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Property Law Summary

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PROPERTY LAW
Introduction

-Historically there were two branches of Property Law: • Real property: (Land and interests in land) • Personal property: (Everything besides land and interests in land) -The reason for the two separate branches is that historically land was the most valuable type of property (and arguably still is). -This course predominately focuses on real property. *Note that personal property can become real property by being attached to real property – referred to as ‘fixtures’. (E.g. carpet fixed to a house). SEE LATER FOR FULLER DISCUSSION OF FIXTURES.

-General terminology: • Licence: all rights in relation to land, which look like a property rights, but are not actually property rights. ❖ Bare licence: The licence is not coupled with any form of consideration, and therefore can be revoked at will. ❖ Contractual licence: A licence coupled with a contract, and therefore may have remedies in breach of contract (damages, etc.).

-Real Property (Common law) rights: • Fee Simple – An unencumbered inherited interest in land. It is almost equal to ownership (the crown actually owns all the land, but people have the right to reside on the land. • Native title – To be distinguished from the common law system. • Life estate – This estate lasts until death, i.e. it is not inheritable. • Lease / tenancy agreement – The right of possession is given (also known as a ‘possessory estate’. (If the right of possession does not exist, then other rights and interests are not available). • Easement: This does not give the right to possession. It is the right to do something on someone else’s land, or to suffer another doing something on your land. • Mortgage: • Adverse Possession: If after 20 years (12 years in SA) (find legislation / cases) of occupying another’s land, that person’s ownership rights are extinguished. The reason for this is that land is valuable and if it is not looked after, the law is not very sympathetic to this. • Profit a prendre: Literally means ‘a profit to be taken’. Similar to an easement, in that no possession is actually given. “Incorporeal Hereditament”

-Real Property (Equitable) rights: • Trusts: Where an inequitable situation occurs under common law. (E.g. in the case of a husband and a wife. The husband has land in his name and then they divorce. The wife has a claim on the land through an implied trust. • Restrictive covenant: A promise to refrain from doing something. This can be enforced against a third party.

*Note that property law extends contractual rights, especially in relation to third parties.

-Doctrine of Fixtures: • A fixture is where personal property becomes part of the realty to which it is attached. • TESTS: 1. Latin maxim – Quicquid plantatur solo, solo credit, meaning ‘whatever is attached to the land forms part of the land’. Note though that this maxim simplifies the issue too much and should be used only as a starting guide. 2. Degree of annexation and object of annexation. -Degree of annexation: is concerned with how the chattel is attached to the land. (*Chattel: personal property as distinct from real property). If a chattel is attached by anything other than its own weight, e.g. screws, bolts, etc, prima facie it is a fixture, (and conversely if only attached by own weight, it is not a fixture). Cases: Buckland v Butterfield and Hulme v Brigham. -Object of annexation: is concerned with whether the object is attached to the land as a temporary measure to display it as a chattel (not a fixture) or in order to benefit the realty (a fixture). Recently the object of annexation has had more importance than the degree of annexation. Tests from p587 of the textbook. Cases: Metal Manufacturers Ltd v Federal Commissioner of taxation provides the tests. 3. What a reasonable person would consider the reason for attaching the object to the land. *In recent Australian case history, there has been emphasis on the third and commonsense approach, rather than the two-fold degree and object of annexation approach.

Possession

-General terminology: • Possession: is the actual holding of property with the intent of keeping it for yourself. (See below for detail). *Note: possession is more important than ownership, as most remedies in property law revolve around possession. ❖ Obtained through: 1. Transfer of property 2. Res Nullius (not owned by anyone) -1st come 1st served basis. In case of wild animals, they can be referred to as: ferae naturae (non-domesticated animals). 3. Abandoned goods.

-Possession (General law): • Definition: (i) The taking of custody of a thing, (ii) With the intention of treating the object as one’s own (animus possidendi). In relation to land, possession is: (exclusive possession). (i) Going into substantial occupation of an area (ii) with an intent to exclude all other persons (including those whom one might regard as having a better claim.

• What determines possession – Res Nullius & Abandoned goods: ❖ Young v Hitchens (1884) 6 QB 606(Queen’s Bench) (p95 CB) -2 fishing boats, the Def. casts his net into the net of the Pl, seizing some of the Pl’s fish. At trial, it was found that the net had almost been closed, with seven fathoms open and two of the Pl’s boats were splashing the water to scare the fish. -Although the Pl would have had possession of the fish ‘but for’ the act of the Def, he did not have possession. Lord Denman CJ: Party cannot have possession until they have actual power over the fish. -‘All but reducing into possession’ is not ‘possession’. ❖ The Tubantia [1924] P78 English High Court of Justice (p97 CB) -‘The Tubantia’ sank in the North Sea after being torpedoed in war. Pl. organised expedition to recover the ship. Pl’s made several diving expeditions, including cutting a hole in the side. After recovery attempts were unsuccessful, Pl. placed buoy to park position. -It was found that the Pl had possession of the wreck, as they had done all that they were ‘practically capable’ of doing, and they had a power to exclude strangers from accessing the wreck. ❖ National Crime Authority v Flack (1998) (Federal Court of Australia) 86 FCR 16 (p104 CB) -Briefcase with $433,000 found by a police drug-related search on the premises leased by Mrs Flack. Police seized control for evidence. Subsequent disagreement as to ownership. -As Mrs Flack was leasing the property, she would have possessory rights against all other people, besides the original owner of the briefcase. *She must show that she had an intention to possess all chattels on the premises. ❖ Waverley Borough Council v Fletcher [1996] QB 334,338 (p109 CB) -The Pl, Mr Fletcher dug up a medieval gold brooch in a public park while using a metal detector. There occurred a disagreement with the Council (Def) as to who had possessory rights over the brooch. -Auld LJ: The council as trustee of the park for the general public had a greater claim of possessory rights to the brooch than Mr Fletcher. The general rule is that the possessor of land owns everything that is under his land, right up to the centre of the Earth, including minerals & lost & abandoned chattels. ❖ Armory v Delamirie (1722) 1 Str 506 (p114 CB) -An apprentice chimney sweep found a jewel while cleaning. He took it to be valued, but the goldsmith failed to return it. There was no claim by the owner of the house whose chimney was being swept. -It was found that the chimney sweep had a better claim than the goldsmith for the jewel, as he had prior possession.

• General characteristics of possession: ❖ Possession can be obtained without formality: ➢ s31 (c) Law of Property Act1936 (SA) ❖ Possession continues until it is abandoned: ➢ Allen v Roughley (1955) 94 CLR 98(2.11 TB) -If a person in possession of land abandons it, they have no right of action against a person who subsequently takes possession. ❖ Possession can be assigned: ➢ Asher v Whitlock (1865) 1 QB 1(2.09 TB, p205 CB) -Williamson was the F.S. owner and in his will, he assigned the land to his widow for life and then to his daughter. ❖ Possession can also be statute barred, through the original possessor failing to contest an adverse possession. ➢ s4 Limitation of Actions Act 1936 (SA) states that adverse possession takes place 15 years after the original dispossession (at common law, the limitation time was 60 years). ➢ Adverse possession is possession which is peaceful (not by force) and open (not secret) and without the consent or permission of the prior possessor. ➢ Note: s28 Limitation of Actions Act 1936 (SA) states that a person’s fee simple is extinguished if the land has been adversely possessed.

-Possession (Torrens): • Torrens System provides that a registered title is indefeasible. • To adversely possess someone under Torrens law, more has to be done than claiming land as your own for 15 years, s80(a) – 80(i) Real Property Act 1886 (SA): ❖ Time required: 30 years. ❖ Also, the person claiming adverse possession must apply to the Registrar-General in the proper form and deregister the original owner, and register themselves for the fee simple instead.

-Seisin: what do I need to know about it???

