LAND LAW CLASS NOTES

CLASS 1 All contracts for sale of land- in writing, s 54A.

• s 23c =not relevant Land is influenced by: Soil, topography and climate Native title

1. Crown grants • When the colonial and state governments of Australia made hundreds of thousands of land

grant to citizens • Origin of all land titles is originally land grants • Long-term leases from government

o Person gets lease for 99 years- long enough for people to invest in land and for the time of their lives

o Advantage over fee simple: they can get it back at the end of 99 years o Rare in urban areas aust govs wanted people to own their own houses.

• Freehold fee simple o Largest interest in land for an indefinite period of time o Almost all land grants in urban areas are freehold fee simple o Only way government can get it back is compulsory acquisition – ie if they want

to develop a specific piece of land for infrastructure Under constitution- federal government can resume land, but must pay on just terms. State government has unlimited power to resume land. It doesn’t because it would create a revolution. Doctrine of Estates

• Freehold estates o Fee simple – largest interest in land o Fee tail – abolished. Where someone has owned land, but have left it to someone on the

basis that it will only pass down through male relatives. Interest can only last as long as their life. Purpose: keeps the land and wealth in the family

o Life estate – interest in land granted to someone for life. Terminated on death. Typically used from husbands to wives, remainder usually to children. Wife lives in it for her life, then remainder goes to son. (second marriages)

• Leaseholds estates Possession:

• Cant show ownership through possession – theres a land register • But still is important • Landlord- you owe a fee simple, but youre granting possession to the tenant • Use torrens register to show tenancy anyway • Possession- surest sign of having possession of land: living there, paying rates, maintain the

property, have the keys

Numerous clauses principle: • Limited number of property rights, no one can have their own version/ tailor it as you please

Fee simple:

• Largest interest in land for an indefinite period of time • Comes about by crown grant • Can carve out interests

Lease:

• Can carve a lease out of fee simple Mortgage Little interest in land you give someone that has lent you money. Owner of the land- mortgagor Person who has given you money- mortgagee Mortgage is secure- not just a promise, little interest in land that entitles you to sell it if you don’t repay them back You can mortgage anything that has value If debt is paid back, mortgagee has to give them their interest back – ‘equity of redemption’ Easement:

• Bare license to use land- permission to use land • Needs to be in writing –s 54A of conveyancing act • Need to register it • How to get rid of it- if you purchase their land, or buy them out

Restrictive covenant:

• Stop someone doing something on their land • How to get rid: buy them out, but practically impossible • Infinite time: Doesn’t take into account developments of buildings

Profit of pendre

• Can use natural resources on someone elses land

Lien or charge: Contract: enforceable against parties to contract Property: against the world, and fall into the numerous clauses list Fixtures:

• Personal property become attached to land • Important when valuing land • Cant contractually override doctrine of fixtures

S 54A of conveyancing act: All sale of land contracts must be in writing Why? To avoid gazumping Land is valuable and unique and no 2 pieces of land are the same Need to know: parties, price, what the land is, and signatures, NEED TO BE IN WRITING- big expensive and unique. How to get around writing- part performance (get around parole evidence rule) Not satisfactory for part performance: paying money (may be other reasons)

Exchange of contracts= intention to be bound 54A- can be fee simple, leases, mortgage etc (not only fee simple) Practice law question of private law, contracts, equity and trusts and land law:

• Mr B wants to buy a house from Ms Ali • Ms Ali is moving to Melbourne in a years time – wants to stay in the house until she moves, but

doesn’t want to pass up on Mr B’s offer • Mr B would like to subdivide, and build a 2-storey house with water views behind the existing

1 story house • Driveway runs down the side of the land, which he wants to extend so both houses can access

their respective garages • Mr B negotiated a loan from ABC Bank

Mr B’s contract and property rights: Contract rights: contract of sale between A and B- s 54A of conveyancing act B contract with ABC Bank- mortgage contract – s 54a of conveyancing act. Promise to give ABC bank a little interest in land tenancy agreement between B and A. Agreement by B to allow A to live in the house for a year—s 54A conveyancing act Property rights: Mr B: has an equitable interest Mr A: legal register owner Easement and restrictive covenant When Mr B is registered= legal owner:

• 6 months into the construction, the subdivision has been registered and the builder, is living on site in the partially constructed house

• Mr B gave him permission in exchange for reduction in construction costs (paying $500/week) • Mr Bain sells the house to Ms David • Ms Davids father is a builder and wants him to finish he construction on the 2nd house • Ms David tells Mr Can to move out and leave all construction materials on site • She also tells Ms Ali that she wants her to move out of the original house in 2 weeks time

