Exam Discussion11/04/11 11:24 AMReceived: Subject Outline Guide to tutorial quizzesReading Guide (T1, 2, 3)

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Set TextsCN #4172Real Property Geoff MooreProperty Law in New South Wales - GreyLand Law Peter Butts

Course Outline:Tutorial outlineAssessments:mid-semester examopen book35%2 hrsSat 9 AprilDisciplinary knowledgeIn-tutorial QuizzesBest 2/any countMust do at least 3 QuizzesMust be to at least 5 tutorials=20%First Quiz at second tutorialFinal examOpen book45%Exam period2.5 hoursdisciplinary knowledge + critical thinking

Reading GuideTopics (numbering issue (T2-T5, should be T3)SummaryKey Concepts (glossary)Required readingTopic 1, not in Tbook etc.Case w * is important (read whole case)TutorialSkill questions

Real Property11/04/11 11:24 AM

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This is meant to be very difficult

Questions:Therefore do other European countries (especially old republics, e.g. France) have allodial?Aboriginal LawCan reservation rights be excercised?Via just terms

Definition: Real PropertyLand and interests in landConsists of:Corporeal hereditaments (tangible); and,Incorporeal hereditaments (intangible: e.g. easement).

TenureNo one owns land absolutely (our system is not allodial, but tenurial)We hold land of the crownThe crown holds it (we have it via grants)The thing we hold of the crown is an estate

HistoryRoman EmpireBig, dramatic fallWith end, chaos ensuedThose without protection asked a leader to protect them (birth of feudal system)Land transferred to stronger, people kept use and occupation rights (often in exchange for military service)Came to Britain in 1066 (Battle of Hastings) (William the Conqueror)Creates legal fiction (e.g. all land is held of the crown)When William conquered England, he legally owned all of the land in EnglandIn that moment, he regranted land to those who originally owned it (vests rights in original owners)Big change, legal fiction of crown owning all landTherefore, no-one owns land (since behind our rights are crowns rights)King is Paramount LordThen grants downwards to people who own land in colloquial termsDid we get this system when NSW settled?In England at the time, knew it was a bad ideaNow only 1 level (estate of the crown)Many different ways of holding (tenure) (of the crown)Most abolished by NSW timesNow 1 form: free and common socageLaws imported into Australia (settled because of Terra Nullius)An Englishman brings as much of the common law with them as is relevant to the circumstances of the colony (settled) (Cooper v Stuart)we imported feudal law (Attorney-General v Brown)

Attorney-General v Brown (1847)FactsCase about 60 acres of land at NewcastleFinds coal, starts digging for itCrown says coal was not his (was Crown)When granted land, it has a reservation clause (where something is reserves out; here, granting land but not giving away mineral rights)Brown argued reservation clause was true, but all land law for England didnt apply and that the crown did not own his landCourt said:(same argument as Mabo, opposite result)His argumentEngland had sovereignty (= Paramount Lordship over Australia)But, there is no correlation between sovereignty and ownership of all the land, therefore crown could not reserveButBrown admitted sovereignty, and then could do whatever it wanted, including creating reservation clausesCourt saidCrown owned land since 1788And, tenure is a fiction (not true in Britain, etc.)But, even though it isnt true in England, it is true here, because of Terra NulliusTherefore Tenure is more entrenched in AustraliaCrown owns land and has a fictional interest in the landVests itAnd can reserve rights

MaboSame as Browns argument, not what the court found in BrownNot the first attempt at native title (1971 there Gove land rights case which failed (spiritual not economic relationship with the land))Then High Court found native title for PNGPlaintiffsTheir rights to traditional country survived crown coming to Australia and should be recognized as Native TitleTo argue this they had to overcome Tenure as in AG v BrownHow can aboriginal peoples and the crown OWN the same piece of landTherefore when land was vested in the crown, native title was extinguished (this was the crowns position)Was the court going to overrule AG v Brown?Most of the court chose to rethink TenureNot that activist a moment, just brought Australia in lineMade in light of international agreements on discriminationBrennanTenure might not have been the best ideal in 1788But it is too late to change itto abolish tenure would fracture the skeleton of the common lawso what are we going to do? How can it fit into modern society?We have tenureWhere no one owns land absolutelyTherefore crown has a notional interest in every piece of land. What is the crowns interest?Radical title

Radical Title (Mabo (No. 2))What is the notional (or conceptual) interest in land?Radical title is the concomitant of sovereignty Brennansovereignty independence and right to ruleas in Browns plaintiff argumentLinks private ownership and sovereigntyRadical title is sovereignty in land-law (looking in)Power to create interest in land, and manage themCrown has a beneficial interest in all landbeneficial contrasted with notional interestowns (ish) the landlike a governmental power, rather than actual title to a specific land parcelPower to grant land, but not instant ownership of land

EstateEstates are property It is inherently alienable no restrictions on sellingGiving, sale, mortgage/leaseThis is the interest that we hold of the landA slice of timeGives you rights with respect to the physical land (rather than ownership of the actual land)Different estates based on endurance (i.e. how long it lasts)

Types of estatesCreated by govtInherited, sold, etcOr created by people (subdivision, re-estate)Freehold (uncertain duration)Fee simplePassed onMost rights out of any estatefee inheritabilitysimple no restrictions on inheritancefees simpleLife estateEmbedded in trusts, oftenFamilial situationsi.e. make children comfortable use of the property for lifecannot waste it (significant change)Abolished fee tailInheritabilityEstate is entailed cut fee simpleFee tail you could specify descendantsFor landed families, to be within families couldnt easily be soldWhat does it tell us about society? Land and society?Pastoral leasesLeasehold (certain duration)Remainders and reversion

More detailedFee simpleInheritableAt common law to Bob and his heirs. Now can be to Bob forever To Bob in fee simple Conveyancing Act s47(1), (2).Also created by default if trying to create a fee tail ss(19), (19A).Life Estate or Life estate pur autre vie (for the life of another)To Yochi for the life of Danny Hahah playing with peoples brainsCannot wasteTo create it show an intention to create a life estate. It happens by default if fails to make fee simple s 47(2) for life.Can be sold until, have estate until death of person for the life of which the estate is created.WATCH IT! ONLY CHANGES WITH DEATH, NOT IF SOMETHING HAPPENS TO THE OTHER ESTATEForm of notification see slides, not too importantCan do it about random thingsLeasehold laterintestate without will bona vacantia or ethsheat

Simultaneous estatesReversionTo Bob for life (reversion to grantor)A fee simple in reversionAfter Bob dies, I get the land againRemainderTo Bob for life remainder to Alfred in fee simplePossession: who actually has the land at a moment in timeAlienable-ishCan only sell what you have (if in reversion, can sell estate, but not possession)If you die whilst in reversion, life estate keeps until they die, and your heirs receive the fee simple

Giving propertyInter vivos in life Testamentary in will

Estates as a bundle of rightsInter-subjective rights exercisable against the whole world with respect to a particular thing (in rem)In personam right (exerciseable against someone in particular)Shares not a thing but a right to ownershipTherefore property is rights not things 11 rightsimportantalienablepossessionpossession exclusion (everyone and no-one in particular)

Carbon Tax price on tax carbon trading Intangible Right with respect to itHow do you own it?AnswerRather than purchasing the carbon itself you purchase the right to emit carbone.Measured either by estimates or with metersThese rights are allocated and then traded on a secondhand market

Native TitleHow does it interact with Tenure? Can it exist where there is tenureWhat does it tell us about indigenous relationship to country? Not much, reallyIt is a western legal concept, not an indigenous concept thus it reflects western concepts of land, not indigenous ones.

Mabo =/ the first attempt (e.g. Gove land rights case in NT aboriginal title in Canada 1823 Johnson v Macintosh in US)Gove =/ have succeeded because relationship was seen as spiritual, rather than economic (1971)Dao v Gerber (PNG), there was native title, heard in High Court of AustraliaIn the 80sMabo (1 of 7 plaintiffs) (he died, and the court case continued because of the other plaintiffs)Clear cut case (if the law existed)Economic useClear heritageAs close to western land ownership as aboriginal land ownership could have beenHeritage is Melanesian (=/ aborigine, different land use, now difficult to prove with aborigines in the light of Mabo)Evidence that was foundIn Queensland Supreme Court (evidence heard)Judge went to the Island rather than requiring plaintiffs to come to court (now a common practice with Native Title)There was market gardeningGardening and tradeRequired plots of landLand divided into single unit lots with boundariesThere was exclusionThus land ownership was found appropriate: that is, productively (see adverse possession, below)Why does common law love productivity?Locke he wrote when king and parliament were struggling for powerParliament was keen on property rights Not the first or last philosopher on the topicCame up with Lockes labor theory (1600s)Why is everything not in commons?We have private property because of our labor, the mixing of our labor with something that lets us take it out of the commonsAs much as a man can improve, it is his property, and he can remove it from the commonsE.g. Mr. MooreFactsLiver disease, goes to hospitalHas some immunity, cells extracted, and cell line patentedMr. Moore does not get a centDo you own your body?No (there are limited exceptions: e.g. you can own the product of your body)Thus there was an issue of autonomy, slavery etc.UC, however, did have a property rightBecause of the work they had done (mixed the work, with something that cannot be owner) it was extracted from the commonsThe working skills exception to non-ownershipLocke was a secretary to the board of plantationLike coloniesWhy were Britons able to colonize where there are people living places?Because of improvement laborVattellNatural law requiring to cultivate its landCannot expand until they require more, and have cultivated their land to the best of their ability)Those who pursue non-agrarian land ownership should not be allowed to own landIn 1600s, they counted aborigines, and then stoppedTo justify taking of new colonies, they required that natives be civilized If not civilized, they legally did not existsquatting | adverse possession | rewarding productivity (an historical leftover that hasnt been abolished, even though it has been considered)if you move onto landopenly and peacefullyand you use land in a certain wayso that it amounts to possessionafter 12 years, you are owner, and dont need to compensatenot commonlylaw does not like land lying fallowin deciding, appropriateness and exclusion considered