Tenure & Estates

-The Doctrine of Tenure:

-Doctrine of Estates: • An estate gives its holder a right of possession, and the nature of the estate determines the extent and duration of that right of possession. • Estates can take the form of freehold (fee simple, fee tail & life estate) or leasehold. • Freehold estates can be classified as they are indefinite in duration, whereas leasehold estates must be definite in duration.

-Freehold Estates: (Nice diagram p732 CB) • Fee simple: ❖ General characteristics: ➢ This is the closest estate to absolute ownership and is the longest in duration. ➢ The F.S. estate continues indefinitely, whether or not there are heirs. ➢ The holder of the F.S. may dispose of their interest as they wish. ➢ If a holder of a F.S. dies intestate (not having made a will), the F.S. will transfer to the next of kin. If there is no next of kin, the F.S. will become property of the Crown. ❖ Words of limitation: determine what type of estate is created. Inter vivos gifts treated more stringently than disposition by will. Statutory modifications generally have reduced need for words of limitation (except in the case of South Australia). Words of limitation of no effect in relation to Torrens system land. -*Note: Rule in Shelley’s case: “to A for life, remainder to his heirs” creates a F.S. in A & “to A for life, remainder to the heirs of his body” creates a F.T. in A, despite the clear intention of creating a life estate. (This is still good law in South Australia for both inter vivos gifts and wills.) ➢ Disposition inter vivos: In South Australia, the correct words of limitation must be used: “to A and his heirs”. This does not give A’s heirs any interest in land, merely the expectation of succeeding to the estate. In South Australia, using incorrect words, such as “to A in fee simple” will create a life estate. ➢ Disposition by will: legislation (s31 Wills Act 1936 (SA))has passed that no longer requires the specific wording and a fee simple estate will be passed on, unless there is evidence of contrary intention. The phrases: “to A”, “to A in fee simple” or “to A forever” are all suitable.

• Fee tail: ❖ General characteristics: ➢ F.T. is an estate of inheritance; however it is limited to inheritance by a particular person and her or his specified descendents. General idea is to keep an estate in a particular line of a family. ➢ It can be even more specific, e.g. the grant could specify only male descendants were to take: “to A and the male heirs of his body”. ➢ Effectively, the holder of a fee tail has the same possessory rights as a F.S. holder, but they cannot alienate the land and if they did it was only for the period of their life, afterwards it would revert to the line of descendants. ❖ Current application of F.T estates: ➢ In Australia, the F.T. estate is rarely used. In NSW, Victoria, Queensland, WA and NT, the F.T. estate cannot be created any more, any attempt to do so creates a F.S. estate. ➢ In Tasmania, a F.T. estate cannot be created over Torrens land, since 8 Dec 1886. ➢ Only in South Australia can a fee tail estate still be created (over both General law land and Torrens land. It is regulated by the Estates Tail Act 1881 (SA). ❖ Words of limitation: ➢ Disposition inter vivos: In South Australia, the correct form must still be adhered to: “to A and the heirs of his body” or “to A and from him proceeding” or “to A and of his flesh”. It is also possible to limit it to a particular gender of descendants: “to A and the female heirs of her body”. ➢ Disposition by will: In South Australia, the fee tail will be created if there are clear words in the will showing an intention to create a fee tail estate.

• Life Estate ❖ General characteristics: ➢ Although it is a freehold estate, the life estate is not inheritable (although now statutory provisions allow that the holder of a life estate pur autre vie can leave the estate in their will). ➢ A life estate can have two forms: 1. For the life of the grantee (pur sa vie) – “to A for life”. 2. For the life of a person other than the grantee (pur autre vie) – “to A for the life of B”. Creation of this is not usually direct: e.g. if X already holds a life estate and they convey it to Y, Y will hold a life estate (pur autre vie) for the life of X. ❖ Words of limitation: ➢ Disposition inter vivos: the correct words of limitation in all jurisdictions must be used (this arises indirectly, as the words of limitation are no longer required for fee simple estates): “to A for life”. In South Australia, a life estate can also be created by default, where the incorrect words of limitation of a fee simple estate are used. ➢ Disposition by will: the only way that a life estate can be created in a will is if the correct wording is used: “to A for life”.

• Determinable and conditional interests: ❖ Determinable interest: an interest which terminates on the occurrence or non-occurrence of a particular event. (The event cannot be one which is bound to happen). -A determinable fee simple estate carries the possibility of reverter (i.e. if the determining event occurs, the fee simple reverts to the grantor or his/her estate). -Once the determining event can no longer occur, the grant becomes absolute. -If the terminating limitation is declared void, the entire grant will fail and revert back to the grantor. (See below for voiding criteria). *The use of: “while”, “as long as”, “until” and “during” are all indicative of a determinable interest rather than a conditional one. ❖ Conditional interest: is the grant of an estate which has some condition attached to it, pursuant to which the grantee’s F.S. may be cut short. -If the condition subsequent occurs, the grantor or his estate has the right of re-entry. It is not until this right is exercised that the interest of the grantee terminates (compared with determinable interests where the interest terminates immediately). -If the condition is declared void, the condition is severed and the grant becomes absolute (This is the major difference to determinable interests). Criteria for declaring a condition void: -Contrary to public policy: any condition which is illegal, immoral or is against public interest is void. (E.g. total prohibition of marriage is void, unless the intention is to provide for the grantee while unmarried. A condition encouraging the separation or divorce of a couple is void. A condition separating a parent from their child is void. A condition forbidding a change of religion is not void. -Conditions repugnant to the interest granted: any condition which places a substantial restraint on the power of alienation by the grantee is void. (See pp58-59 TB). -Uncertain conditions: If a condition is not clear and precise, it will be declared void and severed from the grant. (Examples, p59 TB). *The use of: “on condition that”, “provided that” or “but if” indicate the creation of a conditional interest. *(Note: as well as a condition subsequent, there can be created a condition precedent, which marks the point when an interest in an estate begins – see later). ❖ Zapletal v Wright [1957] Tas SR 211 (pp202-204 CB) -The Pl. (woman) and Def. (man) lived in cohabitation in a house paid for solely by the Def. At the request of the Pl, the Def. placed the Pl’s name on the title, so if anything were to happen to him, she would be secure, but the Def. placed a condition that if she ever left him, her claim to the house were to be void. -Crisp J. found that the Pl’s interest was conditional rather than determinable, for reasons that: “the form of the condition is such that it did not denote the extent of the estate but only the event in which the larger estate conferred may be cut short” and as said by Preston: “the (determinable) limitation marks the bounds or compass of the estate, and the time of its continuance. The condition has its operation in defeating the estate before it attains the boundary”. -The condition itself was found to be void, as it promoted immorality as it effectively forced the Pl. to reside with the Def. Therefore a void condition is severed from the gift and the Pl. holds an absolute fee simple. -If on the other hand, the void condition was found to be determinable, the entire gift would revert to the grantor (in this case, the Def).

• Remainders and Reversions ❖ Both remainders and reversions give a right to possession in the future. ❖ A reversion is the right a grantor has of the estate granted returning to them. (E.g. X grants his estate to Y for life, X has a reversion: i.e. a right to possession in the future). ❖ A remainder is the grant of a future interest to a person who was not previously entitled to the land. (E.g. X grants his F.S. to Y for life and then to Z and his heirs, Y has a life estate in possession and Z has a fee simple in remainder). ❖ Future interests can be vested or contingent. ➢ A vested interest is the present right to possession. -A right is vested if: 1) The identity of the person who is to take it is clear, 2) There must be no condition precedent to the interest taking effect in possession other than the regular termination of the prior estate. ➢ A contingent interest gives no right until the occurrence of a future event (condition precedent). -A contingent right is converted into a vested right if the condition precedent occurs.

