scheme /


Scheme of Development
A building scheme may exist under Torrens Re Louis; Hosking v Haas
(contra Re Martyn)
Criteria in Ellison v Reacher + s 88(1) for Torrens Land:
i) Both titles derived through a common vendor eg. Dennis from previous
example (even if it has been sold and passed through more than one
buyer, so long as it comes from same one developer/seller)
iii) The common vendor laid out the estate in lots subject to restrictions
intended to be imposed on all the lots and that the restrictions are
consistent only with some general Scheme of Development of the
land eg. brick or no pets;
iv) the restrictions were intended to benefit ALL of the lots in the
subdivision (express intention in the instrument);
v) both the parties, or their predecessors in title, purchased their lots from
the common vendor on the basis that the restrictions were for the benefit
of the other lots in the scheme.
Hosking v Haas 2009 was found to be a building scheme as there was still an
overall intention to have some general scheme.

Running the Burden EQUITY (continued)

5. Is there compliance with s 88(1) formalities? The section requires any


covenant created over land to clearly identify: the benefited land; the
burdened land; any additional persons who may have the right to
release, vary or modify the right; and the persons whose consent is
necessary for a release, variation or modification of the right.
Section 88(1) is only applicable to enforcement against successors in title
(not the original covenantee). Therefore where the burden of a covenant is
being enforced against a successor in title the covenant must comply with
these requirements to be enforceable. See above notes

Third Parties and s36C Conveyancing Act


Eg A enters into an agreement with B, in which B covenants that she will not
build a dwelling of more than one storey. C owns the lot adjacent to that of A.
She also wishes to enforce the covenant against B.
Can bind where the covenant purports to be made with C or with a class of
persons which includes C.

Persons taking who are not parties


36C Persons taking who are not parties
(1) A person may take an immediate or other interest in land or other property,
or the benefit of any condition, right of entry, covenant, or agreement over or

respecting land or other property, although the person may not be named as a
party to the assurance or other instrument.
(2) Such person may sue, and shall be entitled to all rights and remedies in
respect thereof as if he or she had been named as a party to the assurance or
other instrument.

REVISION LECTURE
For determining priorities:
1. Registered interest
2. Unregistered interests
3. Unregistered tenants last
Question 1.
Vance (registered proprietor)
Too late to caveat to block transfer to Sean as it has been LODGED. Seek an
injunction from court at an ex parte basis to stop the forged transfer to be
registered shortly.
Vance, Ian and Sean has not had any disentitling conduct
Vance is registered but will be subjected to Bob through Barry v Heider (personal
equities exception) as Vance armed Bob. Bob > Vance in priorities.

Sean and Ian will have no interest in the property if Vance wins.
Question 2.
Question 3.
Dealing NOT registered but lodged COULD be dealing registrable.
Jim has not signed any mortgage but has an equitable mortgage by the deposit
of title deeds.
Advise Brian:
Need three elements in caveat: s74F
1. Needs the date
2. Needs the price
3. Needs to be an equitable mortgage
Jim conduct to steal the CT was dishonest but has signed and transferred to
Cynthia, she does NOT have a void dealing with the transfer.
Cynthia will be next to have dealing registrable, assuming no notice. No facts
provided
Despite the bank holding the CT, they are the agent of Cynthia and between
them and the successive effect doctrine, she will satisfy s43A dealing registrable.
As Brian has an equitable interest and Cynthia has a legal interest, she will have
priority.
UNREGISTERED LEGAL INTEREST
S43A dealing registrable for first mortgagee/purchaser
S23D compliance for lease