QuestionsDid aborigines record their laws?Didnt aborigines have adverse possession rights?They had possessory title appropriately ownershipYou have the best title, unless someone else shows a better right to itThen they would have gotten an estate in fee simpleRather, they got native title, which is not equivalent, and is much more delicateThus too farAnd the court did not allow itNomadic difficult to quantify as appropriateIsnt there only crappy land left?extinguishmentHavent all of the native title claims happened?Most arent, now, litigated

What is native title?Origins in traditional law of aboriginal law (normative approach) uniquely Australian (different from Canada, etc.) (Yorta Yorta)Thus aboriginal custom is central specific to the aboriginals of the specific land (i.e. the customs of the plaintiffs)Every claim has different laws based on customHow do we find out the customs and traditions?Combination of oral tradition (elders) and writings about the people (i.e. Yorta Yorta, oral evidence contradicted by a diary of a gentlemen ethnographer)Problematic form of evidence because of hearsayAnthropology, archaeologyVery expensive (about a decade, lots of expert witnesses, lots of Barristers, Solicitors, etc.)Private culture (e.g. Women/Men only information)Culture shockMoral/symbolic importanceThere needs to be:Ongoing, substantially uninterrupted connection to the landCustoms and traditions (Yanner v Eaton) custom must maintain its traditional natureIssue:Dispossession (e.g. being sent to Missions)Evolution of cultureCourts fairly unwilling to allow for evolution of culture (difficult because of change of culture e.g. white Australia changing aboriginal culture)Yanner v EatonCommitted by flora and fauna legislation because he hunted a crocodileHe argued he was exercising a native title rightJustice Callahan was concern, because Yanner had used a spear gun and a boat with a motor (different from traditional hunting methods)Native title right to fish (etc.) cannot include commercial rightsSo: Brennan in MaboWhat are native title rights?Hunting and fishing (subsistence)Ceremonial use of land (and access)Exclusion? IshResources ochre for face-painting (not for sale)Right to live on the land (and maybe build shelters)All physical use of land (i.e. white), right to speak for country does not translate into government?Bullan BullanPlaintiff unhappy because traditional art reproduced on tea-towelsThey could not claim breach of copyright (who owned the copyright?)They claimed native title (ability to paint was an obligation that flowed from responsibility to land central to ownership of land)Court said this was not a native title right (Brennan quoted intellectual property as native title would fracture the skeleton of the common law)

Then what? Proof (has it been extinguished?)You have to prove that the rights have not been extinguishedFejo Effect of an estate in Fee SimpleKey right is right to exclude others (exclusive possession)Thus the granting of an estate in fee simple extinguishes the native titleRead a case notenative title is extinguished (because it is legally inconsistent) when fee simple is created, even if given back (because there are inconsistent rights)native title yields to estate in fee simple (extinguishment happens once, and forever)Wik soon after Mabo (straight to high court) Pastoral leaseCrown leaseState land actsGiantDesigned for cattle/sheep to be run over enormous areas of landCreated because people farmed outside of settlement, govt wanted to regulateSo, does a pastoral lease extinguish native title?Govt argued that pastoral lease was normalLease extinguished native title in Mabo Brennan (Minority)Pastoral lease is a lease, confers exclusive possession This extinguishes native titleToohey (Majority)Label is insufficient (substance not form) What determines a real lease? Is exclusive possession conferred?Thus it must be interpreted in light of purpose of the lease (light footprint on the land). Was there an intention to confer exclusive possession?Probably notThere were conditionsAs such, no exclusive possession, thus is does not totally extinguish possession.Effect:List A:What are all of the rights that native title rights are able to show?Hunting, living, etc.List B:What rights does the pastoralist have?Run cattleBuild runwayEtc.Slam them together, see where they are inconsistent. If a native title right cannot coexist with a pastoralist right, it is extinguishedBoth Pastoralists and Native Title holders were not happy: they have to coexistNo new rights?MaybeRights that have not yet been exercised? Difficult question Thus consent determination is preferred to litigation

Native title:Inalienable (cannot be sold)Cannot mortgage or sell or economically developIt is communal (vested in a group that are the native title holders) It is up to group to determine who is within itUsually vested in a body corporateIt is a bundle of rights (different to 11 right of ownership), not fixed like ours, but moveable depending on culture

Native title act:Is it a property right? (compare above with definition of property right)Validates 1975 (racial discrimination act) titlesProvides a claim mechanismFuture acts regime (to government: if you want to change native title, you have to do it in the way set out) (affecting future grants of land)Defines native titleS223Rights and interests as part of definition (ss1)HC narrowed definition to be ss1(a)(b) (only interest in land or water) Questions on last slide of PP. DO!

Questions:Topic 1: Tenure and Estates (and Native Title)11/04/11 11:24 AMWhere to purchase legislation?

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Was in the exam last year

What is Land?Check out the memorandum of transfer

Definition?As per the definition section of the relevant act Different acts have different definitions

As per conveyancing actTenements, hereditaments, etc.

Land Lateral boundaries (fences?)Subsurface rights (minerals?)Upper boundaries (airspace trespass?)What is included (fixtures?)NB: it is 3D, not 2D.

Lateral boundariesDividing Fences Act 1991Fencing and trees are common complaintsFences mutual requirement to pay ( and of the cost of a sufficient fence)Includes repair, etc.Need to negotiate, then can go to a local courtCommon law obligation of supportNot allowed to change something that will make your neighbors land be unsupportedOnly required for natural state of landEither nuisance in common law or negligence via Conveyancing Act s117Overhanging land nuisance (requires damage)Replaced by Trees (Disputes Between Neighbors) Act^ for hedgesapply to land of environment court (for thinking actual damage or injury will occur)

SubsurfaceCuius est solum (maxim) centre of the earth to the reaches of the heaven: 3 exceptionsownership of minerals? Yes, ish:Crowns prerogative (authority) to own things (Cadia Holdings HCA 2010) and (Case of Mines) as a startAnd owns: King owns everything that is the most excellentGold/silverCopper (intermingled with Gold)WhaleSturgeonSwansUnicorn? HahahahCrown reservationCrown reserved rights in giving estates (when creating new fees simple)PatchyVesting legislationPetroleum actMining legislationyou cant mine without a licenceso we dont own many minerals

Trespassintentional unauthorized entrydirect/intentional tortno damage necessaryNB: torts often protect property rightsTort of trespass prevents interference to right of possessionAs does nuisanceAnd conversion

Upwards boundaries (airspace)Again, cuis est solumTrespass occurs where reasonable enjoyment of the land is interfered withHolder of an estate in fee simple can bring an action or actual possessionException: holder of estate in fee simple does not have possession, but can bring an action if there may be permanent damage to their reversionary interesttypes of damage:permanent trespass (encroachment)e.g. structure of neighbor goes onto your landnb: you can sell airspaceEncroachment of Building Act 1922substantial building of permanent charactercannot easily be removedLand and environment courtCompensationGrant an easement (an incorporeal hereditament)You pay for it (/it is not free)Etc.Transient damageSee cases on slideIncludingSkyviews ( privacy)Height that does not affect the ordinary user (/the ordinary use or enjoyment) of the landLJP Investmentsfacts2 lots of land adjacent1 is developingthere is a boundary wall erectedwanted scaffoldingneighbors say $30kdevelopers build scaffolding w/o paymentthough it is above the ground (4.5m), protruding into landthere is a crane (allowed to move freely with the wind)was not impeding accessenhanced safety of workersP argued that it is trespass Court agreedJudge did not quantify magic heightMirvacFactsScaffolding on high-rise with meshProtrudes onto neighborsScaffolding grows higher, there was a weather-veining craneCrane at 7 storiesWas still trespassHeight not quantified eitherS2(1) damage by aircraft actCannot bring trespass unless it is outside of normal operating parametersIf something falls out and lands on your property, they are liableS7 access to neighboring land actFor repairs (small scale cases)so what is reasonable use?Extrapolated from common law analogiesSo above is usually trespass Weather-veining is not, usually, trespassWhat about remedies?Usually (prima facie remedy): injunction (stopping the trespass)Factors:Hardship to other partyExtent of trespass (e.g. minimal capable of being estimated in money)If it is reckless court will not care about hardship to party trespassing)Preferred because damages may be seen as a necessarily licensing costS88K of conveyancing actApply for an easement for trespass(e.g. 9-5 on weekdays) flexible because it is statutory

FixturesQuicquid plantatur solo, solo cedit(whatever is affixed to the land becomes part of the land)Chattels which have become part of the realtyMost common in sale of landincluded chattels sectionnot limitingalso in life estatesand mortgage defaultstenant fixtures (e.g. life tenants and lessees)Do tutorial Questionis it a fixture? (3 stage test)Degree of annexation; and,If it is resting on its own weight (presumed to be chattel)If fixed, at all (however lightly) (presumed to be a fixture)Still can be rebutted (sets up burden of proof)Object/purpose of annexationCan rebut presumptionsThis is not a subjective testIt asks:Did you affix it:for the better use of the item itself; or,for the benefit of the realtye.g. Flat screens bolted into the wallThough Dunn and NAB, widened to included circumstances and facts surrounding Erricson v DunnFactsErricson are ownersLeased to xX installed PABX system (phone routing system)X hired PABX from Dunn (10 year contract where Dunn retained ownership)It was nailed to the wall, channels were cut, etc.Presumptively a fixtureWhat was the purpose of annexation?Better use of the itemMade steadyBetter use of the realtyImprove value/enjoyment of land? (e.g. a stove)Facts and circumstances (and position of third party (Dunn: owns PABX)There was a higher purchase contract (Dunn still owns the PABX according to PABX lease)No right or wrong, just good or bad argumentsIt was a chattel, balance of testNAB v BlackerFacts: Blacker have a mortgageThey have a mortgageBlacker defaultsThere is a large irrigation systemBlacker thinks it is a chattel and offers to sell it to the bankBank thinks they own itBlacker doesnt take irrigation system, but does take valves, pumps etc. ($30k worth)Bank thinks they are fixturesPumps are mounted and towableValves arent specialDegree of annexationLow degree (presumptively a fixtureBUT interchangeableThey could be removed without damageWhat was the result?Facts and circumstances (Very important to getting good marks)Damage on removal?Social/architectural practices:Dishwashers (mid 90s, not fixture, since social practice was to take it)Now, it is considered a fixture (for the benefit of the realty)Microwave?Silver fitted, fixtureCrappy bench one, probably chattelWho is annexing/subjective intention?NAB and Dunn, loosened purely objective testNow, is subjectivity part of the facts/circumstances?Tenants fixturesFittings by tenants may be taken, sometimes (retail/tenants lease act)Land and the Doctrine of Fixtures11/04/11 11:24 AMNB cases on this area