• Doctrine of Waste – (applicable to fee tail estates, life estates and tenant-landlord relationships) ❖ There is a conflict in estates less than fee simple estates between persons currently in possession and persons entitled to possession in the future – the way in which land is treated can considerably affect it’s value. ❖ Traditionally there have been four categories of waste (concentrate on 1st 2): 1) Voluntary waste: Acts that harm the property. Generally the damage to buildings etc, but also regarding the opening of a mine and the cutting of timber. -An owner is liable for voluntary waste, unless exempted by the instrument. Even if they are exempted, they may still be liable for equitable waste. -Voluntary waste is not permitted by a life tenant. 2) Permissive waste: Occurs when harm is allowed to eventuate – a failure to repair. -Liability for this only if the instrument imposes a liability to repair. -Generally a life tenant is not liable for this. 3) Ameliorating waste: The altering to land which actually improves the land. Courts award a nominal damage of $1 for this! 4) Equitable waste: The wanton destruction of land. It is waste that the court of Equity cannot allow.

Leases

-General factors: (Diagram at pp732 CB) • The “lessor” or “landlord” is the person who grants the lease. • The “lessee” or “tenant” is the person to whom the interest in land is granted. • When a lease has been created, the interest held by the landlord is known as the “leasehold reversion”. • If the landlord sells the fee simple estate, the purchaser is the “assignee of the reversion”. • The tenant can also dispose of his possessory interest to a third party: ❖ If the whole of the interest is disposed of, it is known as “assignment” (an assignment does not create a new lease). ❖ If only part of the interest is disposed of, it is known as a “sub lease”. The legal difference between the two hinges around the enforceability of the parties’ rights and duties, (see pp412 text for fuller discussion). • Under Torrens legislation, s116 RPA states that any lease exceeding 1 year must be in the proper form and registered.

-Types of leasehold estates: (Categories can easily change). • Fixed term: (Historical name: term of years) ❖ Is a lease for a given term, where the termination date is known, or is capable of being known, (i.e. any uncertainty in the ending date will not create a fixed term lease). ➢ This is the rule from (Lace v Chantler [1944] KB 368 – Court of Appeal), where a lease ‘for the duration of the war’ was unenforceable, as at that time, the end date of the war was unknown. • Periodic Leaseholds: ❖ The period of the lease can be: yearly, monthly or weekly (*although these categories are not exhaustive, eg can have fortnightly periodic leasehold). ❖ A periodic leasehold can arise by: 1) An express agreement between parties in deed form. 2) An oral agreement at the commencement of the agreement. 3) When a tenant enters into possession and pays rent. 4) When a tenant enters into possession of a premises prior to signing a formal lease (*if negotiations break down, no lease will be created, even if money is paid). 5) When a fixed-term lease expires and the tenant remains in possession with the consent of the landlord. (Known as an ‘over-holding period’, see below for discussion of calculation of period). ❖ To terminate a periodic leasehold, notice must be given 1 whole period before. (The exception is a yearly periodic leasehold, where notice is reduced to 6 months.) The notice must be for a whole clear period, e.g. a weekly lease paid from Sat. to Sat, if notice is given on Sunday, then the periodic leasehold actually expires 13 days from the Sunday. ❖ To determine the period of the lease: ➢ The Court will primarily look at the intention of the parties. ➢ If there is no proof of intention, the period is determined by the frequency at which the rent is paid, *with the exception of when the period of calculation and period of payment is different, then the court will determine the period, as the one where it is calculated. ➢ If there is any doubt as to the type (yearly, monthly, weekly) of periodic tenancy, the CL presumption is of a yearly tenancy. ❖ A periodic lease can also arise as an over-holding tenancy, (which is where the tenant of a fixed term lease stays on once the lease has expired). In the absence of clear intention otherwise, there is a presumption that a yearly periodic lease is created, as soon as money is paid. (Moore v Diamond (1929) 43 CLR 105, p419 TB, p747 CB). • Tenancy at will: ❖ Can be described as more of a license than a tenancy. ❖ It arises where a tenant enters or remains in possession of a property with the permission of the landlord and without paying rent (e.g. when a fixed term lease expires). As soon as rent is paid, it will convert into a periodic lease. ❖ A tenant at will may not be sued for trespass until the tenancy is revoked (which can be expressly by the landlord, or if an act incompatible with the tenancy agreement is committed, such as the landlord entering and using it for their own purposes, or the tenant committing voluntary waste). ❖ A tenancy at will carries the right to ‘emblements’ (a vegetable chattel produced by a land occupier through their labour and expense). • Tenancy at sufferance: ❖ A tenancy at sufferance arises where a tenant over-holds after the expiration of a fixed-term lease without the express consent or dissent of the landlord and does not pay rent. ❖ A landlord in this situation can sue for possession at any time and can sue for the cost of the tenant using the property, but cannot sue for rent. ❖ Unlike a tenancy at will, there is no right to emblements. • Concurrent leases: ❖ Where a landlord leases a tenancy to two or more tenants at the same time. ❖ The second of the two leases does not create a leasehold estate, but is a lease of the landlord’s reversionary interest (i.e. a landlord-tenant relationship between the first and second tenant, with the latter becoming the landlord and the former the tenant).

-Privity of estate

-Characteristics of a lease • Exclusive possession 1. The grant of exclusive possession automatically creates a lease. 2. A lease cannot exist unless the tenant has the right of exclusive possession. ❖ This is known as the exclusive possession test (Radaich v Smith (1959) 101 CLR 209 – major Australian authority, pp425 TB). ❖ However, from the judgements in Radaich v Smith, it was found that other factors, such as intention can rebut this. • Commencement of the lease ❖ Where there is no express commencement date, it is presumed to commence on the execution date or when the oral lease is agreed to. ❖ The date of commencement must be certain before the lease comes into effect. ❖ A lease that takes effect in the future is known as a ‘reversionary lease’. • Maximum duration ❖ A fixed term lease must have a maximum duration (Lace v Chantler [1944] KB 364 (Court of Appeal)); however a periodic lease does not. • Other characteristics ❖ The names of contracting parties must be clear and known. ❖ The area must be clearly defined. (Given an inaccurate description, if the boundary can otherwise be clearly defined then the lease will be valid, Mason J, Goldsworthy Mining Ltd v FCT (1973) 128 CLR 99). ❖ Note that rent is not an essential characteristic. However, unless it is in deed form, some sort of consideration must be paid (this is due to general contract rules).