Is Ms David entitled to make these demands of Mr Can and Ms Ali? Ms David= bona fide purchaser Mr Can- has a bare license- nothing in writing, just has permission to be there Difference between license and lease- question of fact. What rights? Ms David Can tell Mr Can to leave. License is not enforceable against her Construction material- not fixtures, so belong to builder (Mr Can). But Mr Can cant take what is fixed to the house Can Ms David get rid of Ms Ali- even if Ms David registers, shes bound by leases by less than 3 years. Short term leases are an exception to indefeasibility

TORRENS TITLE From exchange of contracts up until registration= purchaser has an equitable interest Equitable interest for purchaser is to enforce the contract.

• Breach of contract or breach of trust and account of profits OLD SYSTEM TITLE: Gradually colonial gov given power to make land grants 1863 started the ‘english system’ land is transferred through deeds almost all has been converted to torrens. If you sell old system- must covert problems: fraud, forgery if not correct signature, purchaser got no legal title, and every purchaser after that got no legal title. If P knew about fraud, no legal title Adverse possession- 12 years Strata plans- subdivide airspace Sydney made of sandstone- can cut through for parking (underground) Torrens title comes into existence: deposited lands being subdidivded Converted to torrens Fasting growing form of land: strata Number of titles that you see now: ordinary deospited plan Strata: important Subdivision of primarily land and airspace. Divides land and airspace in individually owned lots Anything outside of strata is owned by everyone Community plans Flat- flattened out strata schemes Torrens register Purchasers are given documents that allow you to register (CT) First schedule: name of owner Second schedule: 1. Reservations and conditions in the crow grant (gov keeps right to minerals), interests affecting the land (‘ad2345’- dealing numbers, ie the actual mortgage or actual lease) To get on register: have to use form and CT (original is the register) Core sections for real property: S 42: estate of registered proprietor paramount S 43: Purchaser doesn’t need to be worried about fraud, chain of title etc Obliterates the bona fide purchaser rule. Doesn’t matter if you know about the existence by equitable interest. If you go ahead and register- that’s not fraud.

Frazer v Walker:- leading authority on indefeasbility Mrs Frazer mortgaged (and signed) family home without telling him Bank selling house Held: this is Torrens system. Mortgagee not implicated Walker gained an indefeasible title Mortgagee exercised power of sale- can do that and sell to walker (registered owner) Forged documents are ineffective Deferred indefeasbility DOES NOT APPLY IN NSW Pay stamp duty on contract and the transfer Breskvar v Wall Mr and Mrs breskvar executed a transfer, but left the transferees name blank (but had their name and their signature) because they wanted to get a mortgage. We only gave transfer and ct to petrie We didn’t mean to sell to him, we can pay the money we want the land back Petrie transferred to Wall (both fraudulent) Wall to Alban (signed a contract of sale) – has an equitable interest in land Breskvars argued: the blank transfer form was void under stamp act. Trying to say alban has no interest in this land (he only has a contract with petrie) Transfer act says blank act is void, therefore petrie got nothing, therefore petrie cannot give alban any interest

1. breskvars attempted to say alban has nothing at all- court said that’s not right, torrens is a system by registration.

Breskvars not on register, wall was. Breskvars did wrong: handed over a blank transfer which they had signed. Anyone who gets their hands on that transfer can put their names in. Having altered the register, the owner of land was shown as wall Breskvars are guilty of postponing conduct Now alban is more meritorious Postponing conduct- postponed to the last person Prior equity takes priority over second one, unless postponing conduct. REVISION: Contract Negotiation Agreement to buy a land in writing– s 54A conveyancing act. Exchange of contracts- legally binding contracts (doesn’t transfer title- only equitable) 6 weeks – finance in order----at this point youre bound settlement of sale/completion of completion purchasers promise: to pay balance of purchase price vendors: hand over Certificate of Title what conveys legal title: state act of registration – s 42 of RPA single most important question: are they registered? If they are-they are registered proprietor of the land

Mercantile Credits v Shell

Facts: • Owner of fee simple has leased land to Shell • Lessor mortgaged the land. • Shell had option to renew • Options are promised by the landlord to the tenant that they can renew their contract • Options come into existence- have to renew the lease • S 42- registered proprietor of the mortgage • First lease- on register • Second lease- not on register-only contractual or equitable

Decision: • What becomes indefeasible is the tenants estate in land

• An option to renew attracts indefeasibility by virtue of the registration of the initial lease