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The aurora program

Torrens title seminar question 1 for Wednesday

IntroBiggest topic in the course, central to the rest of course(Torrens title/system, or Real Property Act land)Australian creation (SA began it, 1850sish became widely accepted nationally) 99% of land is Torrens Title land=/ from old system title (brought to Australia from England e.g. tenure, estates, etc.)there are still old system properties that existit is statutoryReal Property Act (1900) replacing (1862 Act) ss 41-43Named after Robert TorrensNow implemented in NZ, Malaysia, Russia, Israel, etc.It benefits from the computerization of land ownership recordingDocuments available online:Historic Title Search (=s $12)Transfer from Vendor to current ownerMortgage Contract for sale of landTorrens has a certificate of title for each specific property, this registers interests in landFirst ScheduleWho is registered owner?Vendor; then/or,PurchaserSecond ScheduleMortgagesBorrowing against the propertyLeasesEasementsSwapped rights on land commonly used (e.g. right of way, right of support)Restrictive covenantsSubject to restriction (e.g. height restriction)Person in First Schedule is subject to conditions in second scheduleMany interests in land are unregistered (not in Torrens system)

Timeline for Torrens TitleExchange of contracts (C/S)Land in writing (statue of Fraud, etc.), therefore Handshake is not enoughConveyancing acts, requiring many attachments to contract2 identical contracts, vendor and purchaser sign, binding when swapped.Purchaser may pay a deposit at this moment (this is not binding, the exchange is central)Settlement/Completion (Tfr)Approximately 6 weeks after exchangeBlocks of units are sold off the planTherefore settled after building is completedWhere vendor signs/hands over a transfer transferring property from Vendor to PurchaserSensible vendors dont hand over transfer until payment, though these are not necessarily required to transferVendor, if unpaid, has a vendors lien (a continuing equitable interest in the land they used to own with respect to the unpaid purchase price)LodgmentLodged on the same day as settlement (best practice)Registration application of s41-43 of RPARegistered by the next dayUsed to take months before computers (3-12 months)

Tanbar Enterprises v CouchieHC Held that purchaser on exchange gets an equitable interest, they have a right to go to a court of equity and get specific performance for the contract

Here, common law and equity are modified by statute: eg s41-43 (totally changes common law and equitable law)Breskvar v Waugh (Qld)Barwick CJTorrens title is a system of title by registrationHe was talking about equivalent of s41 of NSW actyou get title by registrationdiffered from old system title where you can register your title (though you dont need to, you dont get title by registration, but you can register the title you have already acquired)Commonwealth v NSWIsaacIt is the State of NSW giving you titleForgery, old system does not countIn Torrens, if it is registered, it does countMayer v CoMs Mayer is an ownerShe left title with solicitorHe was a thiefAnd represents to a Mr Co that Ms Meyer wanted a mortgage from Mr CoCo lends moneyTakes mortgageCo gets registered (in the second schedule)Co then got an undefeatable title when he registeredAgainWith old systemDidnt countWith TorrensWhen registeredYou get titledS41 is title by registrationS42 title is undefeatable, except for exceptions (e.g. fraud exception, but Co was not fraudulent, Solicitor was)Barwick in BreskvarTitle by registrationBefore registration, old system law prevailsOn the moment of registration, Torrens applies S43, you dont need to track purchase, you can deal with the register directlyThus, registering is very importantRules of indefeasibilityperson registered in the first schedule is subject to whatever is registered in the second scheduleorder of registration is central for persons claiming in the second schedule s36(9)registered interests prevail over unregistered interests

Exceptions are important and many (several lectures), and they apply where at least one of the competing interests are registered in the Torrens system.

Priorities under Torrens TitleRegistered v RegisteredExceptions to indefeasibilityRegistrated v unregisteredExceptions to indefeasibilityUnregistered v RegisteredExceptions to indefeasibilityUnregistered v UnregisteredOST principles

Seminar problemsUsually seminars devoted to subjectsHere, we will do seminar problems in LecturesThey are central to mid-semester examsDo these in the next week or two A tool for self-assessment

The RegisterBursill Enterprises2 adjoining propertiesfront on George Stthere was a boundary between them (e.g. common wall)early Torrens propertyin 1860 somethingThere was an easement for the benefit of the neighbor (right of way) for passageFine-print of easement gave exclusive rights to building above right of way (12 ft and up) to neighborThis easement was registeredNowNeighbors find out about this fine-print in easementOwner said easement should be limited to right of way, since it could not give exclusive indefeasible rightNeighbor said that it did create this indefeasible rightHC agreed with neighbor: the weird right was registered and thus indefeasibleFells and Knowles (NZ)Landlord and tenantLandlord is a trustee holding land on trust for benificiariesTrustee is governed by trust deedTrust deed said trustee could lease but not sellTrustee entered into a long lease, which is registeredThis contained an offer to purchase property within a time-frameLease with option to sell was registeredOwners said he didnt have rightLessee said it was registeredHC said tough luck, it was registeredKoteff v BogdanovicThere is property in annondaleKoteff snr lives in the placeGot oldKoteff Snr was in helping relationship with a chickTake care of meGet a life estateKoteff promised this life estateIn will, everything was left to his son Koteff JnrHe registers as recipient of giftOld-system principleHe has no greater gift than the giver (who had transferred the right)Here, dad was subject to chick, thus gift would be subject to helper chickBut it is TorrensSince he registeredHis title was indefeasible against the womanBerowra Waters Holdings v State Bank of NSWBWH owns property Subject to Bank in second scheduleBWH wants to pay out banks second schedule interestBank says this muchBWH paysBWH registers discharge of mortgageBank checks figuresBWH owes more money, apparentlyBWH doesnt want to payNeedham in HCMortgage is GONE, it was dischargedThere might be a right in debt, but it is no longer an interest in landWhere in old system it could be rectified, now you cant

Rules of indefeasibilityFirst > secondHigher > lower in secondRegistered > Unregistered