-General rights and duties in relation to leases (Express terms): • Subject to any statutory exceptions, parties to a lease may include any terms they please. • If the terms are phrased as covenants, the remedy for a breach will be an action for damages and/or an injunction, whereas if the terms are phrased as conditions, there also exists a right of rescission. • Where there is reference to the ‘usual covenants’, according to Hampshire v Wickens (1878) 7 Ch D 555, they will include: ➢ A covenant by the landlord for quiet enjoyment ➢ Covenants by the tenant to: -pay rent -pay rates and taxes -to keep and deliver up the premises in good and tenantable condition -to permit the landlord to enter the premises to inspect its condition
-Implied terms/covenants (by legislation): • Terms implied pursuant to the Real Property Act 1886 (SA). • Covenant by tenant to pay rent, rates and taxes ❖ s124(1) RPA – The tenant will pay the rent and all rates and taxes, except for those payable exclusively by the landlord, as governed by State or local government legislation. ❖ This does not displace the CL rule that rent is not payable in advance, but rather in arrears, at the end of each period. • Covenant by tenant to repair ❖ s124(2) RPA - The tenant will keep up the leased property in good and tenantable repair. • The landlord’s right of entry for inspection ❖ s125 (2) RPA – The landlord may enter at all reasonable times to enter the rented premises to inspect its state of repair. ❖ Apart from this statutory right of inspection, the landlord cannot enter the premises without the permission of the tenant, as this would conflict with the tenant’s exclusive possession right. • Landlord’s right of re-entry ❖ s125(3) RPA – Where rent is 3 months in arrears, the landlord can re-enter the premises. ❖ s125(3) RPA – If a tenant breaches any other covenant for a period of 3 months, the landlord can also re-enter the premises.
-Implied terms/covenants (by common law): • Repair obligations of landlord ❖ At CL, landlord has no general duty to do repairs during the term of the lease, or to put the premises into repair at the commencement of the lease. (Caveat emptor – let the buyer beware!). ❖ However, a term can be implied to give business efficacy. ➢ (Liverpool City Council v Irwin [1977] AC 239 (House of Lords)) -Tenants in a high-rise block of flats withheld rent in protest against the poor condition of the building. -Main issue: did the council have any obligation to maintain the lifts? -Law: There were no specific contractual terms however a term can be implied in order to give business efficacy. Therefore, the council should have maintained the lifts. ➢ Note that this principle must not be applied too broadly. A term can only be implied if it is necessary to give business efficacy. ➢ Application of Liverpool in Australia: (Karaggianis v Malltown Pty Ltd (1979) 21 SASR 381) – Landlord ceased to operate escalators and reduced lift operation one year into the lease (leased premises were on the 6th floor). A term was implied in order to give business efficacy. ❖ Exceptions to landlord’s repair obligations: ➢ Where premises are furnished, there is an implied condition of fitness for human habitation. ➢ This is known as the doctrine of Smith v Marrable (1843) 11 M & W 5: -After only one week’s occupation, Sir Thomas Marrable vacated the premises on the ground they were infected with bugs. ➢ This is to be contrasted with Hart v Windsor (1843) 12 M & W 67, where: -Parke B stated that Smith v Marrable only applied in the case of furnished premises. -Later cases confined the situation further to where the defect existed at the commencement of the lease, (see 12.31 TB). • Repair obligations of tenant ❖ There is an implied covenant for the tenant to use the premises in a ‘tenant like manner’ Warren v Keen [1954] 1 QB 15. ❖ Examples – Lord Denning: ➢ Clean the chimneys and windows ➢ Mend electric lights. ➢ Unstop the sink when blocked. ➢ Generally, the tenant should do what a reasonable person would do, and also not to damage the house. • The right of quiet enjoyment (from the landlord). ❖ ‘Quiet’ in this situation, means ‘peaceful’ or ‘freedom from interruption’, rather than ‘without noise’. (*Note: the covenant is independent of the covenant to pay rent, i.e. the non-payment of rent does not remove the obligation on the landlord to give quiet enjoyment). ❖ Limitations: ➢ If the landlord did not authorise the act. (If a TP is preventing quiet enjoyment, then a remedy lies in nuisance.) ➢ Where there is interference by title paramount (arises where someone has a superior title). (Jones v Lavington [1903] 1 KB 235 (Court of Appeal)) and (Kenny v Preen [1963] 1 QB 499 (Court of Appeal)).

Head landlord (LL)

(Head lease)

Landlord (L)

(Sub lease)

Tennant (T)

If there is harassment by (LL), (T) cannot complain against (L).

➢ There must be significant interference. Contrast: (Southwark London Borough Council v Baxter [1999] 3 WLR 939) excluded this limitation, where it was stated that substantial physical interference is not required. It was found that regular excessive noise is capable of breaching the covenant). • Non-derogation from grant by the landlord ❖ If an interest in land is granted, you must refrain from acts on the remaining land that counter the terms of the lease. *Note that this is not specific to landlords and tenants but to property law generally. ❖ As stated by Stirling J in Aldin v Latimer [1894] 2 Ch 437, at 444: ➢ “Where a landlord demised part of his property for carrying on a particular business, he is bound to abstain from doing anything on the remaining portion which would render the demised premises unfit for carrying on such business in the way in which it is ordinarily carried on”. ➢ Examples: 1) A reduction in security for a tenant caused by demolition work around the premises may constitute a breach (Lend Lease Development v Zemlicka (1985) 3 NSWLR 207 (Court of Appeal)) 2) Where a lease was granted for a stable, erecting hoardings which blocked the ventilation flow to the stables amounted to a breach (Cable v Bryant [1908] 1 Ch 259). • Implied duty by the tenant not to commit waste. ❖ This is rarely in operation due to legislation on the subject. ❖ All tenants are liable under voluntary waste, but whether they are liable for permissive waste (allowing tenancy to fall into disrepair), depends on what leasehold estate exists: ➢ A fixed term tenancy is liable, and there is some authority that yearly periodic tenants are also liable, however, monthly and weekly periodic tenants are not. • Duty to yield possession to landlord at end of the lease. ❖ This covenant requires that the tenant not only vacate the premises, but ensure that the landlord is able to retake possession.

-Assignments and subleases: • Covenants prohibiting assignments and subleases. ❖ Both the landlord and tenant at CL can dispose of their interests to a TP (in absence of express covenant). Exceptions: tenancies at will and sufferance. ❖ Usually there is a covenant in the tenancy agreement against assignment or sub-letting. There can be ‘absolute’ (completely no assignment/subletting permitted) or ‘qualified’ (requiring consent by the landlord) covenants. ❖ The acceptance by the landlord of rent from an assignee or subtenant amounts to a waiver of the covenant (both absolute and qualified). (Hyde v Pimley [1952] 2 QB 506 (Court of Appeal)). ❖ There also exists certain situations where a landlord’s refusal to allow an assignment or sublease was found to be unreasonable. A number of related factors were determined in International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd [1986] 1 Ch 513 (Court of Appeal): ➢ A landlord cannot refuse consent to a lease on grounds designed to achieve a purpose unconnected to the terms of the lease. ➢ Landlord does not have to show that his reasons for refusing consent were justified, only has to show that they could have been given by a reasonable landlord. ➢ A landlord may reasonably refuse consent to an assignment on the basis of the proposed user. ➢ Where refusal of an assignment will give a disproportional benefit to the landlord and a detriment to the tenant, this can be the basis of treating the refusal of consent as unreasonable. ➢ See pp446-447 TB to see examples of reasonable and unreasonable refusals of assignment. • The enforceability of covenants by and against assignees or subtenants. ❖ If a tenant assigns or sublets a tenancy, he or she remains liable to the landlord for breaches of covenant committed while a tenant. ❖ Also, based on privity of contract, both the landlord and initial tenant will remain liable for the remainder of the term for the performance of various covenants in the lease… e.g. if an assignee fail to pay rent, the landlord can sue the initial tenant, with the proviso that he/she cannot claim double damages. ❖ The liability of the third party depends if they are an assignee or a subtenant, due to privity of estate (privity of contract is irrelevant). Privity of estate exists between a landlord and an assignee (where the whole of the interest has been disposed of), but not between a landlord and a subtenant. • The covenant must ‘touch and concern’ the demised land. ❖ The purpose of this is to protect TPs, i.e. covenants are enforceable predominately against the original contracting parties. ❖ Whether a covenant ‘touches and concerns’ the land, depend on whether the covenant affects the landlord in his normal capacity as landlord or the tenant in her or his normal capacity as tenant. -From P&A Swift Investments v Combined English Stores Group Pty Ltd [1989] AC 632 at 642, a covenant touches and concerns the land if: 1. The covenant benefits only the reversioner for time being, and if separated from the reversion ceases to be of benefit to the covenantee. 2. The covenant affects the nature, quality, mode of user or value of the land of the reversioner. 3. The covenant is not expressed to be personal. 4. A covenant to pay money is not void, providing the above are satisfied and the covenant is connected with something to be done to the land. -Examples: 1) Covenants by tenants to repair the premises. 2) … to pay rent. 3) … not to assign or sublet w/out the landlord’s consent. 4) … to insure the premises against fire. 5) … to use the premises as a dwelling only. 6) See pp449-450 text. -Contrasts of what is not ‘touching and concerning the land’: 1) Covenants by tenants to pay rates assessed in respect of other property. 2) … to pay rent to a TP. 3) … by landlord not to open another public house within half a mile. 4) … to pay the tenant a sum of money at the end of the lease unless renewal is offered. 5) … to pay a security deposit. • The passing of the burden and benefit of leasehold covenants. ❖ Good discussion on pp450-455 of the five situations where interests of tenants and landlords are disposed of.