• lease was registered before the mortgage, so it takes priority

• mortgagee wants to sell house with vacant possession

• HC says: youre bound by the tenants lease, so the mortgagee has to sell it with the lease attached

If landlord sold property, but tenant still leasing the property. What is the new owner bound by? What covenants touch or concern the land are enforceable- rent, options to renew, electricity bills

mortgagee stands in the shoes of the original landlord. Ie a successor in title

MORTGAGES: Mortgagor- doesn’t pay back money, they default, mortgagee can sell the land Mortgagee- registered If mortgage was forged by mortgagors solicitor/spouse etc If mortgage is registered- it is effective (frazer v walker) WHAT IF:

• mortgage debt = $800,000 • When the exercise power of sale: goes for $600,000 (if goes for $1mil- take $800,000 and repay

the balance to mortgagor) o Theres a contract- ‘I promise to repay you all of $800,000’- person

covenant/contractual promise • Takes $600,000, then sue on contractual promise to repay $200,000 • Mortgagee: must make sure you value the land- make sure property market is not shaky

COMPLEX PROBLEM:

• Where: property hasn’t sold for enough money, and mortgagee wants to sue on personal covenant, and the mortgage is forged

• If you want to sue for breach of contract- forged contracts are invalid-you don’t have a leg to stand on

EXCEPTIONS TO INDEFEASBILITY:

Volunteers: One who does not give valuable consideration for his/her title (ie under a gift in under a will). In NSW- a volunteer gains indefeasbility of title upon registration, and is not affected by the equities that affected the original owner, despite any notice. S 42 of the RPA ONLY CONFERS INDEFEASBILITY ON THE ‘registered proprietor’ and does not differentiate between a purchaser and volunteer. Bogdanovic v Koteff:- since the decision, registered proprietors who are volunteers also get the benefit of indefeasbility as a result of the authority in frazer v walker and breskvar v Wall, in which there is an unequivocal endorsement of immediate indefeasbility. Facts:

❖ applent (bogdanovic) lived with S kottef and looked after him, the father of the respondent (N Koteff) in his house

❖ After the father died, he left the house in his will to his son (N Kottef). ❖ His son became the registered proprietor ❖ The respondant tried to kick the appllent out, and she refused, saying that she had an equitable right to

the house----She argued that they had a constructive trust based on common intention ❖ Mr koteff had to hold the interest on constructive trust for her

Argument: the respondent argued that he was free from any equitable or legal claims The appellant argued that indefeasbiltiy does not apply to volunteers, s 42 cannot be read with absolute force (and the respondant is a volunteer-he received the house under a will) Judgement: immediate indefeasibility extends to volunteers as well, and the Respondent wins. S 42 applies to both voluneters and purchasers. Rethink in terms of in persom exception Russmussen v Rasmussen: - VIC LAW Held: volunteers do not gain the benefit of indefeasbility. Outlines 2 arguments against bogdanovic:

1. s 42 does not distinguish between volunteers and purchasers for value but other sections within the act draw a distinction, Thus indicates that s 42 should not be read as covering both voluneters and purchasers

2. frazer and breskvar, deal only with the purchasers value rather than volunteers Facts: grandfather made a gift to his grandson (equitable interest), but there was a lease on the land. son= registered proprietor grandson tries to kick out grandson who is leasing the land HELD: S 42 DOESN’T APPLY TO VOLUNTEERS

FRAUD Loke Yew v Port Swettenham Rubber Co Ltd: Background Facts

❖ Eusope was the owner of a lot of land. ❖ The Plaintiff [Loke Yew] acquired some land off Eusope (but did not complete registration)=equitible ❖ Eusope entered a contract to sell the rest of the land to the Defendant [Port Swettenham], who agreed

that they were only buying the land which did not belong to the Plaintiff. ❖ Despite their agreement, the Defendant still registered all of the land in their name and thus became the

registered proprietors of the Plaintiff's land as well. FRAUD IS A MATTER OF FACT Judgment

❖ S 42: except in the case of fraud ❖ A Registered proprietor who has acted fraudulently will not enjoy the protection given by the

legislation (indefeasibility). ❖ A type of fraud: where a party promises that an unregistered interest will be preserved (in order to

induce another party to agree to a transaction) and then goes back on that promise, that party will be guilty of fraud.

❖ In this case, the Defendant made a promise that the Plaintiff's interest will be preserved. If that promise was not made, Eusope would not have agreed to the transaction. When the Defendant went back on that promise, he was guilty of fraud and thus comes within the exception in the legislation.