Exceptions to indefeasibility (to determine priorities of competing interests of the same property, this applies to R v R, R v U and U v R [i.e. at least 1 party must be registeres])Sometimes, where, under the rules of indefeasibility, they would lose: they may succeed if they find a case in any exception belowPrior Folios (42(1(a))Comes from 42(1)a)Premised on Land Titles Office making an administrative error2 different CTs for same piece of land, with different owners listedOlder CT prevailsWhere there is a mistake, you can recover moneysOmmitted Easements 41(1)a1)42(1)a1) there is an exception where easements are omitted or mis-describedWhy? ProTownhouses, built ages ago, with enforceable easements that didnt have writingShared walls, guttering, support, etc.Not documented because in old-system, express easements as well as easements created by implication, prescription and necessityThese werent written, but still enforceableIf easement is created when land is old-system, it became subject to s41(1)a1), as a continuingly enforceable easementJames v Stevenson (NSW to Privy Council)Implied easement created by old-systemPrivy Council held, where burdened land was old system, it is an omitted easement within 42(1)a1)James v Registrar GeneralEasement impliedRegisteredForgottenEven though it was in writing, it became omitted and was still enforceableThree cases (NSWCA)Beck v Awerbach Doby v DavinsonAustralian HIFI v GHL (or Gail)No implication in Torrens, ok if old system. If made in old-system, ok if property changes to torrensSayYou can create an implied easement under old-system titleYou cannot create an implied easement under Torrens (which is the servient tenement, what system is it under at the time of creation of the easement?)If an implied easement is created when servient is old-system, it remains enforceable when servient tenement becomes TorrensDelowry20 years of continuous use creates a proscriptive easement (in old-system)NB easement in Torrens must be in writingProfits A Prandre (profits to be taken from the land) (42(1)b)Relevant to harvestsA landowner may be in first schedule, but, because of A Prandre, someone else may be able to harvest even if it is not in scheduleMis-described parcels of land (42(1)c) Change by registrar general to allow for:When surveyor says it is differentTo fix this errorShort Tennancies (42(1)d) (usually for UvR)Only available when the tenant can show that:Period of lease and any option to renew is three years or less; AND,The unregistered tenant can show that the registered person took their interest with notice of the unregistered lease (i.e. the purchaser knew of the unregistered lease)What is notice?Actual noticePurchaser actually knew about the leaseConstructive notice (Marsden v Campbell)Didnt actually know, but should have known if I had made the inquiries that a prudent person in my position should have madeMarsden v CampbellFactsOld system case (but is same for Torrens)There was an owner with a mortgageAnd a lease (in favor of the mortgagee)Owner sellsHe knows of mortgagePurchaser didnt know of tenant (didnt have actual knowledge)But saw animals grazingHeldHe had constructive noticeBecause he should have asked why is there grazing?Mills v Renwick (1904) (enshrined in s164 in Conveyancing Act)You have constructive notice of what you would know if you searched the register Not all things on the register is a registered interest (e.g. Caveat)Impudent noticeActual/constructive knowledge of agentThis is imputed onto the principleDr Peter Clyne (Rent Fixing and short tenancies)Who?Entertaining/tragic manJew from AustriaEscaped from NazisLaw student/grad went to the bar subsequently stuck offDevoted his life to fighting the establishmentE.g. how not to pay your taxes in a bookHe had a spiel with RP in the 60sIn 40s 60s there was laborGovt LL and Tenant amendment actLL could not raise the rentNo incentive to improve landClyne was to use indefeasibility to get rid of bad tenantsIn Clyne v LoweFactsDid not find protected tenant on purposeRegisteredTried to kick out other guyBut:Had noticeWas week to weekUSBaket v ClyneFactsBuys house from BuildDefaults on purposeSo mortgagee would sell land without tenantHeldBuilding Soc had constructive noticeFraud Exception (42-43)What is fraud?Mayer v Co (Whos fraud?)FactsMs Mayer is victim of fraud by solicitor, not by CoIf facts were to change, and Co was solicitor and did the fraud, Co would not have prevailed because they have their own fraudi.e. it must be fraud by person on registereWix v BennetAuthority that notice of itself is not fraudFactsLL subject to unregistered Lease42(1)d) was not yet in force (i.e. no short tenancy exception)LL sold to a purchaserPurchaser, settlesWith actual notice of the leaseRegistersTries to evict tenantArg. Was: actual knowledge was fraud where there was trying to manouvre around itHeldNot subject to lease just by noticeWhat is Fraud? Stuart v KingstonFraud is personal dishonesty or moral turpitudeE.g. Loke Yew v Port Swetnam RubberFactsHere, Yosope in Loke Owned land in MalaysiaIn CommonwealthWith TorrensUsed in Rubber PlantationsYosope sells land to Loke YewLoke Yew did not registerRubber Co went to Yosope and said we want to buy landYosope gave notice of LokeThere was a transferFor all land including bit sold to LokeYesope doesnt want toRubber says dont worry, well look after YewRubber RegisteresedTries to evict LokeLoke goes to Privy council and wins on fraud exception Because rubber said they would preserve Lokes interestAffirmed in AUS HC in Bar v NicolayBreskvar (Authority of imputability of Fraud)Introtitle by registrationnow re fraudis Queensland (NB: Queensland has no equivalent of s43A of NSW RP act)FactsBreskvar registered as ownersRegistered as owners Borrow money from Petrie, who was dishonestSign transfer in blank instead of mortgageGave Petrie Certificate of TitleAlso gave him a Blank, Signed transfer as security, since he askedPetrie puts his grandsons name in blank transferHe registeredOn whos behalf was Petrie acting?He was acting on behalf of his grandson (wall) (via gift)Grandson is in first schedule as ownerWall entered into a contract to sell to AuburnWho buys from WallIn delay before Auborns register, Breskvar finds outHCIssues:If Wall was registered, could he rely on indefeasibility to defeat Breskvar (who was unregistered)?HeldFraud of Petrie imputed to Wall If a persons agent is fraudulent, the Principal is liableBreskvar has a fraud exceptionNB: Breskvar failed against Auburn Because Auburn is more innocent (postponing conduct)Contrast with Schultz v Corwill PropertiesSC decisionFactsC owns many propertiesC is controlled by womanHas a son who is a solicitorUsed as a conveyanceHad custody of CT and company sealSon is a gamblerFixed seal on fake mortgage in favor of Schultz (gets money from Schultz), regarding CTCorwill never knew about mortgageOn registeredSchultz in 2nd registerWoman says where are title deads?Son forges discharge of Schultz mortgageWithout paying SchultAnd registers Schultz out of the second scheduleSon JailedWhen Schultz knows, cries fraudOn behalf of CorwillWas on behalf of Corwill?frolic all of his own so not an agentdifferent from Breskvar, since didnt benefit CorwillAssets Company Case (NZ) v MereFactsNZ native title legislation precluded certain types of sales without certain steps being takenIn breach of this legislationMaori sold to Assets in breachAssets registeredRP Act NZ overruled Native Title LegislationWas there fraud?Fraud?Assets should have know the transaction was in breach of Native title legislation, therefore are fraudulent?Held (Privy CouncilFraud requires Actual Appreciation of DishonestyActual FraudActual knowledge of a dishonest actBahr v Nicolai (Fraud as bigger, Equitable)FactsB transfer Nicolai for $32 grandNicolai leased B lease (3 years) B Repurchase option for $45kNicolai sells Thomson for $40kWhat about unregistered lease and option to Bar?Tomson acknowledges Thomsons option to repurchaseHCI acknowledge = I agree to be subject toTomson registers There was a property boomProperty worth $80kToms had told Bar that option was OKBar borrows $45 from BankSCThomson was registered and indefeasible? No Bar rightsHCNo, Bar had right2 judges found fraudOthers find personal equityMason/Dawson (minority) (no real difference, since Personal equity would stopgap for post-registration fraud)Mentioned most casesView:Fraud is not just actual, but also equitable anything that is against consciencehere, agreement to be subject to Bar and then renege of agreementWilson/Brennan/Toohey (majority Therefore preferred)Only fraud if it before registrationOthers found personal equity exceptionLeros v Torara (Wix v Bennet ish)FactsComemrcial property subject to 5 year leaseWith a 7 year option to renew (could renew for 7 years)In WA (only required for 5+ year lease to registered)Was not registeredLL as puts property on marketTenant exercises option to extra 7 yearsAsks for purchaser to subject to leasePurchaser says noVendor says no salePurchaser says GTFOVendor says sell without leasePurchaser buysRegistersThere is the 7 year unregistered leasPurchaser writes Hahah knowledge of lease, are subject to itVendor says not subject because indefeasibleHeldWas knowledge?NO, not subject to lease, no agreement to agree to be subjectDifferent type questions (NB fraud on Registrar General, fraud third party)National Bank v HeadlyFactsHusban and wife (headlys)Mr Headly, goes to NB and negotiates a loan, which is secured by mortgage with him and wifeBank officer approves loanPrepares documents to be signedRings Mr Headly, and gives him the papers for wife to signHeadly forges wifes signatureOfficer purports to witness their signaturesHe did not know about the forgeryHe said he witnessed the wifes signature, which he didntThe mortgage, seemingly signed by bothPassed on to bankIt is registered in the second scheduleThey had indefeasible title by registration, but:Held:Procured by fraudDifferent kind (the bank did not do something dishonest for gain)Mr Hedly was the evil manThus bank is a victimBut, false witnessThe banks mortgage was set aside as fraudulent It was fraud on the registrar general (pretending witness)Mrs hedley was not subject to the mortgageMr hedly? EvilDid signAlthough mortgage set asideIn equity, Mr Hedly still subject to the mortgage over his half of the propertyBank could only be repaid under his half:They could sue him in damages, tooIf he has the money, not secured by her half of the propertyNB: co-owners (1 can force a sale of the property 66F Conveyancing Act)Bank of SA v Ferguson (HC held no fraud)FactsFerguson borrows moneyTold them his financial position accuratelyBank Officer says he cannot approve a loanOfficer fudges his forms to get the loan (unbeknown to Ferguson)To get the loan throughFerguson always knew the exact amount he was borrowingThus, he did not at all know of the fudgeryHe is lent the moneyBank wants to reposessFergosuns lawyers discover Bank Officers fudgeryAlledge fraudHeldSA Agreed fraudHCThere is fraud between Bank Officer and BankBut no from Bank to FergusonHe knew exactly how much he was borrowingAbility to repay?Afford to repay =/ approval for loanImplied financial advice?summaryIF you agree to be subjectYou will be boundIf there is a short tenancyYou will be boundIf there is more than 3 years, and no agreement to leaseYou will not be boundPersonal Equity Exception Aka:A right in personamA right in personA personal rightEquitable rightPersonal EquityPersonal ObligationEquitable ObligationWhere there is an agreement to be subjected, there is an unregistered, enforceable, equitable exceptionE.g. Bar (v Nicolai) has an unregistered personal equitable interest in the land enforceable against TomsonWhere it is against conscience to give indefeasbility to the registers interest"All other are in RP act, Personal Equity Exception is not in ActHowever, it exists because of case lawFraser v Walker (Privy)Barry v Hider (HC)FactsBarry is registeredBorrows from SchmidtSchmidt, dishonestly gets a transfer, rather then a mortgage, signedBarry gave Schmidt the CT (though this is normal)Between Barry and Schmidt, it could be regularized (by a court), except for transferSchmidt mortgages house in favor of HeiderHeider is not aware of wrongness of transferHeider lodges the transfer and the mortgageDuring wait, Barry finds out, and challenges mortgage to heiderBarry claims registration, and says he did not mortgage, and that Heider is yet unregisteredHeldHC rejects Barry, and finds a right in personam for HeiderAlthough Barry was registered, there is an exceptionEnforcing personal right on behalf of unregistered interestWhy should Heider prevail? 2 stage Test [authority]if Barry created Heider (with a mortgage, etc), he would not have prevailed if Heider had not yet finished registering the interesti.e. you have a personal equity where a registered person creates an unregistered interestBut barry didnt create HeiderBut he armed Schmidt with the ability to pretend that he had bought from BarryThus Heider had a personal equity since Barrys conduct contributed to creation of Heiders interestBar v Nicolai (HC)3 judges found for Bar via personal equityWilson, Brennan and TooheyThomson did not intend to be subject before he was registered(only fraud if it is before registration)But Thomson was subject to a personal equity exceptionHe agreed that a second person to be subject the third?A registered person (Thomson) agrees with a second (Nicolai) for purchase, subject to the third person (Bar)Thus three exceptions:Registered guy creates an unregistered interestWhere R contributes to u. interestWhere R agrees with 2nd person to be subject to UThis are of law is not closedMML v GosperControversial, but still authorityFactsGospar (chick) owns land and is registered in 1st sched.In the past, she borrowed money from MML (now ING)Recorded in the second schedule as having a mortgageSubseqiuently, unbeknown to Ms GosparHusband goes to MMTo double loanHouse was worth enough to secureMMI agreed to double debtBy getting Ms Gospar to sign a variation of MortgageThis was registeredMr Gospar diedHe had forged her signatureShe did not know about doublingHeldDissentingMeagherSaw on the lines of Mayer and CoMM was not aware of hubands dishonestyOr the forgeryAnd thus MM had mortgage over full amountSaid:If Kirby was right, wasnt Maher and Co wrong?Agency?Why does the pre-existing obligation matter?Maj. Marney and Kirby Kirby (Wrong?)If someone lends money to a woman, they must make inquiries of her, not her husband, of agreement to the loanSpecial wiveskinda (Garcia, Kirby though of it as part of Garcia)Thus, because MM had not made inquiries, there was a personal equityWhy wrong?This was the position under old system, But Torrens title is a system under registrationThere are exceptions, but is there an exception just because of lack of knowledge of forgeryDoesnt this contradict Mayer and CoMarney [auth]A pre-existing obligation owedMM was already the first mortgagee and had custody of the title deedThus, they were owing an breaching an equitable, fiduciary obligation not to use the title deed without her authorityDifferent because there was a pre-existing relationshipWindeyer (Judge) was a solicitor, not a barrister, before being a judge (On Gospar)He saidWhen I was a solicitor, he registered mortgages and variationsProblem with gospar (although was bound)Whenever he varied, he never saw consent to use CT, just the signed variationThus, as a matter of conveyancing practice, there is something unreal about Marneys judgementBut he was/is bound by Marney approachGrichich v ANZFactsG was registered Wife and son negotiate loan with ANZANZ says I would like to meet GBring G in please?They found a random to act as GBank manager witnessed impostor signing mortgageMortgage was registeredFirst few repayments borrowedThen they stoppedG didnt knowWife/Son confessG said to court:Bank, although indefeasible, should be subject to personal equity because did not prove ID of impostorHeldDistinguished from GosparBecause in G, there is no pre-existing relationshipThus this is pure Mayer and CoTrue ID does not defeat the bank, because the bank does not need to prove ID of witnessBank did think it was a true signatureTheir mortgage survivesS56C enactedRequirement for a lender to satisfy themselves of the true identity for the person signing the mortgageAnd must keep a record of documents sightedWith 56C, there would have been a different result for Gi.e. there would have been a personal equityNot yet gazzettedNB: 56C would affect G, Mayer and GosparStorey and Advanced BankFactsS negotiates loan w Advanced bankWas loan for CS is a director, though requires approval of boardAdvanced bank registeredShould have checked directors approval?If prima facie the seal has been fixed, there is no requirement for Bank to checkSnowlong and ChoewyFactsLL subject to unreg. 5 year leasePurchaser agrees to buy subject to leasePurchaser registersSeeks to kick out lesee since tenancy < 3 years, and it should have been registeredProblem: Purchaser had agreed to be subject to the leaseWoodApplied Bar v NicolaiIf either fraud or personal equityThey had intention of kicking out tenant, even before saleThus, they are subject to unregistered leaseOther exceptionsOverriding statutesSubsequent statute prevailsRecognized in Pratton v Waringah Shire CouncilDrainage easemtnsAlso in HilparEnvironmental planning and assessment act Overrode indefeasibilityLocal government is given power by state: thus State v State (old v new)Fed v state?Family or Bankrupcy legnCommonwealth overrides state legislation (e.g. RP act)Thus exception to ind. If there is commonwealth legislationPossessory titleDefinition: If I am registered in first scheduleAnd I allow a trespasser to live unchallenged for 12 yearsnative title?The trespasser has better title than meDerives from limitation act NSW 6912 years or lose right to enforceUnless disabled or defrauded, you are limitedAnd 6A of RP actAfter 12 years is empowered to register title NB: must be for whole block of landHow show?Graze animalsPay ratesLiveKirby v CowederyPaying rates adverse possessionMulcahyPrinciplesCourt looked at old-system way adverse possessionDidnt exist in RP act till 6A In 79Authority: you have possession where:Open, not secret possessionPeaceful, not by forceAdverse and not with consent (i.e. not allowed to live there)Does not have to be same person for whole 12 years (though there is a requirement for continuity of adverse poseesion)DependantA B CPerson there on the 12th anniversary gets titleIndependentB is there, adversely to A, rather than by agreement, and C and D etc.A gets titleEasy to title search, shouldnt squatter check?Addison v BillionSometimes reality is more real than the registerE.g. there are good reasons