-Determination of leases (to bring to an end): • Natural expiration of the term ❖ A fixed term lease automatically determines at the expiration of the fixed term, no notice to quit is required ❖ A sublease will automatically determine at the end of the head lease, even if the sublease is expressed to continue past that date. • Notice to quit ❖ A fixed term lease cannot be prematurely terminated prior to the end, except where there exists express provision to the contrary. ❖ For a periodic lease, upon one period’s notice, the lease can be determined by either party. (E.g. one week’s notice in a weekly tenancy agreement, except in the case of a yearly tenancy, where 6 months is required. ❖ Notice to quit does not need to be formal; however it must be clear and unequivocal. I.e. if no date is specified, it must be possible for the tenant to calculate the date, (this will not lead to invalidity, but the courts will construe the notice against the party serving it). ❖ Notice may be given to an agent of the other party, providing the agent has authority. • Forfeiture ❖ This is the right of the landlord to determine a lease (in certain circumstances) on the basis that the tenant or his/her assignee has breached one or more of the terms of the lease. ❖ A breach of a covenant only gives a right to damages, not termination, unless there is a forfeiture clause. ➢ There is a distinction between a covenant and a condition. Breach of a covenant does not give a right to recision, however breach of a condition does. (A condition is assessed by the wording, and is at the ‘heart of the agreement’). ➢ The effect of a forfeiture clause is to render the lease voidable (not void) when a breach occurs. Thus, the lease remains in effect even after the breach, until the landlord exercises his right of re-entry. ➢ If the landlord elects not to enforce his right of re-entry, he may be held to have waived that right. This point is illustrated by Moore v Ullcoats Mining Co Ltd [1908] 1 Ch 575: -Facts: The landlord was refused right of entry to inspect the mine, and subsequently issued a writ demanding mesne profits (damages due to a lessor for the trespass of the lessee in remaining in possession after termination), damages and a clause seeking an order to permit the inspection of the mine. -Warrington J stated (at 585): the demand for inspection of the mine is to be considered an equivocal claim for possession and hence the right to forfeiture is waived. Only an unequivocal claim for possession will allow forfeiture. -Interpretation of the document is very strict by the court and is to be construed against the party seeking to rely on it. (Due to ambiguity in the document, the court found there to be an implied waiver). ❖ Forfeiture for breach of the covenant to pay rent: pp463-466 TB. ❖ Forfeiture for breach of covenants other than the covenant to pay rent: pp466-471 TB. ❖ Protection of subtenants and mortgagees: pp471-472 TB. • Surrender ❖ Occurs where there is an offer by the tenant to terminate the lease and the landlord accepts this offer. Once this occurs, the lease is extinguished. ❖ Surrender can occur expressly or impliedly, through some action on the part of the landlord. ❖ An assignment of the lease is not considered surrender. ❖ Surrender applies to fixed term and periodic leases, but not to tenancies at will or sufferance. ❖ Where surrender occurs, the tenant remains liable for the breach of any covenant up to that time, however any future liability is extinguished. • Merger ❖ Occurs where the leasehold estate and the leasehold reversion become vested in the same person in the same right. Where this happens, the lease is determined immediately. ❖ Occurs when the tenant acquires the reversion in the property or the landlord acquires the lease. • Frustration ❖ Occurs where a contract becomes incapable of performance because of unforseen circumstances, rendering both parties relieved of their obligations. ❖ Traditionally, frustration has been rejected by Australian courts as in (Minister of State for the Army v Dalziel (1944) 68 CLR 261), where the Commonwealth in wartime requisitioned the premises being rented by the weekly tenant. The HC held that as the tenant was not evicted, he remained liable to pay rent, despite the fact he was dispossessed. ❖ There have been no other HC cases since, but in general, state SCs have decided in favour of the doctrine of frustration applying to leases. • Enlargement into a fee simple estate (not applicable in SA)
In NSW, Vic and Tas, legislation allows a fixed term lease of at least 300 years to be enlarged into fee simple by declaration in deed, where the unexpired residue is at least 200 years. (Seldom used in Australia).

Easements and Restrictive Covenants

-General terminology: Easements • An easement is classed as an “incorporeal hereditament” which is a right in land which does not entitle the owner to exclusive possession. (As contrasted with corporeal hereditaments, which do.) • The only applicable incorporeal hereditaments in Australia are: easements, profits à prendre and rentcharges. • An ‘easement’ is: “a privilege without profit, which the owner of one neighbouring tenement has of another… by which the servient owner is obliged to suffer or not to do something on his own land, for the advantage of the dominant owner.” (J Barton, Concord MD v Coles (1906) 3 CLR 96 (at 110)). • Differences between licences and easements: 1. At CL an easement must be created by deed, a licence can be created without any legal formalities. 2. An easement requires a dominant tenement, a licence does not (it can exist in gross). 3. Unlike a licence, an easement cannot grant a general right to occupy neighbouring land.

-Essential characteristics of an easement
(Originally proposed by Dr Cheshire and adopted by English Court of Appeal in Re Ellenborough Park [1956] 1 Ch 131 (Court of Appeal) and later approved by Gillard J in Riley v Penttila [1974] VR 547.) • There must be a dominant tenement and a servient tenement. ❖ I.e. there cannot be an easement to benefit the public at large. ❖ As a result of this, easements in gross (an easement without a dominant tenement) cannot exist. (Except in the case of the Crown or any public or local authority s41A Law of Property Act 1936 (SA). ❖ Under Australian case law, the dominant tenement does not have to be expressly identified, the court may have regard to surrounding circumstances to determine this. (Surprisingly, this is also applies to Torrens land!) ❖ Also, the dominant tenement does not have to be corporeal real property. It can be solely incorporeal property (Hanbury v Jenkins [1901] 2 Ch 401), or a combination of corporeal and incorporeal property (Re Salvin’s Indenture [1938] 2 All ER 498). • An easement must accommodate the dominant tenement ❖ I.e. there must be a connexion between the easement and the dominant tenement (the dominant tenement benefits from the easement). ❖ The dominant and servient tenements need not be contiguous, (although tenements need not be adjacent, the must be physically proximate). ❖ An easement is limited to the needs of the dominant tenement. It is impossible to set up a business enterprise under the guise of an easement, which has no normal connection with the use of the dominant tenement. (Hill v Tupper (1863) 2 H & C 121). ❖ People other than the dominant owner may also derive benefit from the easement. (A right of way may still be a valid easement, even if it benefits any passer by that chooses to use it as a short-cut, Re Ellenborough Park.) ❖ An easement may accommodate the business carried out on the dominant tenement. ❖ An easement may accommodate the subdivided parts of the dominant tenement. (Gallagher v Rainbow (1994) 68 ALJR 512). • The dominant and servient owners must be different persons. ❖ Based on the rationale that a person cannot acquire rights against themselves. ➢ Note though: an easement is not invalid unless both tenements are owned and occupied by the same person. Therefore, a tenant may acquire an easement over adjoining land belonging to the landlord. • The right must be capable of forming the subject matter of a grant. ❖ Wide and vague rights are not considered to be valid easements. ➢ ‘Ius spatiandi’ is such a right – “a privilege of wandering at will over all and every part of another’s field or park”. ➢ ‘Right of prospect’ was held to be too vague, Aldred’s Case (1610) 77 ER 816. ➢ Contrast with: ‘Right to an undefined flow of air’ held to be a valid right, decided by the HC in Commonwealth v Registrar of Titles (Vic) (1918) 24 CLR 348. ➢ ‘Right to park’ held to be a valid easement, London and Blenheim Estates Ltd v Ladbroke Retail Parks Ltd at 161. ❖ Rights of recreation cannot constitute easements, rule in Mounsey v Ismay (1865) 159 ER 621. However, this rule has been criticised as outmoded, since large financial investments in recreational areas.