❖ It follows that the Defendant does not enjoy indefeasibility. ❖ The Plaintiff wins, and the Defendant was ordered to transfer the relevant land to the Plaintiff (as

opposed to a rectification of the register).

Assets Co Ltd v Mere Roihi Something may have aroused your suspicion, but you didn’t bother to check. The fraud that must be proved, must be brought home to the person. Carelessness in examining a document for fraud, or the failure of a party to make inquiries (even if they were reasonable), will not make a registered proprietor guilty of fraud. This was discussed in Assets Co Ltd v Mere Roihi:

❖ A person who fails to discover the fraud of another because he didn't make inquiries is not guilty of fraud.

❖ The fraud must be 'brought home' to the party - ie, the party must be a part of the fraud in a way to come within the exception.

❖ However, if the person had suspicions that there might be fraud, and then didn't make inquiries so as to not find out and thus tied down by law (this is called willful blindness - shutting one's eyes to avoid implications), then they are guilty of fraud.

❖ A person who honestly believed that a transfer is legitimate and free from fraud is not guilty of fraud Bank of SA v Ferguson Facts: a bank officer forged the signature of an applicant for a mortgage Held: HC dismissed the claim that the mortgage could be set aside for fraud by the bank The document ‘was not prepared for, and was not used for the purpose of, and did not have the effect of, harming, cheating or otherwise being dishonest’ to the mortgagor. The fraud must be ‘operative’ in the sense that it operated on the mind of the person said to be defrauded and to have induced detrimental action by that person. Pyramid building society: Facts: a mortgage was fraudulently executed by an improper affixation of the company seal by a person who was not a director of the company. The mortgagee had no knowledge of the irregularity and the mortgage was registered. Mortgagor submitted that the mortgagees solicitor had acted with reckless indifference to the irregularity Held: mortgagee not guilty of fraud.

What would be characterised as 'negligence' (eg, failure to make inquiries) will not be extended to mean 'willful blindness'. Willful blindness requires more than mere negligence or the failure to make inquiries. FRAUD AND AGENCY: Schultz v Corwill

There are two possible agency situations: 1. The agent himself has acted fraudulently.

a. If the agent was 'acting within the scope of his actual or apparent authority' (given to him by the principal) then the principal will be guilty of fraud.

2. The agent has learned of the existence of fraud by another. a. If the agent has actual (as opposed to constructive) knowledge of fraud, then the agent

will be presumed to have communicated to the principal all information that he gained 'in the course of carrying out the transaction' (the big requirement is of actual knowledge).

FALSE ATTESTATION OF INSTRUMENTS Russo v Bendigo Bank Background Facts

❖ The Plaintiff [Russo] and her son owned a company. ❖ The son executed a mortgage with the Defendant [Bendigo] on the Plaintiff's home by forging the

Plaintiff's signature on the mortgage. ❖ A law clerk (working for the Defendant) falsely attested the forged signature despite not seeing the

Plaintiff sign, and despite instructions that she is never to attest a signature without seeing the person sign it in front of her.

❖ Her superior (a solicitor) then registered the mortgage, not knowing of the false attestation. ❖ The bank tried to sell the property, the Plaintiff argued that the bank's interest was defeasible due to

fraud. Judgment

❖ A good definition of fraud (in the context of the Torrens legislation) was given in Waimiha Sawmilling case: 'it means dishonesty - a willful and conscious disregard and violation of the rights of other persons'.[1]

❖ In regards to the law clerk, whilst she knew what she had said was false, she was not 'dishonest' in the meaning of the quote above (ie, in the meaning of fraud).

❖ She did not fully appreciate the significance of her actions, and she did not know that the signature was forged, or that the Plaintiff did not want the mortgage.

❖ In regards to the solicitor, he had no knowledge of any false attestation or fraud and was not at all party to it. Again, there was no 'dishonesty' on his behalf, or any 'moral turpitude'. Thus, he is not guilty of fraud.

❖ There is no fraud, and the Defendant's title remains indefeasible. Davis v Williams Facts: registration clerk made unauthorised alteration on a transfer to save on stamp duty. Changed ‘joint tenants’ to ‘tenants in common’ Held: no dishonesty. No element of actual dishonesty or moral turpitude required for fraud Even though inferred that clerk knew Registar General would be misled, however she did not understand the misrepresentation was material, rather than mere formality. FRAUD AGAINST THE HOLDER OF A PRIOR UNREGISTERED INTEREST