We can now answer any issue where there are at least 1 registered interest

Torrens Title, rules and exceptions to indefeasibility11/04/11 11:24 AM

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Now, we are going to talk about where there are two unregistered interests.Common law or equitable interestL v LL v EE v LE v EMost interests are equitablePostponing conduct For earlier personEarlier people might be guilty of postponing conductE.g.Failure to take possession of title deedsFailure to retain Prematurely releasing title deedsMortgagees saying they have been paid when they haventFailure to hold out saleNotice For later personActual, constructive or imputedPriority?Where the equities are equal, priority goes to bold (legal, or, where there is no legal, the earlier equitable prevails)If later takes with notice, they loseIf there is postponement, first losesYou can protect your interest by lodging your caveatClaim an unregistered interestRG does not vet caveatsIt is only a claim, it is not actual/checked

INJUNCTION

CaveatsBeware/be warnedWarning that unregistered interest claims an interestRegistrar general does not vet a caveatWhy are some interests not registered?Unregisterable:Purchasor who exchanges contractCannot register contract for sale of land (you have unregistered/able (Couchie v Tanbar) interest)Can only register on settlementBeneficiaries under a trust (RPA s82)Mortgages(Coonie v Burns)can have equitable mortgage with no writingmortgage via conduct via handing over title deedsLoan agreement mortgagelend xI give you mortgageLeases, etcThey just sit there on the register until challengedA caveat blocks subsequent deals from registration (s 74H)Thus there is a motivation to get rid of CaveatsChallenge CaveatsLapsing notices (s74J, I)Inexpensive means to bringing to ahead whether Caveat is properApprox. $97If caveat is reported, serve a Lapsing Notice under s74JChallenging caveatIf anyone else has interest, s74IThis says you have 3 weeks to go lodge in supreme court and get extension of caveatIt is expensive to do this, so they would only do this if they really care/have an interestThis is a harsh one (74M Caveator consent, MA Court order)They have to pay all the things (expensive)20 daysMA extremely urgentWho can caveat?Anyone with an unregistered interestBut, this is not vetted Formal Requirements 74 FCaveat what is the nature of the interestPurchasor, etc.Date of the interestxx/xx/xxxxQuantam of the interest$v DaleyBad in formCan you caveat yourself?Sinclaire v HopeMeedhan JFactsRegistered in Sch 1 as ownerSubject to mortgage in Sch 2Default, saleMortgagor sale improperPuts a caveat on own property my interest as a mortgagor victim to improper saleWas a fine caveat, since different interestsNB cannot in Victoria (Swanson Mortgage)Effect74 H stops future dealsRe Rush (retrospectivity)FactsCaveator puts in Caveat A (Bad in form)Mortgagee lodged mortgagee for registrationCaveat A blocks Morgtage registrationProprietor serves lapsing noticeCaveator gets advice from a crazyLodge a new oneMortgage is before, therefore it does not blockNot retrospecitivelyGodfrey Constructions (Vendors obligation to get rid of caveats)FactsVendor exchanges contract to sell with P1GefazzleVendor terminatesP1 doesnt accepts, and puts on a caveatWhat should Vendor have done?Sort out caveat firstWhat did he do?Vendor sells to P2Exchange, about to settleP2 says there is a caveat, you better get rid of itVendor tries to terminateHCVendors responsibility to get rid of caveatS82, cannot register a trust:Though you can ask Registrar General To register trust as a caveatOr trust can register themselvesCaveat without reasonable cause?Hilparm v Wilson FactsC owned by a womanIn relationship with WilsonFallout, litigation that continuedWilson puts on 13 lapsed caveatsOne of them that caused a sale to failThen price fell ($140 000 loss in differential)Sued under 74PWilson acknowledged it was frivolous caveats74Oonce it has lapsed, you need courts permission to make a new onethis didnt happenDamages for loss of property

Priorities under unregistered interests (subject to postponing and notice)Where both are unregistered, the parties are either legal or equitableLegal > equitableAssume no postponing, assume no notice the equities are equal, then earlier and legal has priorityWhy?Nemo Dat cannot give what you do not havew/out postponing, legal prevailsEarlier legal has prioritiesWhippLater legal > earlier equitableSpoonerA bona fide purchaser of legal estate without notice you prevailEarlier equityQui prior est tempore

Equal equity based on:Did earlier have postponing conduct?Did later have notice?If neither occurred, equities are equal, and priorities as above