-Types of easements: • Rights of way ❖ A right of way can be granted in general or specific terms. The grantor can restrict the user to a particular type of use (e.g. for ‘vehicular traffic only’ has been held to exclude pedestrians). ❖ There can be multiple rights of way, provided there is no inconsistency or derogation from grant. ❖ The height and width of the right of way only extends as far as is reasonably necessary for the owner of the dominant tenement (e.g. if an easement is granted for farm machinery, it is imagined that it will be wider than an easement granted as a footpath). ❖ Where the dominant land is used for business purposes, it has been held that vehicles can be parked on the easement, as is reasonably necessary for carrying out that business, provided this does not stop others entitled to used the right of way. ❖ The duty to repair rests on the grantee of the right of way, irregardless of the condition of the right of way at the time of the grant. • The right to support ❖ This is a natural right based in common law. The right to support has been limited to the support of the land itself and does not extend to buildings on the land. ❖ The right to support does not extend to liability to support any building erected on adjoining land, except in the case where if ‘the adjacent support is withdrawn, causing the land to subside and this subsidence has not been the result of the additional weight of any buildings’. ❖ In the case of a strata title, express legislation exists, providing a right of support for the common property and each unit in the building. – s9 Community Titles Act 1996 (SA). • Rights of light ❖ This type of easement cannot be created since 26 October 1911 (SA). LPA 1936 s22.

-Creation of easements: • By Statute ❖ Where an easement is created by statute, the grantee only has such authority as governed by the statute. ❖ Generally, the Acts are designed to create easements in favour of local councils or State or Territory government authorities supplying essential services, Torrens statutes, SA s69IV. • By express grant or reservation ❖ There is a distinction between a grant and a reservation: a reservation is where the current landowner reserves the right for themselves, a grant is where they grant the right to another. ❖ The construction of a grant is construed against the grantor in favour of the grantee (contra proferentum). ❖ Any individual can create an easement by grant, even if they do not hold the fee simple. ❖ An easement cannot be created by simple reservation. A conveyance containing a reservation has to be executed by the purchaser. This is the CL rule and is still applicable in SA and WA. Under Walsh v Lonsdale, even if the reservation is not made by conveyance, the vendor is still entitled to an equitable easement. • By implied grant or reservation ❖ Implied reservation: no reservation on land will be implied, with the exception of a necessary and intended easement. ❖ An easement of necessity arises in the context of ‘right of way’, where a landholder is left with no access route to their property. (North Sydney Printing Pty Ltd v Sabemo Investment Corporation Pty Ltd [1971] 2 NSWLR 150. ➢ To imply an easement of necessity, court must be satisfied that it is essential, rather than convenient (the existence of an alternative route has provided fatal for a claim under necessity). Also, the easement of necessity must be specific to the prescribed use of the land (e.g. an easement for agricultural uses is inapplicable if it is later to be used for building purposes). ❖ Intended easements are granted by the law, if it was the intention of both parties to do so, subject to the qualification that the land granted should be used in a defined and particular manner. (E.g. an easement of support, a cross-easement). ❖ Implied grant: easement of necessity, intended easement ➢ Wheeldon v Burrows (1879) 12 Ch D 31 (pp1072 CB, test from pp1073 CB), detailed a test for an implied grant (all three components must be shown). 1. Right claim must be continuous and apparent. (e.g. a well worn track for a right of way). 2. Must be necessary to the reasonable enjoyment of the property granted (in contrast to implied reservations, convenience is a good argument). 3. Must have been used by owners of the grant for the benefit of the part granted. ➢ s36 Law of Property Act 1936: where there is a grant, a right that was previously a privilege may be turned into an easement. E.g. a 1 year lease with a right of way privilege may lapse and when it is renewed, the privilege turns into an easement: Goldberg v Edwards [1950] 1 Ch 247, and Wright v McAdam [1949] 2 KB 744 (Court of Appeal). • By prescription - what is needed on this?

-Extinguishment or modification of easements • By agreement ❖ At CL, extinguishment of an easement must be done by deed. Any informal agreement to release an easement will be enforceable in equity, providing it is in writing and supported by part performance. ❖ To extinguish at law, s64 RPA 1886 (SA) requires that the parties must obtain a court order before any notification of an easement will be removed from the Register, even if the parties have reached an agreement to extinguish the easement. • By abandonment by non-user ❖ The abandonment is considered a question of fact as to the intention of the dominant owner. Mere non-use is not sufficient to constitute abandonment. The use by the dominant owner of an alternative route may be evidence of abandonment. The longer the period of non-use by the dominant owner, the stronger the argument that abandonment has occurred. ❖ It is possible to have part-abandonment, e.g. an easement originally granted as a driveway for vehicles may be part-abandoned if over time no vehicles are driven on it and it is used primarily as a footpath. • By alterations to the dominant tenement ❖ If the dominant tenement is altered in such a way that it increases the burden on the servient tenement, the easement is taken to be extinguished, Ray v Fairway Motors (Barnstaple) Ltd (1968) 20 P & CR 261 (Court of Appeal). • By unity of seisin ❖ If the same person acquires a fee simple estate (and possession) in both the dominant and servient tenement, the easement will be taken to be extinguished. If the servient tenement is later resold, the easement will not revive, Roe v Siddons (1888) 22 QBD 224.

-Easements as a statutory exception to indefeasibility of title

-Restrictive covenants (a creation of equity) • Generally, land sold with an equity attached will apply to any vendor with notice of the equity. ❖ Tulk v Moxhay (1848) 2 Ph 774 ➢ Tulk sold his land to E, with the covenant that the land would be maintained in ‘an open state, uncovered with buildings’. E later sold land to Moxhay. The conveyance to Moxhay did not included the covenant but Moxhay knew of it. Lord Cottenham LC stated: • Requirements for covenants: • The covenant is only enforceable if it is for the benefit of the land. ❖ London & South Western Railway v Gomm (1882) 20 Ch D 562 • The covenant must be negative or restrictive in nature. ❖ Haywood v Brunswick Permanent Building Society (1881) 8 QBD 403 ➢ I.e. a covenant that requires someone to ‘put their hand in their pocket’ will be unenforceable. E.g. a covenant to maintain a building. • The covenant must ‘touch and concern’ the land. ❖ Any covenant which confers only personal benefit, on conveyance will not run with the land. • The covenant must be intended to bind the land. ❖ Forrestview Nominees Pty Ltd v Perpetual Trustees WA Ltd (1996) 133 ALR 465. The High Court determined 2 ways to prove this: 1. By virtue of the terms in the covenant, e.g. if a covenant is made by a covenantor ‘on behalf of her (or his) heirs and assigns’. 2. When there is clear intention that the covenant is intended for the benefit of the covenantee’s land, and not a mere personal obligation imposed on the covenantee. • There must be notice of the covenant

• ‘Doctrine of schemes of development’ ❖ If land is to be used in a building scheme, then the benefit of restrictive covenants can be enforced in equity. This is so developers can ensure that their development retains a certain quality or character. ❖ Requirements to establish a building scheme, Elliston v Reacher [1908] 2 Ch 374: (Restrictions to be taken as a guide) ➢ There must be a common vendor ➢ There must have been a plan for the development preceding the sale ➢ The restrictions placed by the vendor must be for all the lots in the scheme. ➢ Parties must have purchased lots on the basis that restrictions are mutually enforceable by owners of all the lots.