Postponing conductpostponing conduct means:postponing conduct that causes or contributes to the creation of the later interest/person (i.e. postponing and notice cannot occur) NB: if notice, there cannot be postponing conductConveyancing practiceWhen V sells to P, they exchange then settle/completeAt settlement/completion, V hands over the title deeds to PIf not, they are liable to be found to have postponing conductWith a mortgage (conveyancing practice)Title deeds pass from Mortgagor to Mortgagee at settlementRetained by mortgagee until paid outWith no mortgage, owner has title deedPs mortgagee will take title deed, takes it when paid, gives to next PThere is postponing conduct if this is not followedTitle deed is an old system term (can also describe CT in Torrens)Torrens, 1 sheet with first and second scheduleOld system, title is a collection of deeds (Crown to P1, to P2, to P3 etc.)Torrens?Old system law for when 2 unregisteredTypes:Failure to take possession of title deedsEither failure of Purchaser, at settlementOr Mortgagee, at settlement to take possessionWalker v Linom FactsHusband/father establishes family trustProperties put in trust Governed by deedTrustee is Solicitor, holding on trust for daughter wifeH/F held back deeds to one propertyTrustee did not pick them upAfter conveyance of land from H to Trust c/o SH/F conveyed land to X (with deeds)Thus X and S believed they ownedWho prevails?HeldX has no common law rightsEquity, X has an interestsSince S didnt take possession of Deeds, failure allowed H/F to convey propertyThey didnt have noticeTherefore, it is postponing conduct for conveyance without taking possession of deedsS postponed for failing title deeds, as well asBeneficiaries under trust also postponed because of Ss conductSometimes, B will not be postponedE.g. when T is defrauding B (Shropshire Union Railways v R) Here, T was just being slack, so there was postponing (This case)Or when T is acting outside of Trust Power (Cave2)Fail to retain possession of title deeds by an act of gross negligenceWhat is gross negligence?Gross negligence is an equitable property concept(not tort)E.g.If Mortgagee doesnt keep them in safe, but on a desk that is unattendedFire Insurance v WhippFactsEmployee of an insurance CoBorrows from employer (common practice)Signs a mortgage (I keeps mortgage)Employee was a rogueHe stole the title deeds Conveyed the property to someone elseThey were not aware that the deeds should have been controlling deedsChallenged that I should be postponed since they failed to retainHeldNo, requires gross negligenceWhen should vendor hand over title? When should Mortgagee hand back title? (applies to Vendor and Mortgagee)When all money has been paidHanding over is conduct that implies full paymentReliance Finance v Heid (2 people claiming moneys against Connel, who gets the money first?)FactsTorrens caseHyde ownerConnell to buy$15k deposit (usually paid to stakeholder, not V)Connel controlled by Mr McCaiHe owned a group of companiesDeal: 15K to Heid Goes to travel agent, buys eurotripArrangement was, at settlement, Heid would lend 50K to PWould be paid balance (100k)Heid decided they would save by using legal services internally (Gibby, pretended to be a solicitor)Heid knew that Gibby was an employee of McCai (owner of Connel)You are going overseas, so bring your deeds and transferFine-print I aknowledge that I have received full purchase priceBut had only received 15KGives to Gibby CTWhile he is awayConnel and Mcai are evilConell goes to reliance, please lend me 80KThey lend, on belief that Connell has settledNB: Reliance decided not to register mortgageReliance did not bother to registerAt time when Conell borrowed from Reliance, Connell was not yet registeredNB: since he was not registered there is no s43A protection borrowed morehe borrowed 12K for stormarhe borrowed 40k from Alexander20k from reliance, again45k from Irving50K heid vendors finance100k heid (vendors lien)2 equitable (heid v reliance)Held:Reliance won (but should have registered, would have been easier)2 equitable, (heid should have prevailed, earlier)Should Heid be postponed?Trial judge no, normal practice to give solicitor title before completion, in prep for settlementCofAWrong for Heid to assert that Gibby was a solicitorSince Gibby was a Connel solicitorAnd represented the other sideHCForget about SolicitorMore important, Gibby was an employee of Connell, and Heid knewAnd gave document to the other side before full paymentMason and Dean who has a better equityGibbs and Murphy estoppel (Heid signed a transfer saying he was paid, hands over CT representing paid, hadnt, Relience acted at their detriment on that representation, Heid is estopped.Possible browniesLloyds Bank v BullockFactsOld systemOwner was HMortgage conveys property to a building SocietySubject to entitlement to reconveyance if fully paid (equity of redemption)H diesIn will, left to S (son, in trust of all kids, Bullock sister)Solicitor dishonest (C)Solicitor for H, S, and Building SocietyC says to S, Ill buy it off youC to draw up solicitorS conveys to C Receipt clauseNo receipt of cashC goes to Build SocH dies, S sellingC says, I have drafted a deed of reconveyance in expectation of conveyance to third party (actually C)Not paid out in fullSolicitor has a deed of reconveyance and deedC goes to Lloyds bankEveryones paid, give me a mortgageHe is lent moneyBuild Soc, S and Lloyds are all awed moneyWho has the best equity? Build Soc has a first mortgage by deed and the legal estate (legal)Bullock is beneficiary of estate, under redemption, whould get (equity)Lloyds thought they were getting a first mortgage, did not know that Build Soc had not been paid out (equity)Who still had legal titleHeld:Was the build Soc guilty of postponing conduct with signing of reconveyanceBSOC not guilty of postponing when they signed it to C, they did so In Escrow on condition that the deed was only to operate when the money was paidtherefore better than Lloyds and BullockBullock v Lloyds?Did Bullock do postponing conduct?Was beneficiary of estate, executor signed conveyance Was C the familys socilitor or third party?Yes, worked for Building SocietyKnowledge imperativeBuilding Soc had no notion that C was buying from family (then they should have gotten different lawyers). Thus BSOC did nothing wrongS knows sell to C, and wrote he was fully paid, thus postponed against LloydsBSOC Lloyds BullockThe trustee, S, was guilty of postponing conduct, thus beneficiaries were also postponedHolding OutBreskvar v WallFactsSee fraudS tfr to Wall is questioned B has equitable right to registerWall sells to AlbanQld (No s43A)EquitableBefore registration of Alban, breskvar finds outHeld:Earlier Equitable (B) v Later equitable (A)Breskvar is postponed because they have held out that they have sold when they have not (though they would have won agains Wall)Alban Prevails, since more innocent (estoppel?)Failure to CaveatNB: Caveat are paJ&rt of RP act (thus only under Torrens)Unregistered person must caveat, or else they will be postponedButler (2nd M)FactsA man (G) registered as owner (vic, no 43A)G was registered in sch 1M1 in sch 2G entered into 2nd mortgage with Butler (B) (unregistered)Took 7 days to Caveat2 days after mortgageG sells to FaircloughSubject to M1, not 2Held:Butler (earlier E) v Fairclough (later E)B> unless postponedHC, B should have registered/caveat,Made it impossible for Fair to know,Therefore B is postponedThough Fair didnt even look (this didnt matter)When Fair lodged, (12) Butler had already Caveated (7)Not changing priority, but merely stops registrationLawyers thinks it defeats title, it doesnt just require courtLappen v AbigailDixonCaveat to protect?Now creates an obligationBlack v GarnockJ&H v Bank of NSW (1st M)FactsJosephson owned PropertyBorrows from BoNSWThey have deedsBank did not register or caveatWhy didnt first mortgagee register?Time to register could be less than payment timeJ borrows money from J&HThey say where are deeds?with BoNSW for safekeepinglend money firstthen contact BoNSWWe are now M1, give me deedsBoNSW FUCKOFFHeld?J&H (later) v Bank (earlier)Didnt bank fail to caveat? (Butler)Differentiated1st not 2nd mortgageeHad CTNo one else may register where you have the CTNB CoAIf you (J&H) knew bank had title deeds, there was constructive notice of M1Should have asked firstOther kinds of unreg. InterestP who exchanges contract, before pay? Should caveat?OsmanowskiIf P exchanges w/o caveat, there is postponing JacobsP not postponed because family of companysFishmanNo, P doesnt need to postponeDifferent if deposit released (PV) Purchaser gets equitable charge over the property, and that property is charged with their rights to get the money back (must caveat as per Butler)Black v Garnock (Obiter)P should caveatAfter this, it is now good practice to caveat on exchange (in fear of Garnock)Suspect that Benificiary of Trust, you should postpone if you dont caveatButler mortgage to caveatTorrens, s43, deals with guy on registerThus, benificiaries are exposed, since you dont have to check if they exist (only Trustee is on sch 1)74F benificiaries can caveat (82)Thus, should caveat

Cant a vendors lien only come out of postponing conduct?Settlement, no paid, then equitable lienIs postponing, but can still claimHanding over transfer is completion, CT only to be when paid

Timeline

How does notice matter?

Wednesday (Legal v Equitable)Q2

What is an unregistered legal interest?Lease (unreg.) 23D Conveyancing ActStatute of FRAUDS (writing)Exceptions (23D) If a lease satisfies below, then it is enforceable, even if oral & it is a LEGAL (rather than equitable) interest (even without writing)3 years or less (not lease +option)if 5 year lease, binding in equity between landlord and tenant (Chan v Creston) (Leatz Leeholme Stud) (still needs to be in writing) i.e. unregistered but still in writingBest rent reasonably obtainable (market rate) (e.g. not family rates)Immediate right to possessionEven if havent moved in, have a right to move in (i.e. lease period has already started)If any are missing, it needs to be in writing23CBenificiaries under certain interest may have an equitable interest without writing42(1)D (short tenancy exception)obligation to register (53)23D (exception to writing)Snowlong v ChoePersonal equity exception (where purchaser agrees to be subject to lease)Walsh v LonsdaleEquitable lease READAs agreement to grant a lease43A RP Act (not in Vic or Qld)(mirrors old system idea)protects purchasers and first mortgageesDealing registerable (8 elements), you are deemed to be taking the legal estate (legal, later legal v later equitable, would make them win against earlier equitable)36(6) RPA dealing must be accompanied by CTor you lodge a direction to RGeneral to use CT if RGeneral already has itused to only have 2 CTs (one with RGen and one with owner)with computers, now only owner has hard-copy of the CT (compy generates both)this section is regarding community CTWho has it?Purchaser or first Mortgagee (once settled)Post settlement and pre-registration (dealing, thus, registerable)i.e. after settlement (has CT) and before registrationDealing must be stamped (Stamp Duties Act)No formal defect: (e.g.)Different name of vendor (Register name must be the same as transfer lodged name) (if names different, you have to cure defect before it is registerable; or,Error re prior encumbrancesLook at a transfer There is TransferorTransfereeAnd subject to prior encumbrancesWhat registered interests is this transfer to be subject to?Either get rid of the encumbrance, or remedy the transferNot void: Mayer v Coe; Jonray v Partridge Bros (affirmed Mayer)Upon registration, forged mortgage got titlePre-registration, did Coe have a dealing register able? NO, he has NO interestIt is an ineffective void dealing43(a) DOES NOT extend to void dealingsNext dealing to be registered (IAC V Courtenay)E.g.Transfer before mortgage(mortgagee does not have dealing registereable, only purchaser does)Discharge before transfer before mortgageTransfer1 before transfer2No notice at settlement (IAC v Courtenay)When they took the interest, they must have no notice of an inconsistent third partyIn the absence of noticeIACPurchasors mortgagee tried to get 43A protectionFactsMs Austin is regd owner of land suitable for subdivisionsold to Courtenayand lent him most of the moneythus Ms Austin had the Mortgage (Lodged, 12 months later, had not yet been registered)Courtenay sells back to Austin (not completedAustins solicitor a crook, contract of sale not completedAustin thought she had bought it backSolicitorTry to cancel original saleIn reality, she was subjectSells to Denton S/DMortgages1 Hermes (U/R2 IAC U/RCourtney now want to keep house (equitable, but first in timeHeldCourtney (Early Equitable)Hermes/IAC (registerable?)NO not nextCourtney wins (no postponed because it was Austins responsibility.Go through 8They tried to cancel 7 a dealing which can be registered, not next thoughHC said ONLY THE PERSON TAKING THE NEXT MORTGAGEDenton had notice of CourtenayBefore settlement, Austins solicitor and Dentons Solicitor (before Her and IACs came)Thus, Denton got constructive noticeIf Denton did get 43A?The successive effect doctrine (Wilson v Spooner(UK) ; Jonray v Partridge; Meriton v Tate)If Denton got 43A, they can pass it on

Can you register a short lease? yes

2 unregistered parties11/04/11 11:24 AM

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Equine is the registered proprietor in fee simple under the Real Property Act of Brownacre, which is situated in a country town. Upon Brownacre is erected an old four-bedroom house and a stable to the side, part of which is erected 4 metres above a 3 metre wide easement, benefiting the adjoining property and giving access to the back portion of the property.