Equitable interests

*The purpose of equity is to soften the harshness of the common law.

-General terminology: • Land can be transferred with the consensus of both parties, in the form of either a sale or a gift. However, transfer can also be without consensus, for example, on the death of the owner, or to meet bad debts of the owner, or by acquisition by a public authority. • Note that even the non-consensual transfer of land through a will is actually consensual, as the person making the will has the right to direct the interest in land to anyone whom they please. (*With the exception that the dependants of the land owner can challenge the disposition, if it can be proven that inadequate provision has been made for their maintenance, Inheritance (Family provision) Act 1972, SA.) • A beneficiary to a will, is considered to only have an equitable interest in land, when all the debts of the deceased have been settled. • There is a distinction between ‘rights in rem’ (theoretical property rights that are good against the entire world) and ‘rights in personem’ (enforceable between the parties that created them and arise through a contract). *It is possible to enforce ‘in personem’ rights against others not privy to the contract through equity.

-Contracts and Transfers: • The land transfer process ❖ Contracts for sale of land are subject to the same general rules as any other contract, with the addition of particular formalities. ❖ Any kind of misrepresentation (not by private sellers, who are not in trade or commerce) may amount in an action for damages under s53, Trade Practices Act. ❖ Principle of caveat emptor has frequently been applied in relation to land transactions. ➢ There are no implied terms applicable to sellers (private) of land, as they do not have any sort of superior power. ➢ However, the seller does have an obligation to prove that they have a good title to the land. If they do not have a good title, the purchaser is not obligated to continue with the sale.

• Formalities (General law system) -For the creation of interest in land/ estates, particular formalities, as listed by the Law of Property Act1936, (Originally from Statute of Frauds), need to be adhered to: ❖ s26(1) Contract for sale must be in writing… ❖ s26(2) … except in the case of part performance. ❖ s28 Transfer must be by a deed. ❖ s30(2) Not withstanding earlier sections, lease can be formed by parol, providing it is not longer than 3 years. ❖ s41 Definition of a deed: a highly formalised type of contract, containing certain elements. ❖ If a contract for sale does not comply with the above formalities, it will be unenforceable (although not void). • Formalities (Torrens system) ❖ The Torrens system requires the registration of an instrument. ❖ Not all instruments under the Torrens system must be registered: Short term leases (Torrens statute s69VIII, SA), easements and adverse possession. However, the High Court recognises that equitable interest flow from unregistered transactions.

-Informality and inequity: • Statute of Frauds ❖ Under the Statute of Frauds, a purely oral contract for the sale of any land interest is unenforceable. ❖ Note: Statute of Frauds renders an agreement merely unenforceable, not void. Therefore, in the absence of any dispute, this issue does not apply. • Equitable doctrine of conversion (dealing with lag time in sales) ❖ In equity, the transfer of the interest occurs at the time of the contract. ❖ What this means is that all the risk is transferred to the purchaser at the time of signing the contract, Lysaght v Edwards (1876) 2 Ch D 499, where Jessell MR stated: ➢ “Upon the existence of a valid contract, the beneficial ownership passes to the purchaser and the vendor has a right to the purchase money, (in equity)”. ➢ E.g. if a party dies during the transaction, the doctrine of conversion survives. ❖ The doctrine applies to any property interest that can be created at law. ❖ Equitable doctrine of conversion applies to Torrens land - Barry v Heider (1914) 19 CLR 197. • Equity deems as done that which ought to be done ❖ Applies where parties intend a formal agreement but did not complete the formalities. A right is still recognised by equity and can apply to any property interest. ❖ Walsh v Lonsdale (1882) 21 Ch D 9 – Oral agreement (with the intention to draw up a deed), but no formal contract: ➢ There is a lease in equity. ➢ In this situation, the same remedies at law exist, (landlord brought an action for distress for rent).

*See next page for continuation.

❖ Chan v Cresdon Pty Ltd (1989) 89 ALR 522 – Extends on Walsh, however legal and equitable leases are different and therefore must be treated as such. ➢ The lease between A & B will be a legal lease. ➢ However the lease between C & B will be an equitable lease (provided there is notice).

A sale + conveyance of F.S. C
(legal F.S.) (legal F.S.)

B Is this equitable lease between B and C binding? Only if C has notice of B’s lease, as C is a bona fide purchaser.

• Doctrine of part performance ❖ The doctrine allows the enforcement of an oral contract for the sale of land. ❖ Requirements: ➢ Fraud rule: acts of the person relying on an agreement must be substantial and in detrimental reliance. ➢ Evidentiary rule: acts must provide some evidence of the contract. I.e. the acts must be unequivocal and referrable to the said contract. ❖ Determination of unequivocal acts: ➢ Going into possession (i.e. using a lease, using an easement) is an unequivocal act of part performance. ➢ However, according to the House of Lords, the payment of a deposit, coupled with a deed of transfer was sufficient to be part performance. ➢ Authority in Australia: Regent v Millett (1976) 133 CLR 689: -Agreement between parents and the daughter and son-in-law that they children would have title to the house if they paid off the mortgage. -The daughter and son-in-law moved in and started to pay off the mortgage. Found to be sufficient part performance. ➢ ANZ Banking Group Ltd v Widin (1990) 102 ALR 289 -The bank endorsed bills that were provided to a borrower under an oral mortgage agreement. Hill J held that the act was unequivocal and referable to the exact alleged contract. *Note: payment of money itself is not sufficient of part performance.

-Gifts and Wills: • Proprietary effect of gifts ❖ Where a gift is made, together with a deed, the lack of consideration is not sufficient to revoke it. However, equity does not enforce the intention to make a gift. ❖ At common law, the gift must by “signed, sealed and delivered” and therefore the deed must be executed by the transferor and actually handed over. ❖ Under the Torrens system, the requirement of registration simply means that documents must be lodged at the Land Titles Office. • Proprietary effect of wills ❖ A valid will only goes into effect upon the death of its maker. ❖ Under Torrens system, the interest will only pass on registration. ❖ Upon the death of the will-maker, the interest in land will transfer to the estates executor. At this point, beneficiaries only have an equitable interest in land, and can apply for an order of land transfer by the executor. • Gifts and equitable intervention

-Resulting and Constructive Trusts: • Modern trusts ❖ Allows a flexible technique for planning one’s estate for (young) children, etc. ❖ In a commercial context (i.e. tax benefits for the holding of property). • Types of trusts ❖ Express trust: where parties intend a separation of the legal and equitable proprietary interests. An equitable obligation which binds the trustees to hold land vested in them for the beneficiaries, (where beneficiaries can include the settlor and trustee). DKLR Holdings provides background of express trusts. ➢ Creation: -“A Declaration” - The settlor can declare they hold the F.S ‘on trust’ for certain beneficiaries (an inter vivos gift). (Both Torrens & General system). -“By Transfer” – The settlor transfers the F.S to a trustee who holds it for specified beneficiaries (can be both inter vivos & in will). *Rule of intention: must be a deliberate intention by the settlor of creating a trust. -Law of Property Act s29(1)(b) – Minimum requirement of writing, but normally a deed or form of will is used. *An oral statement is insufficient. ➢ Features: -The powers of trustees & beneficiaries are found in the deed/will. If the documents are silent, these powers are provided by Trustees Act 1936 (SA). -Where beneficiaries under a trust are of full age (18) they may call upon the trustees to transfer the legal title to them and have the trust ended. Saunders v Vautier. ❖ Resulting trust: when the legal title to property is transferred to someone, but that person is not intended to be the beneficial owner. Operates as a matter of law (i.e. after certain transactions are undertaken). No requirement of written evidence. ➢ Arises by: -The beneficial entitlement under a trust is not fully disposed of by the settlor (e.g. a life estate is given and once the person dies, the remainder equitable F.S can revert back to the settlor - or his estate). -Gratuitous transfer – If A intends to make a gift to B, the presumption of a resulting trust can be rebutted. Depending on the relationship between A and B, the presumption of advancement may exist: Calvery v Green (1984) 59 ALJR 111: 1. Where a father purchases property for their child. 2. Where a husband purchases/ transfers property to his wife. *The presumption of advancement does not exist for defacto relationships.

❖ Constructive trust: A remedial device used by courts, independent of the parties’ intention, in order to do justice. Not related to intention of parties. No requirement of writing. -E.g: where ‘B’ accepts transfer of title for benefit of ‘C’ and then seeks to resile on that agreement. ➢ Arises by: -Denial of an undertaking: Bannister v Bannister [1948] 2 All ER 133. *FACTS: The Def. sold two cottages to the Pl. on the Pl’s undertaking that the Def. could live in one of the cottages rent free as long as she desired (the price reflected this). The Pl. brought an action for recovery of possession. *RULE: The Pl’s undertaking stopped them from recovering possession, as this would render their conveyance fraudulent. The Pl. held the cottage on trust for the Def. during the Def’s lifetime. -Denial of an undertaking (Torrens): Bahr v Nicolay (1988) 164 CLR 604. *RULE: The same result as in Bannister that the person making the undertaking prior to registration (conveyance) cannot resile on their undertaking later, as doing so would be considered fraudulent. -Breakdown of joint venture: Baumgartner v Baumgartner (1987) 62 ALJR 29. Giumelli v Giumelli *FACTS: De facto relationship, pooled funds to buy house, furniture, etc. Subsequently they separated, but F.S in male’s name. *RULE: 1. HC found that apportionment should occur, as the man asserting his sole title was unconscionable. This is done by: 2. First finding equality, then making adjustments for differing contributions by each individual party (financial and non-financial). During this, the property is held on trust by the parties for themselves. -Estoppel: To create an equity through a party’s detrimental reliance on another party’s undertaking, 6 criteria have to be met, as identified by Walton Stores (Interstate) Ltd v Maher (1988) 76 ALR 513: 1. The Pl assumed a particular legal relationship between the Pl and the Def existed or would exist and that the Def could not withdraw. 2. Def induces the Pl to adopt that expectation. 3. Pl acts (or refrains from acting) in reliance on that expectation. 4. Def knew or intended the Pl to act on the expectation. 5. Pl’s action or inaction will occasion a detriment to themselves if the assumption or expectation is not fulfilled. 6. Def failed to act to avoid that detriment whether by fulfilling the expectation or otherwise. *The court can impose any remedy that will do justice.

-Find places for these: House v Caffyn & Wirth v Wirth.
Priorities

-Property rules (or disputes), (as operational in General law system, not Torrens system).

-General: • A system of resolving priority issues exists so as to reconcile property disputes between parties and determine who retains their interest and who loses it. • However, where two property interests are not absolute, e.g. a mortgage and a fee simple estate, and the mortgage gains priority, then the holder of the F.S. estate will hold their estate subject to the mortgage. Conversely if the F.S. estate gains priority, the mortgage will cease to exist. • Note that property rights will only come under scrutiny and cause a priority dispute if two different parties want different things.

-There are four primary property disputes, which are covered below. Note that as a general rule, the interest that is first in time will win (all other things being equal).

1. Dispute between: Legal estate and subsequent Legal estate: • Basic rule is that 1st in time wins. (Reason is that it is a ‘right in rem’ and is binding on the whole world). 1st in time refers to the creation date of the interest, which is generally the date of execution of the document. • Authority: Northern Countries Fire Insurance Co v Whipp (1884) 26 Ch D 482. • FACTS: Crabtree, an employee of the Pl. mortgaged his properties to his employer. The title deeds were placed in the company safe. Crabtree when in subsequent financial difficulty took the title deeds from the safe and used them to secure an additional mortgage from the Def. Mrs Whipp. Mrs Whipp later sought to have the Pl’s legal mortgage postponed to her later equitable mortgage. • RESULT: there was no postponement, but factors that would cause postponement were outlined (see below). • Note: This legal interest must be created by a deed and therefore leaves a paper trail that future buyers can check – caveat emptor. *Except in the case of a lease < 3 years, but even so, a tenant in possession is there for the whole world to see upon inspection.

2. Dispute between: Legal estate and subsequent Equitable estate: • Generally (in the absence of fraud or unconscionability), the legal holder will win, as they have a ‘right in rem’ – Northern Countries Fire Insurance Co v Whipp (1884) 26 Ch D 482. • Circumstances in which postponement of a legal estate can occur, (from Northern Fire Insurance v Whipp): ❖ Where the legal estate has been party to fraud and the fraud has led to the creation of the equitable interest. ❖ Where the legal estate holder has been “grossly negligent” in not getting in the title deeds, their interest may be postponed. Generally, “gross” negligence must be more than mere carelessness. ➢ In Whipp’s case, the action of the Pl. company in keeping the title deeds in the safe where Crabtree could access them was negligent, but the court decided it was not sufficient (grossly) negligent to postpone their interest. • Contrast with: Barry v Heider (1914) 19 CLR 197, where the 1st legal holder (F.S.) was postponed to the 2nd equitable holder (mortgage).

3. Dispute between: Equitable estate and subsequent Legal estate: • A legal purchaser who is found to be: ‘bona fide purchaser for value’ without notice of a prior equitable interest, takes the estate free of any prior equitable interests. This person is known as ‘equity’s darling’. • General Law test for ‘equity’s darling’ from Pilcher v Rawlins (1872) LR 7 Ch 259. *Note: is a General Law case, NOT a Torrens law case, and CANNOT be applied to Torrens cases. ❖ Bona fide: The purchaser must act in good faith. I.e. the purchaser has not engaged in unconscionable behaviour with regards to purchase transactions. ❖ Purchaser: equity will not assist a volunteer. (King v Smail [1958] CR 273.) ❖ Legal interest: validly created by deed, or otherwise a lease < 3 years. ❖ Without notice of equitable holder’s interest, where notice can be: 1) Actual notice (personal knowledge of the interest) 2) Imputed notice (any notice through the agent of the purchaser, whether actual or constructive will be taken to be imputed to the purchaser). However, the knowledge of an agent is not imputed to the purchaser if the thing of which the agent had notice comes from the agent’s own fraud, Schultz v Corwill Properties Pty Ltd (1969) 90 WN (NSW) (Pt 1) 529. 3) Constructive notice (comes about if the purchaser had made all the usual and proper inquiries & inspections). General inquires a reasonable purchaser should make: -Duty to inspect the land: possession of the land by a person other than the vendor is notice of that person’s interest, Barnhart v Greenshields (1853) 14 ER 204. *Note: Smith v Jones [1954] 1 WLR 1089 – a purchaser’s notice of tenancy is not sufficient to impose all other rights and terms, such as an equity of rectification. -Duty to inspect title documents: where the law requires a vendor to produce a good chain of title, a reasonable purchaser is held to search the documents in the chain. In South Australia, the search period is presumably the same 60 years as in England. *In Pilcher v Rawlins (REMEMBER: only a General Law case!), it was found that constructive notice should not extend to cases where the vendor deliberately removes deeds from the chain of title, but prima facie the chain seems complete. • Torrens law test for ‘equity’s darling’ from Law of Property Act 1936 s72 (but also case authority): ❖ Purchaser must be a Bona fide purchaser (of a legal interest) for value or ‘BFP4V’, difference from General law system is that there is no requirement of notice. ❖ Also, note that in General Law system, a short term lease is < 3 years, under Torrens Law, it is only…...

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