Equine is a veterinary surgeon, who holds the land on trust for himself and his two partners, although of course this is not disclosed on the certificate of title.

The property was purchased some time ago with a view to the veterinary practice being moved to the property. Unfortunately there has been a falling out between Equine and his two partners over the splitting of profits and the fact that one of the partners is paying undue attention to Equine's wife.

Unbeknown to the other two partners, Equine on 1 December leases Brownacre to Dr Fixit for a period of two and a half years. Dr Fixit intends trying to establish a medical practice there but is delayed in taking possession as he is waiting on certain equipment.

Equine then sells the property to Oats, a hay dealer, for $760,000. Oats inspects the property prior to exchange and finds it vacant. After exchange of contracts and prior to settlement, Oats meets one of Equine's partners in the street. The partner tells Oats that the partners may be dissolving their partnership with Equine but that, in any event, they will shortly be moving their practice to Brownacre. Oats instructs his solicitor to immediately settle the contract. Settlement takes place on 2 February. The transfer is registered.

After settlement Oats, while inspecting Brownacre, discovers Dr Fixit on the property, about to take possession of it for his surgery. Dr Fixit shows Oats the lease and insists on staying for the full two and a half years.

It is also discovered that the adjoining owner claims the part of the stable erected over the easement. The easement is simply recorded on the title as "right of way created by transfer no 12345 dated 20-1-1917". An examination of the transfer shows that the dealing not only gives a right of way but also operates as a transfer of the buildings over the right of way, as it gives the adjoining owner the building plus the right to pull down or re-erect any other buildings over the right of way provided that such buildings be erected at least four metres from the ground.Equine's partners now give notice to Oats that they intend to claim rectification of the register or alternatively that Oats holds as trustee for them on the basis that he was fraudulent in settling the purchase of Brownacre, having had notice of their interest in the land.

Advise Oats.

IssuesEquines easement with NeighbourWith building rights aboveBursill EnterprisesEquines trust (RP s82)Partners have an unregistered interestEquine leases property to Mr Fixit (unregistered not told he is registered)He is not yet in possessionEquine sells to OatsOats finds it vacantOats finds partner in street (Fraud)Partner tells him about moving inOats rushes solicitorNB: Advise Oats =/ Advise OatsOats v Neighbour (R v R)Oats is registered in Sch. 1Neighbours easement in Sch. 2Torrens title by registration, indefeasible (RP s41, 42) unless exceptedIndefeasibility (Sch 1 subject to Sch 2)Thus, Oats is subject to neighbors easementEasements should not give exclusive right (but here, HC said above is fine, because it was registered)Oats v Partners (R v U)Oats is registered in Sch 1Has title s 41 indef s 42Because partner is necessarily unreg s82Oats is good unless:FraudBest:Say nothing (Wix)Said things that arent writtenStewartLoke YuBahrLerosEtc.Notice is not necessary fraud (Wix v Bennet)Must be moral turpitude (Stewart)Guilty intention in rushingDid he say anything to partners?NB: here there is constructive noticeActually know partnershipThat partners want to move inDid he know there is a trust? (constructive)If oats said I just bought property but dont worry this would be fraudWhat if I am sorry to hear, leave it to meLoke and StewartIf said nothing:WixPersonal equity

Oats v FixitShort Tenancy (421dLess than 3 years :DThe Equine Problem11/04/11 11:24 AMOats took with notice of fixit (nope)

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A is the registered proprietor of Blackacre under the provisions of the Real Property Act. He leaves the Certificate of Title for safe custody with his solicitor, S. There are two shops on the property, the first of which is occupied by A. The following events take place; The second shop is leased to T for a period of two years, with an option to renew for a further one year. S acts for both parties in preparing an informal lease, which is not in registrable form. S also advises both parties that this is all that is required, and that there is no need to go to the expense of registration.S also acts for M, who has asked S to invest his money. S forges A's signature on a mortgage in favour of M. The Registrar-General registers the mortgage. S appropriates the money to his own use, pays the mortgage instalments out of his own pocket as they fall due, and later induces M to execute a discharge of the mortgage in anticipation of its discharge.Whilst A is overseas. S without authority enters into a contract to sell the property to P and on settlement of the sale hands to P the Certificate of Title, the discharge of the mortgage to M, and a transfer from A to P: the latter purports to contain the signature of A but it is of course forged by S. These documents are lodged for registration but before registration is complete A returns from overseas and S disappears.

A seeks advice as to whether he can prevent registration of the transfer to P, either by way of caveat or injunction, and whether his title is subject to the mortgage in favour of M.Caveat has a right in equity?A v P (R v U) (right in equity on settlement lien)A prevails (registered) unless: equity or fraudCant see fraud or equity?A v M (R v R) (Fraud)M prevails (2nd sch, unless fraud)Mayer v Co?

P seeks advice as to whether he is able to have the discharge of mortgage and transfer in his favour registered.What is discharge?Innocent third party fraudAs above (PvM U v R)

M seeks advice as to whether he is able to prevent registration of the discharge of mortgage and maintain his security over the property.Induced?

T seeks advice as to whether his rights as lessee are likely to be affected by the outcome of other claims.Short tenancy (42(1)D) < 3 yearsRequires noticeDid have notice?Constructive (Marsden v Campbell)

Answer in classNotesNB: informal lease is cannot be registeredWhen there are heaps of parties, look at the registered first (because of indefeasibility) unregistered?People who assert ownership (if he wins, he wins.)Then others in chronologicalLeave unregistered tenants to last (who is owner before subject to lease)

A TInformal lease in favor of TPersonal equity exception

A MMayer & Co?Except, later induces M in anticipation (postponing conduct or in escrow)

A P Forged transfer

At now: A and M are registered lodged (P and M)

Advice to A:Registered title (41) indef. (42)But A is subject to mortgage in 2 sched.Even though forgery, Mayer v Co, upon reg. had titleAPP has lodged a forged transfer awaiting registrationCaveatNo, order of lodgment, not registration (74H; Re Rush)Injunction (phone call to registrar general)Equity division in supreme court duty judgeTalk to legal officer delay for 24ish hrs. (informal)Talk to barrister, urgent summons to restrain registryThis is URGENTEx Parte without other party involvedJudge will give you 2ish days (not too much inconvenience if garbage, but long enough to serve the other party)Getting this injunction stops registrationA has title, indefeasibleNo exceptionDidnt agreeDidnt receive moneyA never agreed to be subject to P, then there is no lienIf P lodged after he found out fraud, there would be fraud on the registrar generalAMSince registered: Mayer v Coe and in escrow (Lloyds)M signed?Bad if signed discharge to other partys employee (Hyde Personal Equity)If discharge is registeredSchultzFraud must be committed by registered, so not? Not in interest of A (Breskvar)Hyde v reliance?Thus for A: whatever register says

M might injunct.

AT A created lease, is bound (Barry) (personal Equity) (NOT SHORT FOR AT, but TP)

PT 3 years or less (tick)Notice:If actually know, subjectShould have known knew someone was there (Marsden)What if P is away when A is shown?No noticeDischargeTransfer (transfer on clean title (not subject to mortgage))Blackacre11/04/11 11:24 AM

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Q regarding later legalequity of redemption as equitable

NB: from here is the final exam examinable content

Most is already taught (unregistered v unregistered is similar to old system priorities)L v LL v EE v LE v EIf equities are equal (postponing/notice)Different: Failure to caveat does not exist under old system

What is a legal interest under Old System Title (=/ unregistered Torrens)Who has a legal interest?A purchaser gets the legal estate at settlement when he takes the conveyance by deed (passes from vendor to purchaser) (inspiration for s43A Torrens)A first mortgage by deedLloyds Bank v BullockFactsBuild Soc. Had deedHeldThey had the estateOther deeds (deed of easement, deed of lease) are also legal interests, but less than the legal estateOther leases with no deed of lease but complying with s23D of the Conveyancing Act3 years or lessbest rent reasonably obtainableimmediate right to possession

Who has the legal estate? OwnershipEither vendor pre settlementDeliver the executed deed of conveyance (settlement)Sensible doesnt hand over until paymentVendor post settlementFirst mortgagee before completion of paymentsWhen mortgage is paid out (reconveyance) Because in old system, first mortgage by deed is a conveyance subject to the entitlement for reconveyanceWhen it is paid, the estate goes back to the borrower

What is an equitable interest under old system?Person who has exchanged before settlementsBeneficiary under a trustMortgagors equity of redemptionRight that the mortgagor When paid off debtThe right to have a reconveyanceMortgage debt includes principle + interests + reasonable legal costsTime within which they must exercise right to repay in full?Under a mortgage contract, there is a loan periodThis is the contractual right to redeemCommon law says, within time you need to pay (to the day)Equity allows a further period after the common law contractual periodThus, common law period and equitable period is the time to exercise the equity of redemption (Mortgages: heading 1: last case: Cregliner (1914))Equitable right to redeem (time +d) expires when the mortgagee forecloses (or sells) (i.e. there must be foreclosure for this to expire, not mere expiration of time period) CreglinerWhat is foreclosure?When can mortgagee sell (99% of the time)?Other mortgages (not 1st)Cooney v Burns (equitable mortgage by deposit of title deeds)Agreement to grant a mortgage (ANZ v Widen) (not by deed, by agreement) they are both mortgages, but this is equitable, not legal (maybe not money to pay for house?) not a conveyance with right to reconveyance2nd or subsequent mortgagesA lease which is writing that does not satisfy s 23D Conv. Act (Chan v Creston)Restrictive Covenants

S 184G of the Conveyancing Act Enacted in 1984 (used to be s12 registration of deeds act)Conceptually, this is very different from indefeasibility and TorrensIf you do not satisfy all 4, s184 does nothingIf the requirements of 184G are satisfied then 184G gives priority to the person first registered (different register (the general register of deeds), same place)(a) Instrument is effective (i.e. not void: not procured by fraud, not forged (Re Cooper))instrument means any writing (e.g. under old system, you can register handwriting =/ approved form) (e.g. you can register a contract for sale, etc.)Re CooperFactsSon conveyed property owned by dadregisteredHeldEven though registered, void because dad did not sign(b) only applies to sort out priorities where an instrument is versing another instrument (i.e. not effective against oral agreements) (s23C trusts, oral leases, oral deposit mortgages)(c) only gives priority where valuable consideration is paid (not by gift, where the consideration is nominal) must be for valuevaluable consideration must be substantial (Bullen v Becket)(d) only gets priority if you are bona fide (you took in good faith)Marsden v CampbellBona fide means I took without notice (actual/constructive/imputed) at the time I took my interestSchoals v BluntFactsPurchaser exchanged contractsGot notice of someone elsePurchaser settledPurchaser registered conveyance they took at settlementHeldThe purchaser was not bona fide because pre-settlement, they got notice, and they tried to register conveyance at settlementBurrows v CrimFactsPurchaser exchangesPurchaser settlesPurchaser gets noticePurchaser registers conveyance they took at settlementHeldThat purchaser is bona fideDoesnt matter they got notice before registration, they had no notice at settlementMoon Kim G v TahosFactsPurchaser exchangesPurchaser gets notice(if they settle, Schoals v Blunt says they will have settled with notice)instead, they register the contract for sale of landHeldNote: can register any instruments4 pointswas effective instrumentinstrument (yep) conveyanceValuable? 10% and agreement to pay full payment price (agreement is valuable consideration)Bona fide?Yes he was: when he exchanged he had no notice, and it doesnt matter that he knew before he registered.You wouldnt overcome Schoals if you settle and try to register contractBecause, once you settle, the contract is spentIn court: s184G gave priority, even though P2 had conveyanceAwesome advice by P1 (if you settle, you lose, so just register contract)Settles after court finds priorityDarbisher v DarbisherIf a person has a registered, even equitable interestThis can give them the legal estateFuller v GoodwinWhat happens when a vendor conveys to P1 then P2, and P2s conveyance gets registered first?Can P1 say he has priority since he is not registered?Held:Registration of subsequent parties is irrelevant to registration

How to approach a priority question?Is anyone registered? Who is registered first?If yes, you ask: do they get priority under s184G (only if settled 4 parts)S184G overrides rule of priority, but only if satisfies all 4Priority (only if no-one satisfies 184G)

Primary application (not in exam), under Part 4, to convert to Torrens (Qualified title):Qualified title Part 4A of the RPA (enacted in 67, amended 84)OST Qualified Title TorrensQualified title is a kind of hybridTorrens with a qualificationWhat is the qualification?Torrens subject to OST subsisting interestQualified Title works for 6-12 yearsKnow s28J and s28M S28JCautionsSubject to qualifications/subsisting interestsS28MLapsing of cautionCaution lapses between 6-12 yearsIf: within the first 6 years, there is a dealing for value with no fraud registered on the 6th anniversary of QT, qualification lapsesIf: no triggering dealing for 12 years qualification/caution lapsesIf: dealing happens between 6-12 years caution lapses on day of dealing Possessory title is not assessable in final: Qualified title is subject to OST subsisting interestIf you have an old-system interests: you have 6-12 years to lodge your interestsE.g. Prior owner signature forged (possessory title)Until expiration of qualified title, it is subject to these subsisting interests being okFor exam: 28J & M, Qualified is a hybrid for 6-12 years

Note: later legal (bona fide no notice with value) rule does exist

Good conveyancing to register every dealing immediately

Old-System title11/04/11 11:24 AM

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Ask about sale price>debt

Tacking Matsner v Clyde SecuritiesAdditional casesCentral Mortgage Registry v Donemore [1984] 2 NSWLR 128Westpac v Adelaide Bane [2005] NSWSC 517

Explanation of equity of redemption foreclosure Equity of redemption is mortgagors right to get a reconveyance upon full payment of debtTime is Contractual period + Equitable rightEquitable right finishes at foreclosure/saleNote: breach of contract if missing paymentsIf you miss just one month, this is a breach, the bank can demand the immediate repayment of the whole debt (getting out of higher current interest rates?)Thus, contractual right to redeem might change with breach8 steps to foreclosure (where Bank becomes the owner: give up right to sue for shortfall) (see sections of reading guide s61, 62 of RPA, s99A and 100 of Conveyancing Act) (For Mortgagee sale 57 RPA, s111 CA)there must be a default whilst there is no default, the bank cant touch youNotice of default requiring the default to be remedied within a monthConveyancing and RP actIf Torrens land and registered mortgage, the RP actS57(2)(b)Old-system or unregistered Torrens mortgageS111 of Conveyance actNon-compliance with noticeBank can exercise mortgagee sale (foreclosure better if house-prices low?)note: the bank can sell at any moment after non-compliance (1 second, 1 year, etc.)note: the bank can take possession after step 1Hold an auction (properly conducted) question of fact?Highest bid in auction < debt remainingThus, if they sell, there is still a deficitIf the mortgagor has lots of money, you can sue in debt for the restBut if they dont ?Apply for foreclosureRPA apply to RGCA apply to CourtFurther period of 6 months under RPA, discretion of court in Conveyancing act (usually 6 month)Only then is there an order for foreclosure

Note: in USWhen bank sells mortgaged propertyNot allowed to sue for shortfallGFC because debt>price of house

Equity of redemption: When does equity come to an end?When there is foreclosure, or mortgagee saleThus, only at the very endExpenses of going through foreclosure

Tacking:Defn:Old-system and TorrensWhen a first mortgagee makes further advancesTaylor v russelFactsHouse of lords (old system)Mortgagor borrows from M1Then M2Then M3When Mr went broke, M3 acquired M1M1 assigned their first mortgage to M3Maxim Tabula in Naufragio: look, M3 takes an assignment of first mortgage, and, at the time of original lending, did not know of M2, they can tack on this later advance to this first mortgage which they have acquired and prevail over M2HeldIf M3 acquires first mortgageAnd, didnt have notice of M2 at original loanM3 can tack onto M1, and prevail over M2ConsiderFactsMr. borrows from M1, then M2, then more from M1In particular, can M1 add their further advance on initial advance and prevailHotkinson v Rott; West v Williams (both England, and Old System)In relation to scenario above, M1 can only add further advance if M1 had no notice (actual, constructive or imputed)If satisfied, will prevail over M2If had knowledge, you were subject to M2, even if the original loan had a provision for more money to be subsequently loanedRio Burns Estate (Irish)Affirmed in Justice Whites HC decisionFactsThere was a slight variant in HvRottIf M1, from the outset, was OBLIGED to lend more moneyE.g. building loans given in stagesHeldOnly defeated by M2, where there is ACTUAL (not constructive or imputed) notice of M2Reason, shouldnt have to search for an M2 (as a constructive notice would allo)Kredland v PotterIf initial arrangement was that there was to be no further advanceNow, actual or constructive notice that will defeat M2Torrens (Matster)For many years, the only case was Matster v Clyde (Holland J) outcome is ok, reasoning too tied to Old System ?FactsA property in KogarahDeveloper buysKnocks down house to start buildingBorrows from M1Building costs more and more, borrows from M2When built, Mr goes into liquidationWhat would M1 do? Keep building?Took adviceM1 knew of second mortage,Decided that: since it is half built, M1 wouldnt even get back their initial advanceM2 would not get a centThus, M1 decided to pour more $ into project to finish development, to be able to sell with enough money to pay off debtThey should have tied M2 up to an agreement, regarding extra cash from M1 prevailingM1 ignored M2After they finished their developmentHad knowledge/noticeAnd said further advance was subject to second mortgageIf M2 would have succeeded, when M1 sold completed project, allocation of cash would be as follows:1 M1s original advance2 M2s advance3 M1s subsequent advanceArgument of M1:Under indefeasibility, since M1 secured all money including future mortgage, M1s further payments were protectedThere was authority (southwall v Roberts)If M1 reasonably improved property, value may be tackedHeld:Old system cases were applicable, thus indefeasibility did not countM1 had notice, and, thus, should be subject to M2, and indefeasibility was irrelevantMatsner exceptionIt was against conscience for M2 to prevail over M1s further advance because, but for the further advance, M2 would have got nothingCentral Mortgage Registry v Doneware (Karney J); Westpac v Adelaide bank (White J) Held:Under Torrens, it is only actual notice of a further advance that will cause a first mortgagee to be subject to M2But, personal equity or equitable fraud (barr v Nicolai) exception might occur with regards to M2But will only be defeated with ACTUAL noticeBy M1 making further advices squeezes M2 out of their priorityDecision in Matsner correctProcess wrongI